Police close in on Bitcoin fraudsters who stole $370m in Mt Gox collapse

Police are closing in on the Bitcoin fraudsters who stole Bitcoin valued at $370 million during the collapse of popular exchange Mt Gox – and just 1% of the theft is believed to be the work of outside hackers, according to Network World.

A report in Japan’s Yomiuri Shimbun newspaper quoted sources close to Tokyo police investigating the Bitcoin fraud, who said that just 7,000 of the 650,000 missing Bitcoin are believed to have been stolen by hackers exploiting a bug in Mt Gox’s softwre..

The other Bitcoin are believed to have vanished in fraudulent transactions, carried out by people familiar with the exchange system, Coindesk reports.

Bitcoin fraud – who’s to blame?

Mt Gox cited Bitcoin fraud carried out using a ‘transaction malleability’ bug which led to incomplete transactions when it filed for bankruptcy.

Yomiuri Shimbun repots that Bitcoin were reportedly being pooled by unknown parties, whose identities did not correspond with customer accounts, in the run-up to the collapse of the exchange.

Former CEO Mark Karpeles said via email this week, ‘There’s not much I can say at this point, except the fact that I will continue investigating in order to find what really happened.’

‘We will find out what really happened’

When Bitcoin fraud took down Mt Gox,  the site said, ‘At the start of February 2014, illegal access through the abuse of a bug in the Bitcoin system resulted in an increase in incomplete Bitcoin transfer transactions and we discovered that there was a possibility that Bitcoins had been illicitly moved through the abuse of this bug.

‘We believe that there is a high probability that these bitcoins were stolen as a result of an abuse of this bug and we have asked an expert to look at the possibility of a criminal complaint and undertake proper procedures.’

After Mt Gox collapsed a statement was published online by leading Bitcoin exchanges, saying, ‘As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. Mt Gox has confirmed its issues in private discussions with other members of the Bitcoin community.’

Author , ESET

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