Feeds

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

Fears over 'customer funds covering operating costs' says Reuters

Reducing security risks from open source software

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. ®

Mobile application security vulnerability report

More from The Register

next story
LibreSSL RNG bug fix: What's all the forking fuss about, ask devs
Blow to bit-spitter 'tis but a flesh wound, claim team
Microsoft: You NEED bad passwords and should re-use them a lot
Dirty QWERTY a perfect P@ssword1 for garbage websites
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
NUDE SNAPS AGENCY: NSA bods love 'showing off your saucy selfies'
Swapping other people's sexts is a fringe benefit, says Snowden
Own a Cisco modem or wireless gateway? It might be owned by someone else, too
Remote code exec in HTTP server hands kit to bad guys
British data cops: We need greater powers and more money
You want data butt kicking, we need bigger boots - ICO
Crooks fling banking Trojan at Japanese smut site fans
Wait - they're doing online banking with an unpatched Windows PC?
NIST told to grow a pair and kick NSA to the curb
Lrn2crypto, oversight panel tells US govt's algorithm bods
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Mobile application security vulnerability report
The alarming realities regarding the sheer number of applications vulnerable to attack, and the most common and easily addressable vulnerability errors.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.