If Bitcoins Are Traceable, Why Can’t the Missing Mt. Gox Bitcoins Be Found?

By Aug 19, 2014 7:28 AM EST

NEW YORK (InsideBitcoins) — Since the downfall of noted bitcoin exchange Mt. Gox last February, the wheels of justice have turned ever so slowly. Last month — after five months — Tokyo police announced the launch of a formal fraud investigation. Finally. With 650,000 bitcoins “missing” and little progress in determining the culprit(s), some are taking matters into their own hands. Wiz Technologies, a Tokyo-based bitcoin security firm is one such interested party.

“We essentially started looking into Mt. Gox on our own ever since the collapse, in our individual capacities as creditors,” Kim Nilsson, lead engineer at Wiz Technologies told Inside Bitcoins. “Over time, as we learned more and got in touch with more people, it became a more concerted team effort, although still unofficial and behind the scenes.”

And the question that begs to be asked: If bitcoins are traceable through the blockchain, why can’t the missing Mt. Gox bitcoins be found?

“For our own investigation, the simple answer is that we don’t currently have access to the data we’d need to even start looking (the Mt. Gox wallet IDs),” Nilsson said. “But even for someone with full access to all data, like the police, there could be several reasons why this could be slow work, even with experienced investigators. The data may be incomplete or tampered with, the bitcoins could merely be lost rather than stolen, or they might not have existed in the first place.

“The technology that makes bitcoins traceable, the public blockchain, is of less help in this case since Mt. Gox handled all user accounts in its own internal database. As a result, the inner workings of Mt. Gox were invisible to the public and might not match up at all with the blockchain.”

Many observers suspect Mark Karpeles as having a role in the matter, either directly — or as a result of supreme incompetence. What does the Wiz Technologies team believe?

“We’re not casting suspicion nor clearing anyone of it at this time, considering the limited data we have to work with. We don’t think it’s necessarily as simple as one of those two extremes, though. We’ll see,” Nilsson said.

The Wiz Technologies group is working to gain access to the data through “proper channels” in order to aid in their investigation, but Nilsson would say little more.

“We obviously can’t reveal details or plans that could potentially compromise any ongoing investigations, but we have a good team in the right place, so we’re confident we can make the most out of the opportunity.”

Written by Hal M. Bundrick

  • Flibbr

    If I see the same original article rehashed one more time….. !!!!!!!!!!

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