Bitcoin Crumbles To 3-Month Lows On Mt.Gox As CEO Defends Exchange

Tyler Durden's picture

The ongoing exodus from Mt.Gox - a major Bitcoin exchange - amid withdrawal halts, has seen a massive $150 spread open up between it and other exchanges. Having tumbled by over 50% in the last 2 weeks, Mt. Gox pricing is back at levels first seen 3 months ago. This chaos (and the ongoing 'finger-pointing' over who is to blame) had led Mt.Gox CEO Mark Karpeles to come out swinging in the following interview...


Mt.Gox price for Bitcoin has collapsed...


Leaving the exchanges with very different prices...


Mt Gox chief executive Mark Karpeles – whom some internet forum commenters have angrily criticized after the exchange blamed a flaw in Bitcoin software for a potentially serious security issue – has been in contact with Forbes with a response to the criticisms.

Via Forbes,

FORBES: Was Mt Gox’s coding to blame, and are other exchanges having the same problem?

Mark Karpeles: First, you need to understand that the Bitcoin implementation we use in MtGox was created back in 2011. The bitcoin client is not meant to handle the kind of load MtGox has and was having more and more troubles, lagging and crashing. We created our own implementation to solve those issues and to offer a better flexibility to our customers.

Over time Bitcoin changed and started implementing changes that would require people using previous versions of the software to upgrade. While we followed most of those update[s] we were more and more busy and couldn’t keep up with all the changes.

With bitcoin 0.8.0 (released 19 feb 2013) a breaking change has been included that would prevent transactions to be accepted if their signature did not include the right number of zeroes in front of the signature values (in an effort to reduce risks of transaction malleability). We did not notice this change but a few of the transactions we were sending would become invalid because of this.

Due to this fact we started being more transparent on the transactions we sent, and provide a publicly available list of pending transactions. Nobody was however able to tell us what went wrong at that time. Since only a few transactions were affected anyway we didn’t give it much attention (recently we were able to look more into this and fix this issue).

This meant however that some of our invalid transactions were listed publicly, making it rather easy for someone with bad intention to alter these, hence the reason why many people claim there was an issue in our code. Now, transaction malleability does not affect only us, and while it might be more difficult to affect exchanges using regular bitcoin[s], it remains rather trivial.

Is there anything the Bitcoin Foundation can do to help solve this problem?

The Bitcoin Foundation has hired Bitcoin Developers for the purpose of promoting Bitcoin use. I guess the most puzzling part is why this issue hasn’t be[en] solved since 2011.

What constructive steps are both the Bitcoin Foundation and Mt Gox taking together to resolve the issues, and to have everything working at its best for the future?

We have proposed a solution that would allow people sending bitcoins to track sent coins no matter what happens in terms of malleability (a solution that can be applied quickly and without breaking anything), and the Bitcoin developers are preparing ways to prevent modified transactions from being relayed by the network (which will take a lot of time and may break some bitcoin custom clients).

There is obviously no perfect solution in this world, however this is how things are as of today.

Note that our announce[ment], while unfortunately upsetting a lot of people, allowed other exchanges to be much more cautious when faced with failing transactions, and most likely helped a lot of people understanding and dealing with the problem.

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TruthInSunshine's picture

I saw a sign on a low brow store that read "We accept bitcoin."

Wait, I mean that the sign read "We no longer accept bitcoin."

Is still accepting them? (Honest question)

Groundhog Day's picture

I have moved away from bitcoin and am now buying ultracoin from reggie....its much safer

Say What Again's picture

This explains the Ramp-a-palooza today!

tmosley's picture

Sort of like when the COMEX collapses, retards will run around screaming "OMG GOLD PRICE IS COLLAPSING", when the truth is that people have just lost faith in the exchange, and have fled with their bitcoins/gold/silver/dollars.

Saying that "Bitcoin" has collapsed because of the ticker of a disgraced exchange is disingenuous at best and out and out fraud at worst.  Tyler should know better.

LasVegasDave's picture

Hahaha Mosley

Maybe its the Jews

Or the Japs

Anyone's fault but yours


tmosley's picture

What the fuck are you talking about?

You sound like an idiot.

LasVegasDave's picture

Schadenfreude, Baby!

And fuck you, asshole

max2205's picture

Today was a bitcoin rally.....why not

Ness.'s picture

Silk Road 2 moderator Defcon reported in a forum post that hackers have used atransaction malleability exploit to hack the marketplace. The hackers stole over 88,000 bitcoins worth $41,474,415, emptying the site’s escrow account.



TheReplacement's picture

But bitcoin is a protocol and protocols can't be hacked!


Occident Mortal's picture

I remember Bitcoin, that was back in 2013, a nothing year which saw the Boston Bombing, Nelson Mandella passing but most of all Twerking.

fonestar's picture

Such a move as this would scare lesser (physical) men.  To virtual men like fonestar, this is but a gentle rolling over to be expected.

The same group of bafoons will be here howling as Bitcoin temporarily retraces $2,500 from a high of $3,000.

Hapa's picture

SA(msung)TOSHI(ba) NAKA(michi)MOTO(rola)

ForTheWorld's picture

The updated amount is 4474.26 bitcoins worth $2,747,000.

Ness.'s picture

I think we can all agree the amount that vanished is irrelevant.  

tmosley's picture

I see, so you are a sadistic bigoted ignoramus.  Thanks for letting us know.

TheFourthStooge-ing's picture

Hahahaha! DramaQueenDave is back.

"Goodbye ZH.  last post from me.

Sadly, you are no longer relevant."


Looks like Pure Evil was right:

"You'll be back ya little turd."

akak's picture

"As a dog returns to his vomit ..."

GaitherJ's picture

The bitcoin community is letting MtGox collapse, like free market people should. MtGox has halted bitcoin withdrawals but has not halted cash withdrawals. That is why the price is dropping on their exchange and causing the overall price to drop too. Everyone is trying to convert their stuck bitcoin into dollars for whatever they can get. MtGox is fighting back by doing as many MSM interviews as possible. This isn't their first incompetent screw up or withdrawal freeze that's why bitcoiners are letting them fail.

fonestar's picture

Well said.  Hopefully soon a true P2P trading platform on the deep web.  All of this compliance and "lets see your papers" is bullshit.

BlackChicken's picture


The Bitcoin Foundation has hired Bitcoin Developers for the purpose of promoting Bitcoin use.

Mercuryquicksilver's picture

Fonestar, isnt that guy in your avatar a famous poet convicted of being a fascist with ties to Musolini and Hitler. Didn't he go crazy? I thought you promoted BTC because it could not be conrolld by a government, a corporation, or a bank. Isnt that the opposite of your fascism?

Mercuryquicksilver's picture

Yep, thats his name. Thanks.

The conspriacy theory is that BTC is the FED's USD part II. When USD fails the FED already has a backup currency that it can manipulate (and record all transactions). The CT would make Musolini proud. Thats the only tie in I see between Ezra Pound and BTC.

I hope fonestar follows up with his intrest in Pound. Last time I checked his BTC wallet it had less than 2 coins in it. Sometimes I think he makes stuff up.

fonestar's picture

How many wallets does fonestar manage?

(Hint: more than you can count on your digits)

Crash Overide's picture

Do you own any Quarkdongbits?

fonestar's picture

Yes, pound placed his bets along with the fascists that they would end usury.  He was called crazy in part because he did not like the fact he saw the world being taken over by a global network of usurious bankers and their schemes. 

Similarly, stackers and Bitcoiners are identified as "crazy" by the sheep nearly eighty years later for trying to protect themselves from those same bankers.

Citxmech's picture

"Yes, Pound placed his bets along with the fascists that they would end usury."

That sounds more like "stupid" than "crazy."

chemystical's picture

Pound's father was an assayer at the Phil mint.  Oy the irony.


Mercuryquicksilver's picture

I get it, thanks. Why so many wallets?

ElvisDog's picture

Denninger had an interesting point this morning about bitcoin that maybe the bitcoin advocates can answer - why is there a significant price difference on the various exchanges and why doesn't big money swoop in to arbitrage those differences to make a shitload of money? You go into any coin shop, online or internet, and there is basically one gold/silver price.

GaitherJ's picture

It's really hard, if not impossible, to get money on and off the exchanges. Usually takes days to set up an account and days to get money in the account.

You would also have to be able to get the coins out of Gox and onto another exchange, which you can't because Gox shut down bitcoin withdrawals.

TheHound73's picture

I can't speak for "big money", why don't you go ask them?

I have a small arbitrage operation going but it obviously is not affecting the price difference in any visible way.

harposox's picture

Denninger thinks a 1% spread is "significant," but historically this spread has been much higher. When you factor in all of the deposit, withdrawal, trading, wire, and currency exchange fees, any potential arbitrage profit evaporates. Personally I think Coinbase has been running a bulk arbitrage (with customer funds) and that is what's caused prices to converge over the last few months... but that's just idle speculation on my part.

GaitherJ's picture

Take this with a grain of salt because I haven't been right about much in my life.....but I think once the MtGox nonsense sorts it self out the BTC price climbs back up.

There are is also a theory out there that the DDoS attacks on the big exchanges that have been happening are hard core BTCer's forcing the mallubility flaw into the open so the community will deal with the problem. So far the "bitcoin programers" have dismissed the problem as minor and insignificant. However the problem isn't small if you want to run a big automated efficient exchange.

Yen Cross's picture

  When/If comex collapses gold will find true "price discovery." The price of "physical gold" will go ballistic!

Emergency Ward's picture

I'm still looking to buy an "I Love BitCoin" T-shirt from someplace that accepts PayPal!

fonestar's picture

fonestar got one on eBay for around $10 (they didn't accept Bitcoin).

fourZero's picture

why do you insist on referring to yourself in the third person?

Citxmech's picture

Probably because it's about one of the most irritating things on Earth.

Emergency Ward's picture

Thanks fonestar, I'll check out that lead, kinda overpriced for my meager budget, maybe they'll go "on sale" later, but if it's "all cotton", what the heck.

zaphod's picture

As I write this MtGox is at $467 and bitstamp is at $617, so gox is $150 below other exchanges. The market is saying who they trust and it is not gox.

fonestar's picture

Actually it was funny, fonestar tried to fund his wallet with 0.170 BTC at but by the time it reached three validations he no longer had enough to fund the escrow for the seller (less than $100).

No gas or lunch for poor fonestar.

ThroxxOfVron's picture

You mean NO ONE will trade You a fucking dollar menu burger or a stale box of pop-tarts for a Bitcoin?


You really think Karpeles is calmly giving interviews with Forbes while Mt. Gox bleeds out?

ONLY a select few are going to be ALLOWED to redeem shit.

fonestar's picture

Oh well, sucks to be them I guess.

Hopefully it will give fonestar a chance to get more CheapCoins.

Johnny Cocknballs's picture

Volatility, Mr. Fonestar, is how this is gonna work. 

walküre's picture

Is Mt. Gox viable? Despite all the bashing of Mt. Gox from your quarters, the question would have to be to any BTC friend and investor.... is it now the time to buy BTC through Mt. Gox at a discount?

Is this like buying AAPL at $350 from another exchange, then cashing it in at $500 on the NSDQ?

fonestar's picture

After all of their screw ups and piss poor excuses you'd have to be crazy to send dollars or Bitcoin to MtGox.