£226m Mt Gox Bitcoin Theft ‘An Inside Job’

An investigation into bitcoin exchange Mt. Gox, which collapsed and entered bankruptcy protection in February 2014, has fueled speculation that it was an inside job.

The report from WizSec, a small security consulting firm, revealed that the activities of an automated bot that appeared to fool the system by buying hundreds of thousands of coins with fake money.

Exchange Collapse

Just to recap, the Tokyo-based bitcoin exchange filed for bankruptcy in the US and Japan last year after saying it had lost 850,000 bitcoins, worth $500m (£226m). It had been targeted repeatedly by hackers.

And now The Financial Times reported that the WizSec investigation into how Mt Gox lost track of 850,000 coins, revealed the presence of a bot known as “Willy”. The bot apparently assigned itself dozens of accounts with apparently faked US dollar balances, allowing it to buy and withdraw the virtual currency at will.

The FT quoted Kim Nilsson, chief engineer at WizSec as saying that due to the fact that the bot operated in Asian hours, was one of several clues that suggested the creator could have worked at Mt Gox.

“We think it is more plausible that it was an insider rather than an external hacker,” said Nilsson was quoted as saying.

Mt Gox was once the world’s most popular venue for trading and storing bitcoins, and the collapse left thousands of creditors out of pocket.

Mt. Gox CEO Mark Karpeles’ assets were frozen, whilst Mt. Gox was sued for negligence and fraud.

Virtual Currency

Last December, Microsoft revealed it was now accepting payments made by Bitcoins. That decision  meant Redmond joined other companies already accepting the currency including PayPal.

It is fair to say that the virtual currency has had its ups and downs, as the value of the currency has fallen dramatically in the past year. The virtual currency has also faced increasing pressure from regulatory authorities around the world.

Last September, the Bank of England warned that Bitcoins could pose a threat to financial stability in the UK should it see widespread adoption.

Show your Bitcoin knowledge! Try our quiz!