Mt. Gox Mark Karpeles’ release on bail has produced a new radio program examining the historic hack and heist, but is also raising questions about sister exchanges such as BTC-e and their role in laundering stolen bitcoin. If all that wasn’t enough, a Gox trustee decided to dump over 400 million USD in bitcoin core and bitcoin cash in an effort to make Gox creditors whole.
Mt. Gox Money Laundered Through Always Efficient LLP, Claims FBI
Mt. Gox’s Mark Karpeles, released on bail in Japan, recently told England’s state-run media BBC Radio 4 File on Four how hard reality hit him back in 2014: “It felt like… when you fall from a building and you see the ground getting closer, and you feel like you are about to die. Mt Gox went from interesting project to being, I would say, a daily nightmare of dealing with banks, governments, people I never knew existed.” At that time, something like 7 out of every 10 bitcoin transactions were handled by the exchange. “I am very sorry that when I was in charge things happened the way they did.”
Mr. Karpeles is charged with data manipulation and millions in embezzlement, though he describes the latter as perfectly legal loans (none of the charges have to do directly with stolen Gox bitcoin). When dust settled, 650,000 bitcoin vanished, billions in value gone. BBC Radio 4 claims to have found out which regional company was used in laundering that loot, Always Efficient LLP.
The US Federal Bureau of Investigation (FBI) claims London’s Always Efficient LLP was behind the infamous exchange, BTC-e. US authorities effectively shut down the Russian exchange’s site, charging an alleged principal, Alexander Vinnik, with multiple counts of international money laundering, including that derived from Gox. Mr. Vinnik was later arrested in Greece, and is awaiting extradition to the United States or Russia (for lesser charges). For its part, the exchange denies Mr. Vinnik’s involvement. Investigators are claiming nearly half of Gox’s stolen bitcoin were pushed through BTC-e.
In a statement to the BBC, Mr. Vinnick explained “BTC-e is just a web platform for buying and selling Bitcoin – not an exchange. As such it cannot be held responsible for the source of money used to buy Bitcoin, no more than a currency exchange bureau can be held responsible for exchanging a stolen $100 note into pounds sterling.” He also denied any connection to Always.
The BBC 4 episode, The Missing Bitcoin Billions, concludes on Sunday 11 March, 20:00 GMT, and includes infuriating details of Gox’s ongoings at the time. Mr. Glucksman, a former Gox employee, is quoted at length about Mr. Karpeles’ quirks, among them “an interesting passion for quiche. Quiche as in mushroom and onion quiche, or something … in the building that we moved to, Mark had also purchased space at the bottom of the building that was going to be the bitcoin cafe.
And initially the concept was for that to be a showpiece for bitcoin where you’d come in, you’d buy your coffee with bitcoin. But then he actually hired a chef who was a specialist in making quiches. He invested quite a large amount of money in an oven that was specifically built to cook quiche. It’s quite a big distraction from the whole story of Mt Gox.”
Market-Shaking Whale Dump by Mt. Gox Trustee
“I made efforts to sell BTC and BCC at as high a price as possible in light of the market price of BTC and BCC at the timing of sale. I plan to consult with the court and determine further sale of BTC and BCC”, Nobuaki Kobayashi, a trustee in the Gox case charged with paying back losses, explaining why 400 million USD in bitcoin core and bitcoin cash suddenly dumped onto markets. It’s an effort to make Gox creditors whole, part of ongoing bankruptcy procedures which include nearly 2 billion USD worth of bitcoin core and bitcoin cash yet to be sold off.
The sale carried over the last few months, resulting in JPY 42,988,044,343 (slightly over 400 million USD), after having sold 35,841.00701 in BTC and 34,008.00701 in bitcoin cash. Some analysts have openly wondered if parts of market prices crashing by half, say back on 5 February, had to do with the trustee’s sale of 18,000 bitcoin that same day.
The bitcoin were sold over a three month period, beginning in December of last year. “The matters such as the possibility of carrying out a distribution and the timing and method thereof have not yet been determined”, Mr. Kobayashi detailed. Claims and claims against claims will probably push back justice in this case for even more years to come.