the
building was blocked by a
young man who had flown to
Tokyo from London two days
earlier to try to get some
answers. With a sign in one
hand that said, “Mt Gox
where is our money,” the
protester,
a
mustachioed
programmer named Kolin
Burges, placed himself in
Mark’s
way
and
said,
“Please, can I have a chat
with you?”
Mark first tried to dodge
him,
but
then
stopped
reluctantly when the man
said, “I came all the way from
London to try and get my
Bitcoins from you—to find
out what’s happened.”
“We can’t do anything
right
now,”
Mark
said,
looking both disdainful and
scared. He started again
toward the door when Kolin
asked the key question: “Do
you still have everyone’s
Bitcoins?”
“Can you let me get
inside please,” Mark said as
he tried to pass Kolin, who
was bobbing and weaving to
get in his way. “I’m going to
call
the
police,”
Mark
threatened,
before
Kolin
finally let him pass.
Upstairs in the Mt. Gox
offices, the staff didn’t know
any more than Kolin did
about what was going on.
They were still operating the
exchange, allowing people to
buy and sell Bitcoins with
whatever dollars were still in
their Mt. Gox accounts and
taking in new deposits from
daring customers. The price
of a Bitcoin on the exchange
fell lower and lower as people
doubted they would ever be
able to get the coins out. On
Friday, the price stood at
$300, half what it was on
Bitstamp.
Some
people,
including Roger Ver, were
convinced that Mt. Gox’s
problems were temporary and
jumped at the chance to buy
coins on the cheap.
Mark would later say that
during this time he was
spending his daylight hours at
the office and his nights at his
apartment, alone with his cat
Tibanne, furiously working
his way through hundreds of
pieces of paper containing the
private keys to Mt. Gox’s
Bitcoin wallets. He had
driven around in his car and
collected the papers from the
three locations in Tokyo
where he had stored them (he
had kept the keys on paper so
they would not be vulnerable
to hackers). Once he was
back in his apartment with the
QR
codes—essentially
complex bar codes—he began
scanning in the private keys
one at a time, with his
computer’s
webcam.
A
combination of fear and
sickness slowly overtook him
as each one of the wallets he
scanned in showed up on his
computer screen as empty.
It would be hard for
others
to
verify
Mark’s
narration of what happened
during those days because he
kept such tight control over
all the exchange’s accounts.
And as time went on, fewer
and fewer people believed
anything Mark said. But even
if he was telling the truth, it
was not what he told his
employees and customers
when he came in to work on
Monday morning, ten days
after Mt. Gox shut off
withdrawals. In a public
statement on the Mt. Gox site
on Monday, he said, “We
have now implemented a
solution that should enable
withdrawals and mitigate any
issues caused by transaction
malleability.”
On the narrow Tokyo
street outside the office,
Kolin Burges maintained his
one-man protest. There were
still few Japanese people
using Bitcoin, but Kolin did
attract
a
few
foreign
supporters who showed up as
the week went on without any
sign of a resolution to the
problem. Mark had two
security guards advise the
staff on how to deal with
intimidating
encounters.
Mark himself started taking
taxis to work and leased
space in an office tower with
better security. On Friday,
Tokyo police showed up to
remove the protesters.
A few hours after the
police left, the Winklevoss
twins landed in London for a
weekend
appearance
at
Oxford
University.
When
they turned on their phones in
the plane, they found a
worrisome
from
Mark’s deputy, Gonzague,
with whom they had dealt in
the past.
“I would like to talk to
you urgently regarding the
situation with MtGox,” he
wrote. “Would you mind
signing this NDA and call me
ASAP on my mobile phone.”
Cameron
Winklevoss
replied that a nondisclosure
agreement could be tricky,
but he was happy to talk.
After being out in London all
day,
Cameron
finally
managed to connect with
Gonzague by Skype when he
got back to his hotel Friday
night.
Gonzague got right to the
point and explained the
staggering extent of the
problem:
some
650,000
Bitcoins—essentially all the
company’s customer holdings
—were gone, along with
100,000 coins that belonged
to the exchange.
Cameron was stunned.
Doing the most basic math in
his head, he knew that
Gonzague was talking about
hundreds of millions of
dollars worth of Bitcoins.
“How is that possible?”
was all Cameron could ask.
Gonzague
said
that
someone had been stealing
from the company’s online,
or hot, wallet by changing the
transaction identifiers. When
the hot wallet was empty,
Mark had unwittingly refilled
it with coins from the cold,
offline wallets. Gonzague
told Cameron that Mark had
continued doing this over and
over again, until all the
offline wallets were empty.
The whole thing had been
going on for months, or even
years, and Mark apparently
never realized it until now.
The explanation struck
Cameron as implausible, but
it didn’t seem worthwhile to
argue
now.
The
bigger
question was what was going
to happen next.
Gonzague sounded oddly
upbeat. He explained that
Mark had “burned himself”
and was agreeing to step
aside, making it possible to
move
the
business
to
Singapore and reincorporate
under new owners, with the
twins
being
obvious
candidates. Gonzague thought
it would be possible to do this
without telling anyone what
had
happened.
If
the
exchange
could
get
an
infusion of coins the business
could make up the missing
money over time, from fees.
If this wasn’t done, Gonzague
said ominously, it could set