Mt Gox Robbery an Inside Job, Report Suggests

New evidence suggests the downfall of the Tokyo based Bitcoin exchange Mt Gox might have been an inside job executed by an automated bot.

According to a report released by Bitcoin security consulting firm Wizsec, the unofficial investigation run by the company has generated evidence indicating the automated bot “Willy’s” hand in buying the crypto-currency in large numbers using fake dollars.

The bot Willy reportedly used about 200 accounts for buying Bitocoins with each account remaining active just once for a specific period of time. Each of these accounts bought 10-20 Bitcoins every five to 10 minutes totaling up to 250,000 BTC bought between September 27 and approximately November 30, 2013, which possibly explains the sudden appreciation of Bitcoin’s value during that period.

The downfall of Mt Gox, which was once one of the most popular Bitcoin trading and storage company, was a major blow to the emerging crypto-currency resulting in a price drop of 40 percent.

The company filed for bankruptcy in February 2014 after it reported a loss of 850,000 Bitcoins worth about $500 million that were stolen by the hackers. Later, the company reported recovery of 200,000 Bitcoins.

Willy’s activity details indicate that the purchase was made during Asian working hours and was possibly controlled by more than one person.

Wizsec’s Chief Engineer Kim Nilson told the Financial Times that the operation hours indicate that the hacker could have been part of the Mt Gox workforce, which employed about 30 people on contractual basis. “We think it is more plausible that it was an insider rather than an external hacker,” Nilson said.

The attorney of Ross Ulbritch in the Silk Road trial once accused Mt Gox’s CEO Mark Karpeles of being the actual “Dread Pirate Roberts.” Karpeles now works as the CEO of Tibanne Co, which specializes in web hosting, application development, network administration and business development.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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