Police Are Investigating Whether A $730 Million Bitcoin Heist Was Actually An Inside Job

Bitcoin ATM machineREUTERS/Mike BlakeA bitcoin ATM machine is shown at a restaurant in San Diego, California September 18, 2014.

Japanese police are reportedly investigating whether people connected to the Mt. Gox Bitcoin exchange were behind the loss of hundreds of thousands of Bitcoin. 

Pando is reporting that Japanese newspaper the Yomiuri Shimbun has published an update on the police investigation into the theft of vast amounts of Bitcoin from online exchange Mt. Gox. 

Mt. Gox was a central part of the global Bitcoin-trading world. At its peak in 2013 the site was handling over 70% of Bitcoin transactions, serving as the backbone for the cryptocurrency industry. 

The wildly successful Bitcoin exchange was based in Japan, with a team of contractors working under enigmatic CEO Mark Karpelès. As Pando reports, the site’s owner only employed contractors, and kept important parts of the site’s encryption to himself. Despite the secrecy, though, the company thrived.

It was a far cry from the origins of the site, which started life as a website for people to exchange Magic The Gathering trading cards. In its news form, Mt. Gox was handling billions of dollars worth of Bitcoin transactions. 

But everything came crashing down for Mt. Gox in February 2014 when the site suddenly halted all withdrawals. That alarmed customers, who bombarded it with queries. No solid information was forthcoming, with the site blaming a problem in the core code behind Bitcoin for the loss of a vast amount of the digital currency. At its peak value, the amount lost was over $US730 million.

By March 2014, Mt. Gox had filed for bankruptcy and Karpelès resigned from Bitcoin’s board. The majority of the missing Bitcoin was never found, however. 200,000 bitcoin was found in one of Mt. Gox’s old accounts, but most customers still lost out. Karpelès has refused to travel to the US to face charges, meaning that the Japanese police investigation could be the last hope for Mt. Gox customers.

Now, it looks like the police investigation is turning its focus onto people involved with Mt. Gox, not vulnerabilities in Bitcoin or hackers from outside the company. The Japanese newspaper report cites sources close to the investigation who claim that someone involved with Mt. Gox may have transferred Bitcoin around the exchange, repeating the process and earning a profit margin.

If the Mt. Gox bitcoin was stolen by routing the money through the online exchange, that could be related to “Willy” and “Markus” — two of Mt. Gox’s automated trading accounts which conducted suspicious transfers.

Sources close to the police investigators claim that only 1% of the Bitcoin ever left Mt. Gox as a result of a hack, with an overwhelming amount staying inside the company.

Despite what seems to be a significant advancement in the police investigation, there’s still little hope that Mt. Gox’s customers will see their cryptocurrency again.

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