Archive for the ‘bitcoin’ Category
The Mysteries of Mt. Gox Continues: Interim Independent Report Shows Attacks Were Mainly an Inside Job
Tokyo – by Kyoko Miura
A Secret Service agent and a DEA agent, who had been cooperating with the investigation leaked information to the Silk Road operators on Mark Karpeles, the founder of Mt. Gox, once the world’s largest bitcoin exchange. The agents may have also tried to shake down Mark Karpeles on two separate investigations.
The prosecution of the two federal agents who played key roles in the Silk Road investigation now raises new questions about the collapse of Mt. Gox, which filed for bankruptcy protection in February of 2014, and the activities of the two agents involved. When the cops are cooperating with the criminals, and acting as criminals, then informants are likely to become targets for retaliation.
Once the world’s largest bitcoin exchange based in Tokyo, Mt. Gox collapsed in February of 2014, with 500 million dollars missing. The official police investigation began on March 27th. A year later, the mystery has only deepened. The Tokyo Police Department Cyber Crimes unit leaked to the press that it was an inside job but who was that insider? Was there an accomplice?
Data leaked and available after the extraordinary collapse of Mt. Gox was analyzed by a group of independent investigators, who released their 8 month-old findings on February 19th due to non disclosure agreements signed with different parties. The report mainly announces that the Mt. Gox hack was mostly an inside job. The report detailed the activities of a robot that was buying hundreds of thousands of coins with fake money within Mt. Gox. Mt. Gox filed for bankruptcy protection in Tokyo on February 28th of last year after 850,000 bitcoins worth about $500 million disappeared.
On the first anniversary of the mysterious hack, WizSec (Wiz Securities), the independent group lead by Kim Nilsson, 32, a Swedish software engineer and Jason Maurice, 29, a Hawaiian security researcher, both based in Tokyo, launched their first and interim report on February 19th, showing the clearest account in terms of what could have happened to Mt Gox. Days later, maybe in response to this report, the alleged hacker(s) again anonymously leaked data that should normally be in possession of the trustee, who is currently liquidating Mt. Gox, and of the official investigators. The hacker(s) sloppily leaked private information about Mt. Gox creditors. The leak was immediately taken down, possibly by the moderators of Reddit.com.
Wiz’ independent report is based on a limited amount of information. Part of the data analysed in their report was left behind by the hacker(s) who allegedly attacked Mt. Gox.
Among information totally new to the public, the Wiz report sheds light on the time slot of the activities of “Willy bot”, which seems to have been running all the time except between 2 and 5 AM, Japan time. Experts estimate Willy started running sometime in 2013.
Maurice explains that the act perpetrated by the anonymous person is clearly voluntary and illegal. The bitcoin trading data showed that the automated trading robot, or computer software (Willy bot), was used to manipulate the market and possibly steal coins as well. The computer software, because it had database access, was trading different accounts at Mt. Gox, using fake money, creating new accounts, and set the balance of those accounts to millions of dollars. Then it faked the money that didn’t really get deposited. “The bot would spend that fake money on the exchange buying up few bitcoins every few minutes, which would usually take a day or so to spend. Spending $2 million buying bitcoins off of the market is something that can be made only slowly over time.” Maurice explained.
On March 9th, 2014 an anonymous hacker, that called himself “Nanashi”, aka “Anonymous” in Japanese language, posted trading data on Mark Karpeles’ blog. The hacker compromised the Mt. Gox database and downloaded a lot of the transaction data, account balances, packaged it all up and leaked it on Karpeles’ blog, then posted it on Reddit, an internet forum with Karpeles’ Reddit account. This person had clearly hacked Mt. Gox and hacked Karpeles personally. The perpetrator is anonymous and there is allegedly no evidence that points to his nationality.
“There is certainly a lot of evidence which makes the trading bot look like it were being run from either inside Japan or the Mt. Gox network itself.” Maurice said. The time slot of the operation of that bot also suggests it was an inside job.
“I do not know a lot of people capable of sleeping only 3 hours per night during 3 consecutive days.” Mark Karpeles said, commenting on the Wiz report.
This new information suggests that there could be more than one person behind the bot working on shifts. “This opens a new path to the investigation but the problem is that we don’t have anything solid at this level.” Karpeles added.
The bot was discovered by bitcoin traders using Mt. Gox as early as in January 2014 and was then dubbed “Willy”by the trader who discovered it. It’s only after the bankruptcy of Mt. Gox that the community reported the bot to Mt. Gox. Nobody knows how the bot got into the system. The exact nature of the bot is still unknown.
“Multiple hacks, including one attack that happened over several years to manipulate the market”
The report shows that there might have been multiple hacks. One of the attacks might have taken over several years and manipulated the market. Another attack was used to simply steal the coins. “Until we get the full database we can’t really be sure. There could have been multiple hackers in multiple countries. It could have all been done inside Japan and we don’t know. But there is a lot of evidence pointing to inside Japan.” Maurice explained.
Surprisingly, on February 24th this reporter obtained a whole new document disclosed by a Mt. Gox insider. The document leaked information about security issues at Tibanne (the mother company of Mt. Gox). The report, which brings a tremendous feedback for investigators, showed that the systems at Mt. Gox were compromised precisely from 19:23 JST (Japan Standard Time) on February 28th, ending at 16:07 JST on March 2nd. Its analysis on the origin of the attack says that there is a high probability that the attack was in response to the press conference held by Mt. Gox Co., Ltd on February 28th, around 18:30, where it was announced that a police investigation would be requested to find out what happened on Mt. Gox regarding the discrepancy in held balances. According to the leaked document, the attack was stopped on the day it was detected Karpeles, on March 2nd, at 16:07.
Bot operating on Asian hours suggests the creator could have worked at Mt. Gox
Kim Nilsson, the author of the Wiz report says that while his team went deeper and profiled how the Willy bot was run and controlled, their research showed beyond a doubt that the bot was real, intentional and significant enough to affect the market, contributing to, though not necessarily the sole reason for the 2013 price boom and subsequent early 2014 crash. “We also uncovered evidence that Willy’s operator was likely located in East Asia, based on the times they controlled the bot”, Nilsson explained. The fact that the bot was operating on Asian hours is one of several clues suggesting that the creator could have worked at Mt. Gox. “We think that there is a lot of evidence pointing out that it was an insider rather than an external hacker”, both Maurice and Nilsson told this reporter.
The group also claims that their report is about 6 months old, and that they had discussions with the Japanese police last summer with whom they shared a lot of their findings. “The police never came back to us after we had shared these information”. Maurice added.
Just before the bankruptcy was announced on February 28th, 2014, Mt. Gox had about 40 employees, a dozen were highly skilled engineers who had access to the entire system, about half of them were hired on a one year contract and the other half were permanent employees.
Karpeles reportedly wasn’t aware of any coins missing up until late February, weeks after users began to report difficulties withdrawing funds. Karpeles explained that Mt. Gox launched an investigation as soon as they received such information. “One thing we discovered was the transaction malleability, and then we recovered 200,000 of the 850,000 missing bitcoins in an old format wallet. It took us 4 months in total to investigate everything, starting from early February up until months after we shut down Mt. Gox,” Karpeles said.
The Yomiuri Shinbun, Japan’s largest newspaper reported on January 1st of this year that according to police sources, the Mt. Gox hack was a 99% inside job. Sankei Shinbun later reported it was a 90% inside job, showing similarities with the 8-months-old Wiz report.
The independent experts note that the recent leak to the Japanese press is compatible with what they shared with the Japanese police at the time. “It’s possible the police kept investigating this angle without telling us, and it is also possible the leak is referring to some other similar insider activity. Either way, Wiz claims their original report is almost one year old and cryptographic proof was embedded in the bitcoin blockchain. (The blockchain stores the history of all bitcoins transactions and can also be used to store information permanently).
Nobuaki Kobayashi, the appointed trustee of Mt. Gox and anyone in his team was unavailable for comments.
Clearly, there was negligence and lack of security. Some creditors of Mt. Gox say Karpeles is responsible as a CEO of the company for securing everyone’s money. “I don’t think he is personally the thief we are looking for. It could have been someone else, an external hacker or somebody else within the company”.
The Wiz report is based on data leaked by the hacker(s) between February 28th to March 2nd. Wiz investigators claim they matched the data with information they collected elsewhere. The entire data was potentially deleted from Mt. Gox servers between February 28 and March 2nd, and a part of the data was left visible by the perpetrator(s). As pointed out in the surprise report released on Tuesday by a Mt. Gox insider, “during the attack, various logs were erased and disabled.” […] “The files were erased, and instead, a symbolic link was placed”, the surprise report said. The mystery within Mt. Gox is looming but shows some hope in the horizon.
Japanese media coverage of Mt. Gox collapse “too negative”, a Japanese economist says
Yukio Noguchi, a professor at Waseda University and economist said that the Mt. Gox coverage by the Japanese media was too negative and not based on facts. “They [the Japanese media] reported that the bankruptcy of Mt. Gox was the bankruptcy of Bitcoin, well it wasn’t.” He commented, explaining that Japanese people do not trust the virtual currency. “One of the flaws in Bitcoin is that Mt. Gox got hacked. Bitcoins are designed so that transactions can never be reversed or undone. There is no charge back like a credit card. Once bitcoins are stolen, there is no way to get them back unless the guy who did it is actually found.” Maurice summed up.
So Saito, a Japanese Attorney and auditor at JADA (Japan Authority of Digital Asset) said that after the collapse of Mt. Gox, the Japanese government discussed whether regulations should be put in place for Bitcoin, but finally decided that bitcoin is not a currency and that the crypto-currency would be treated like other goods and services, with commercial sales of bitcoin itself and bitcoin-based transactions subject to sales tax.
Note: Certainly the bitcoin community continues to treat Karpeles as a pariah. When he began tweeting anew as @MagicalTux, writing about daily life, snacks, and Japanese sunsets, the response was vehemently hostile. There were even death threats: “I am planning to hire someone to murder you. Watch out your back because your life will be fucked up asap!”
Q: Everybody in the bitcoin community talks about you in Tokyo. Who are you and where do you come from?
I’m a 29 year old geek, an entrepreneur, and mostly, I’m curious. In other words, when I see something, I like to know how it works. My main activities are coding and sending e-mails. I think coding is a bit of an art form. You code, the same way a writer writes his book and the painter paints his picture. When you are inspired, you can’t stop doing it. And sometimes, you force yourself as much as you can, it just won’t come.
I was born in Dijon, France. I did most of my school education in France. When I was 3, I started to do basic programing on a 5 lasers spectrum, a very easy computer that the general public was familiar with at the time. Between 3 and 7 years old, my mother got me game programs, and when I pushed the record button I could see the program itself and I could entertain myself by modifying them or doing other things with them. I did not get a completed school education. In fact I was not very good at school, because the teachers put me in a literature class because that was the only place where they found a place to put me. That was not necessarily the best environment for me. But in math classes I scored 19,5/20 in average, and the teacher always took 0.5 points from my tests because my writing was crappy, and he was maybe right to do so because I really have a crappy handwriting. I used to dismantle a calculator to understand how it works. My profile is not really “literature,” I’m purely a math and science guy. I can easily remember some numbers I typed on my computer few days earlier, but regularly, I do something and I forget about it. For example, if you ask me what I did yesterday, I really need to think hard. I have no memory of what I did or whom I met. I have a memory that is very much based on numbers and much less based on elements. If I want to create a password, I type it 2 or 3 times, and that’s it, it’s registered in my brain.
My mother didn’t have an easy situation to raise a child, so sometimes I lived with my grand mother, who had very old values, and it had some impact on me. At some point I was put in a private school that taught children in small groups and where the kids evaluate their own score by using different colors. When I was 10 years old I was suddenly put in a public school, and that also had a certain effect on me. I consider myself someone who is quite logic and I do have good understanding of computer engineering and I have a particular affinity with programing.
When I was about 17, I was homeless for about a week. I used to distribute flyers to advertise for a cyber cafe near Chatelet, in Paris. The money I made allowed me to buy the evening food.
My big life adventure started in 2009 in Japan. But way before that, I left France for Israel, where I lived 9 months. I had prepared a plan to get from France to Japan in four steps: France, Israel, Australia and from there, I wanted to get to Japan. But everything didn’t go as I planned. In Israel, the war in Gaza started. Somebody blew the power plant in a terrorist attack, and we had half a day of power shut down. For an IT company, that’s the worst thing that can happen. That day, it blew all my plans. What I was trying to create there did not happen, so I returned to France. Selling services in foreign countries is a good business in Israel. Israel is seen as a spotlight for technology, particularly for the US. But the problem of the hazard of terrorist attacks, power plants shut downs, unstable electricity, slow Internet connection, and so on, were things that I didn’t expect. And Australia is also a bad country for Internet connection. So I returned to France. I had nowhere to go, but a friend hosted me and told me that someone was looking for a PHP developer. I was interested. That’s how I got to work in this company in France during 4 or 5 years, prior to moving to Japan. That French company bought several branches, including some in Japan, so I did everything in order to be transferred here. I arrived in Japan in 2009 and I founded the company called Tibanne on October 29th of that same year. Tibanne does web hosting and development. I did web hosting and different services all by myself. Tibanne is the name of my grand mother’s cat by the way. When she died, I inherited that cat.
Q: What is your particular attraction for Japan?
Well, I like the standard of living that we have in Japan. First of all, you don’t find conbini (convenient stores) in Paris. Paying your bills in a convenient store, and that it actually works. Also, I used to forget my laptop on a park bench numerous times, and each time I got it back. In Paris, just forget it, people would mostly steal it. All the service sectors in Japan, such as the delivery system are very efficient I think. In France, it took me 2 hours to get a vital card whereas in Japan, it took me 20 min to get a kokumin hoken, or social insurance card at the town hall. Otherwise, I think you find a lot of Japanese culture in manga, animation. And the nature and politeness of the Japanese people makes it easy to integrate in their society. In the subway train in Japan, when people are not necessarily in a good mood, they will nevertheless be courteous, whereas in France, it’s a bit the opposite (laugh). Every morning I took the metro until Opera, in Paris and from there I took the RER A, every morning I had my hand on my bag to make sure no one was going to steel it from me. I’ve seen guys who enter the Metro and start barking at each passenger inside. People are so courteous here in Japan, so it inspires me to do the same. Once I was in Shibuya in a parking lot with some of my employees and we found a fat wallet on the floor, and we went to bring it to the closest koban or police box. The goal is not only to be in Japan, and to take advantage of the nice people, but it’s also about being part of the whole.
Q: How did you get into bicoins? Is it because you have a great understanding of finance and the banking systems? Do you follow a philosophy, if so, is it libertarian, anarchist, or futuristic?
For me, basically I am more a geek. I’m a computer guy, more than a politician or a finance person, so I was not very well informed about those sides of bitcoin. It all started in 2010, when a French friend of mine in Peru, who was one of our clients, asked me, “Could I pay in bitcoin?” I said, “sure.” And started to look into it, how it works etc. What interested me in bitcoin was the technology part. In other words, the fact of maintaining a global data base in a secured way, the way it works, the fact that each client has a secured private wallet, the possibility to exchange values with other clients without any security problem, to have an entirely decentralized system, capable of exchanging data between two people. Also, bitcoin allows to have a database that is public. A database where everyone knows which keys has what, but without knowing who is which key. So there is a whole concept that was invented behind bitcoin, that is extremely well done, in fact. That was basically what interested me in the very beginning. The anonymity of the bitcoin was not my main interest. Bitcoin requires an extremely rapid communication between all the parties concerned. And the joint database, or the account book of bitcoin, is made in a way that everybody can look into it and at any time. Everybody can update it anytime they want and globally track a new transaction. There are a lot of technical problems that are very interesting challenges to meet as an engineer in the network or as a programmer. The beauty of the technical challenge itself is a sufficient motivation for many people like me. And that is really what motivated me in the start. To have a database that is updateable by several million of people, at the same time, and instantly is an incredible challenge, especially to do this on the Internet.
Q: What are the 5 things you like the most and the 5 things that you hate the most?
I like computers, courtesy, Japan, apple pies and cooking, and also driving around in a car, or travelling. I can’t really take an airplane at the moment. I am more secure in Japan, and if I want to travel abroad I have to get a permit from the Japanese court that put Mt Gox into bankruptcy. And unless there is a strong reason for me to travel, it is very unlikely that they would say yes. Otherwise, I love dismantling old computers or electronic devices and try to make them work. I also love cooking my grand mother’s apple pie, a family recipe from Burgundy.
It’s more complicated to find the 5 things I hate the most. I hate mushrooms, most fish, except tuna and salmon when I have sushi. I never lived near the sea, so I think that’s why. That’s for the food I hate. Otherwise, I hate press conferences. I had only one experience in giving a press conference, if it was possible, I would like to avoid doing another one ever.
Q: Is there anything that people do that you don’t appreciate?
I don’t like egoism. It’s so pleasant to share, so I don’t see why we wouldn’t do it.
Q: Do you think you are generous?
I think I am. But then it’s a question of doing what I can do and that it doable.
Q: Who is your hero? Who is the person, real or fictive, that you admire the most, whom you want to be?
It’s complicated, each people have different interesting aspects and skills. Putting all the good things in one person is something difficult. I admire Neil de Grasse Tyson, the astrophysicist and author of “Space Chronicles and Inexplicable Universe.” My hero is Iron Man. (Laugh.) He’s a good example, because he does a lot of things. Again, I like the action of inventing and innovating.
Q: What do you think life gave you? And what did people give you?
Until now, I think I was really lucky, because not many people can have the same things that I do. And at the same time, I think I am unlucky when I look at how it all ended, it’s actually quite horrible. And I really hope we are going to find out what really happened. What we are seeing now, maybe in the near future we will be able to say that we were part of an economic revolution. Bitcoiners are making history. When I landed in Japan the first time, I didn’t possibly think all this would happen. But among bitcoiners, there are some who are quite extremists, I would say, but somehow that is something important, because in general when you try to achieve something, suppose that you can only achieve half of it. Let’s suppose you are trying to do something and you get only half way through, it means you achieved half of the impossible. Now, if you try to achieve the impossible and suppose you can achieve half of it, that means you can do the entire possible things. That’s why you always have to aim for the moon. Because even you can’t reach the moon, you will still reach the stars. Never hesitate. When you wake up in the morning, you have two types of people, those who will go back to bed because it’s the morning and those who will put their dream in action.
Q: Who are the people you saw the most, these last years?
The last 5 years, and especially when I had Mt Gox, it was house/work, work/house. Mt Gox used my entire energy. I didn’t really have the choice. As of 2012, we started to encounter the governments, and then I had no time to go out and take some relaxing time. I feel somehow better now than then, because I spend less time at work and because I didn’t really know how I could improve the situation anyways. That said, I still have a lot of things to sort out, and most of all, it leaves a bad aftertaste to be pirated and to have been stolen so much bitcoins.
Q: Is there something that you have now, that you didn’t have when you were running Mt Gox?
I now have time. It’s something positive. I feel liberated. It makes a big difference on that level. With Mt Gox, I sometimes had 8 meetings in a day. Evening meetings with the lawyers in Europe, and night meetings with the lawyers in the US. I was indeed put under huge pressure and stress. I gained 30 kg. And nothing improved with time. When we managed to solve one problem, others appeared one after the other. For example, at some point the French government seized one million Euros from us, and that was very stressful. A year ago we managed to get that money back. And we were relieved for a moment, but then the problems came along with the Americans.
Before, when I woke up in the morning, my day looked gray in perspective. But now, whenI don’t have any meetings, which happens more often than before, I think to myself, “Gosh, today I can work on this or that.” And I feel excited about my day. Nowadays, sometimes I wake up and I arrive to the source code, and it happens to me to think, “Well I am going change that entire code.” And I end up spending my entire morning re-writing an entire system. And it pisses off every one at the office because suddenly I change the entire thing, (laugh.)
Q: Were all these problems related to bitcoin? Some believe that bitcoin is the future. Some say that governments will always find ways to enforce new laws to frame bitcoin because bitcoin is not a concept that goes along with central banks and the very existence of governments. Tell us about your views.
At the moment, the best enemy of bitcoin are the people who love bitcoin. Particularly the pirates and all these sorts of people, who spend their entire time trying to attack the services that are trying to make bitcoin user friendly, like Mt Gox for example. As I am speaking to you, I do not think that it is possible to have a bitcoin exchange service unless you have a team that works 24 hours to detect attacks and that kind of things. It requires a budget that not many people have access to. I think we will see another Mt Gox next year, and the next year. And my opinion is that each time we will see that, the losses will increase. In 2013, you had the collapse of Bitcoinica, the first collapse of an important bitcoin exchange company, because of hackers. After that you had Mt Gox. And there will be another one soon. It might be BTC-E, it might be Coinbase. But it will strike harder next time. However if bitcoin works, it can be extremely interesting. Those who are enthusiastic about bitcoin should be more careful about the harm.
Q: What is your landmark, what keeps you going, what makes you feel secure?
When I’m home with my cats, I feel much more quiet and peaceful. But I also have my company and all my employees. We know each other well, and we have been together for quite few years now. And we do what we can.
Q: What are the first things you do when you wake up in the morning, and what are the things you think about most of the time?
The first thing I do, is I go the room next to my bedroom and I switch on the screen, (my computer is always on,) I check what happened. I take a shower, put my clothes on and go to my office or I continue working from home. Depending on my inspiration, I go to bed very late when I do coding. I am now dealing with a case in the US with CoinLab who is trying to sue us. This week, our lawyers made an announcement, where we stated that CoinLab is a joke. Five million dollars was stolen from Mt Gox, and we’re being sued by CoinLab, who manages the Bitcoin Foundation in the US. I can see no other words but “cheeky” to qualify CoinLab. Otherwise, most of my time, I think about a code, a network, a piece of apple pie, going out on a little trip. I also find myself inevitably thinking about who could have pirated Mt Gox.
Initially, the contract that we had with CoinLab was to subcontract CoinLab for all the financial parts in the US, so that we wouldn’t need to have a license in the US, because it was impossible to get it. Four different financial services experts found 4 different answers to whether a license was needed or not. Some had said that bitcoin is not regulated. Another said that a LTB license was required. We thought, “It’s too complicated in the US. We will let some local companies handle this, because they are there and they will make it.” There are regulations that exist, and we were not sure whether they applied to bitcoin. We tried to be on track, but the problem was that different parties told us a different story. For example the MTB license cost almost 50 million dollars, and we didn’t have 50 million dollars to inject right away. So we decided not to do all this by ourselves. That’s why we contacted CoinLab. And CoinLab, based in the US and they told us, “No problem, we can deal with your license.”
Q: Against what does a startup have to fight most of its time in order to exist?
A good question to ask yourself is, “What is the average age of a politician?” Politicians are usually not so young, and instead of thinking about innovating, their goal is to maintain things stable at the least during their term. So if there are any problems, they will want to leave to the next generation. For example, in order to get the most expensive license, which is the NTB license, you have to have a physical office in each State. And what we do is we provide online services. So the license says you have to have a physical office in each State, and each state has a slightly different system. Bienvenue in the USA! One thing I love doing is also giving lectures on bitcoin. I’m quite good at doing that. I gave some lectures at Chuo University in Tokyo and you had bankers coming along with the students. I could have had a career as a university Professor I think, I would have been excited doing that job anyways. I’m capable to explaining what “mining” is in a way that anyone can undertsand. (Laugh.) One thing I wish I had done in my life is I wish I went to university. I actually never had a university education.
Q: You said you felt liberated that everything is over with Mt Gox, do you still think about it?
Maybe it’s too strong to use that word, but being pirated, in other words, to have someone who enters your server and you don’t know about it, it’s close to be a rape. You have your space, where you do your things, and while you are not watching, someone enters inside it, does what he wants. It might not be the appropriate word, but that’s how I feel. I think I spent too much of my time dealing with the governments and the banks. All the precious time I should have spent coding and maintaining the system, I was spending it at meetings with lawyers, bankers, and lobbies. That is finally a lot of time wasted in dealing with regulations and stuff that oppose what we do, whereas my time could have been more efficiently spent. When Mt Gox was still in my agenda, I had only meetings with bankers and lawyers who were worried because they didn’t understand bitcoin, and I was practically doing nothing that dealt with technical parts. With 8 intensive meetings per day, I would go home at night and I was exhausted. And the next day I had to start it all over again with new meetings. I spent months and months without really having a decent life. I think there are many things that go against innovation. When you want to do innovation without borders, you will see many people who have their little comfort and who don’t want you coming out and destroying their comfort. Banks are typically the first to be worried about bitcoin, because their international banking system is currently functioning. Despite some problems like high risk loans, where they end up, and all the stories we hear with the mafia passing their money through the normal banking system, you see banks that have to pay impressive amounts because of that. But globally, their system works. So they don’t welcome someone like Satoshi Nakamoto who forces them to re-learn what they are doing. With bitcoin, they suddenly have their banking system that’s not up to date. It represents a huge change and a lot of cost if all the banks in the world have to learn how to do their job from scratch.
Q: What is your favorite song?
I have a billion of favorite songs but those that show up the most are Rhamstein, and for example, “Seven Nation Army” by The White Stripes.
Q: What are the thing that you desire the most today?
I would like to be less lonely. That could mean different things, but a big problem I have is that I don’t have many people who understand me, and it isn’t always easy. I am not a very social person, I used to be worse, but now I learned how to detect the flaws I have and I am more capable of interacting with people.
Q: Are you a “white hat” or a “black hat,” Mark?
You are talking about hackers. The fundamental difference between a white hat and a black hat is as follows. Imagine two kids who are playing and they are trying to open a lock with a little hairpin. The white hat will test his knowledge, opens the lock and demonstrate that the lock is vulnerable and report it to you and tell you to change your lock. The black hat will come at night, open your lock, empty your house and disappear. It applies to the security breech in computer engineering. The white hats are those who want to publish a maximum of reports in order to improve the situations, whereas the black hats are those who is use their knowledge to reach a more lucrative business, I would say. You have those two mentalities, those who don’t understand or did not take the time to assimilate the entire environment around and to conform to the rules. And often, in certain cases, the rules that are defined don’t necessarily make sense.
After the bankruptcy of Mt Gox, the Japanese police opened an investigation on this case. Foreign creditors including Japanese reporters who cover the cyber crime beat believe that the Japanese police haven’t got the skills to solve this issue. A team of 4, lead by @wiz aka Jason Maurice from Wiz Technologies launched an independent probe on their own, and Roger Ver, aka “Bitcoin Jesus” launched a bounty to find the culprits. What do you think of this initiative?
I think that those who think that the Japanese police is “incapable” slightly underestimate them if they think that they are not advancing. I don’t have all the details, but I have more details than usual people. So I have seen things that others won’t ever see. And based on that, I think the Japanese police are quite efficient. But I totally support the idea that several people start their own investigations. It is generally a good idea to have different people having different way of seeing the same problem. The police does not report into details on what they are doing, that’s why it might seem like they are not doing anything but they are actually working on this. As for understanding the situation, I think I gave them enough training so that they can now go on. It is a recurrent fact that the Japanese police arrest innocents and make them confess that they did the thing. So, I simply hope that they won’t do anything insane. That is something that is not guaranteed though.
Personally, I support the fact of finding the culprit or the culprits. The method used is less important for me than the result.
Q: Have you read the book of Satoshi?
No. I haven’t read “the” book. These days I read more books like, “What If ? : Serious Scientific Answers to Absurd Hypothetical Questions,” by Randall Munroe. And I try to imagine all possibilities to frame a problem.
Q: Who is your favorite Japanese comedian and your favorite French comedian?
Mr. Downtown, aka Hitoshi Matsumoto, who does the show called “Waraccha ikenai 24 jikan,” (“the forbidden to laugh 24 hours.”) And my favorite French comic is Fernand Raynaud.
Q: We say that bitcoin can obstruct governments to finance wars, is it true?
Well, it’s not credible. Nowadays, governments finance wars with taxes. If we didn’t have taxes, which is improbable, I would see how bitcoin could obstruct financing wars, maybe. But as I am talking, people who are using bitcoin are ready to pay taxes. If we stop paying taxes, we won’t have the firefighters, the ambulances, many of the things that we need in the end. What we could do is to experiment a society where we put all these people who don’t want to pay taxes together, they create their “bitcoin nation,” and if it works, that’s good. I totally support experimentation. However, taking in account the information we have available at this point in time, I do not believe it is a realistic thing to do.
Q: What’s good about bitcoin?
It allows a financial system that is entirely independent and it has the advantage of not being under the control of a country or an entity. Therefore, it is a much more robust system. I explained earlier that I had the intention to do replace one of our systems for Swift. Well, as I am taking to you, the entire international banking system that uses Swift depends on Swift, which has its headquarters in Belgium. If someday for some reason, the company decided to cut everything, although they cannot really do it because all their shareholders are all the banks in the world, but suppose that there is a problem with an entity or that the Belgian government decides to do something. Well, suddenly you can have all the world’s banking system cut. Bitcoin does not have that kind of problems or risks. And we could technically do a system that is similar to bitcoin that would allow banks to exchange messages in a decentralized way. It would reduce costs, because currently, each time a bank sends something to another bank, it has to pay a little fee to Swift. It will not only reduce the costs but it will also create a robust system.
Q: Will the world be a better place then?
Maybe not, but at least it will be slighty better than how it is now. What is fascinating with technology is that we improve systems little by little, and although perfection does not exist, what we can do is to improve things along our way.
Q: New York just just launched its bitcoin license, what do you think about it?
I think it’s constraining, on one hand you have the requirements that have been defined and that are a bit absurd, like the fact that you have to collect names and addresses each time, whereas for normal payments you only need the names and the countries. However in other cases, I think the text needs to be much tougher. Particularly regarding safety requirements. Because storing bitcoins for your users, is the same as storing gold. So, you have someone who gives you gold and tells you, “I would like that gold to still be there when I come back in a week.” In Order to do that, you will use guards 24/7, you will put surveillance in front of your strong room, that’s usual business. However the bitcoin businesses say, “It’s fine, we are hackers, we won’t be pirated.” And the next day you have someone who actually hacks you. Or for example someone who physically enters your offices, install keys on the computers. Like someone who gets hired as a cleaning agent, and takes advantage of a moment when the offices are empty and do the things I just mentioned. You see that in movies, but it exists also in reality. I think it’s not very complicated to get hired as a cleaning agent in a building where you have a bitcoin business. So, when you get that job and you clean the offices, you have access to the building at hours when it’s generally empty, because you usually clean places when no one is working. It’s a way like any other way to access an office that manages billions of dollars in bitcoin, when the office is empty. That is something that should not be possible. But it is, for many companies it is. You can ask your employer to vacuum his own space to counter that issue. But sometimes you can have an employee who gets hired and whose real intention is just to get access to what you have. This is not a fact, it’s just my opinion. We are dealing on a level where our little hackers who are protected behind their screens, are not anymore on a par to face all the possible cases. If you want to do a bitcoin business nowadays that is secure and safe, you need a security team 24/7 on a computer science level and a 24/7 security team on a physical level, in other words, guards who are in your office 24 hours per day and who keep a close watch on the movements of everybody who gets in and out of the office. To have a security system that you can control and that is efficient, with access cards, badges etc, you have to have audits, in other words, if possible, to have someone who verifies in real time, all the in and outs, like identifying whether this or that person is supposed to be here or there at this particular moment of the day. For example, if the cleaning lady who usually cleans the office in 30 minutes, suddenly takes 2 hours to clean, that’s weird. I say the cleaning agent, because it’s the most usual case. It’s easy to bribe them, for example, at night after work you tell someone, “I have a problem with that woman, I think she cheats on me, could you bring me her garbage so I can verify that? And in exchange I will pay you 100 $. The guy will do it 2 or 3 times, and after several times, you tell him, “If you don’t want me to report you to the police, you will give me the garbage of everyone in it, and then you will plug this on each of their computers.” You ask for a little favor and then you turn it into a blackmail, that’s how theses guys proceed. Those small cleaning people usually don’t have bodyguards and they can sometimes be put in a situation where they don’t have the choice. They are helpful and then they don’t want to loose their job and then above all, they don’t want to be reported to the cops, these people would do anything. Suddenly, the tone of the exchange is not asking for a favor but it becomes an order. It’s easy to do, and then usually no one thinks about that. Someone who cleans the offices in your building is someone you see every day.
Q: Do you trust your little cleaning lady now?
Now we don’t have any important things in our offices, we don’t have bicoins anymore. So it’s simple.
Q: What is a question that you wished a reporter would have asked you and that no one ever asked you?
That’s a good question. Well, I wished that someone had asked me how I’m doing. I think everyone sees me as “Mr. Mt Gox,” and not enough like a human being, or just a person. Although I don’t always agree with what human beings think, or the way they react, it’s sometimes disappointing, everyone needs human interaction.