More like this

Business

Cops think Mt Gox meltdown was an 'INSIDE JOB' – report

Research shows less than 1% of missing funds lost to attacks, it's claimed

Nearly all of the funds missing from bankrupt Bitcoin exchange Mt Gox were the result of fraudulent transactions, rather than outside attacks, Japanese authorities have reportedly said.

Tokyo's Metropolitan Police Department (MPD) told The Yomiuri Shimbun newspaper on Thursday that no more than around 7,000 of the roughly 650,000 Bitcoins that vanished from Mt Gox could be attributed to cyber-attacks.

The rest of them were likely spirited away when "the system was fraudulently operated by an unknown party," police sources say.

Tokyo-based Mt Gox filed for bankruptcy protection in February 2014 after its devastating losses were made public. At the time, the missing Bitcoins were worth around $429m. They're worth less than half that to whoever has them now, following the crypto-currency's precipitous decline of 2014.

The company's CEO, Mark Karpeles, said the loss of the Bitcoins was due to an inherent vulnerability in the Bitcoin system itself that had been exploited by outside attackers. But researchers quickly pooh-poohed that theory, saying the transaction logs of the missing Bitcoins didn't support it.

Japanese police have now concurred, saying their own analysis of the Bitcoin transaction records found no traces of cyber-attacks for 99 per cent of the missing digi-money. They did, however, find "at least two suspicious accounts with balances that continued to grow despite no records of Bitcoin purchases."

Funds were transferred to these accounts from the accounts of other Mt Gox customers "through system operations" that could only be conducted by "people familiar with the system," authorities have said, without going into greater detail.

Investigators have not named anyone as being a suspect in the apparent heist, saying only that the fraudulent transactions were conducted by an "unknown party." (El Reg can imagine said "unknown party" being malicious software on an employee's PC, silently siphoning off BTC.)

In light of their findings, however, MPD officials say police now plan to question Mt Gox employees and others closely related to the firm in order to shed more light on how the exchange was run.

The MPD is but one authority looking into what went wrong at Mt Gox – of the roughly 127,000 creditors that Mt Gox had when it ceased operations, only about 7,000 were Japanese.

The company is simultaneously under investigation by US authorities, although it's not known how many US citizens may have been victims of the apparent fraud. US investigators have been working alongside the MPD, so it's likely that they, too, will have dismissed the notion that Mt Gox's losses were the result of outside attacks. ®

Sponsored: The Nuts and Bolts of Ransomware in 2016