Feeds

Mt Gox staff tried to warn CEO of Bitcoin loss risks – reports

Fears over 'customer funds covering operating costs' says Reuters

The Power of One eBook: Top reasons to choose HP BladeSystem

Staff at fallen Bitcoin exchange Mt Gox in Japan have claimed that they raised alarms about how the company was handling client funds as long ago as 2012, according to Reuters.

In this report, the unnamed “current and former employees” of Mt Gox were concerned that “customer funds were diverted to cover operating costs” of the popular website.

These expenses went far beyond the day-to-day running of Mt Gox's offices in a Tokyo tower: they included “high-tech gadgets such as a robot and a 3D printer and a souped-up, racing version of the Honda Civic imported from Britain for [CEO Mark] Karpeles,” the staffers alleged to Reuters.

However, the same sources also noted that Karpeles said customer money was not being used to fund the business, "but [he] declined to provide details on how the business had covered any loss," the newswire reports.

The exchange claimed in 2012 it was handling US$14 million in monthly Bitcoin transactions, which would have been around 90 per cent of Bitcoin trade at the time. In August 2012, to assure traders it was solvent, it claimed on its site that its transaction fees were netting it US$1,500 per day.

In April 2013, Karpeles claimed – again according to Reuters – that it processed US$20 million a day.

As is now well documented, Mt Gox's collapse early this year stung account holders for about US$450 million in losses at today's prices for the crypto-currency. The company has also been unable to account for US$27 million in cash holdings. ®

Designing a Defense for Mobile Applications

More from The Register

next story
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
Roll out the welcome mat to hackers and crackers
Security chap pens guide to bug bounty programs that won't fail like Yahoo!'s
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Researcher sat on critical IE bugs for THREE YEARS
VUPEN waited for Pwn2Own cash while IE's sandbox leaked
Four fake Google haxbots hit YOUR WEBSITE every day
Goog the perfect ruse to slip into SEO orfice
Putin: Crack Tor for me and I'll make you a MILLIONAIRE
Russian Interior Ministry offers big pile o' roubles for busting pro-privacy browser
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.