Mt. GOX: Investigating the Facts

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It you'll yogurt won the consumer's guide to cryptocurrency. This is Matthew Aaron and this is part two of the Gok saga in a first part. We had Mr. Brock Pierce to talk about his plan to revive mount gags in the episode called Cox rising. Brag feels that mount guts is a stain on the crypto space. Also, he wants to compensate the victims of Mt. Cox hack and make sure all the money gets returned to them. However, there's a lot of critics in the crypto space says that his focus on. Mt. Cox in his ambitions to revive it or a little less than genuine one of those people who have been investigating. Mt. Gog since the beginning since the hack two thousand fourteen is Mr Kim Nilsson, Kim was accustomed Vermont gods and ever since the heck has painstakingly kept up with all of the information, rope, blogs and kept us all inform Kim's on the show today to talk about some of the things that was said on the Brock Pierce episode. Tell us the story from a fact based perspective and also touch on. Some of the claims of ownership of monks. But before we get the conversation wherever you're listening to this podcast and make sure subscribed leaves a rating and commented helps us stay visible. Also think about becoming a patron patriots. Thank you very much for supporting the show over the past nineteen months. Also, a special. Thank you to keeps for sponsoring this episode. And like always this is not financial advice. Trading advice, legal advice or personal vice now without further ado, part two of the gawk saga was after the show. Kim Nosan investigator of the mount story and former mount got customer. Welcome to crypto one, sir. Thank you. Nice to be here. Kim before we go into the monk story in the years of research that you have conducted about the losses. The revival and the different players positions in this story. Let's learn a little bit about yourself. I'm basically, a normal soccer engineer, I live in Japan. Now moved here ten years ago, I code by day and couple of years ago. I developed a hobby of Montauk say Mr. Gatien tricks, basically as you started out saying, I was a customer amount gawks when Montauk spent down lost money. There got really really annoyed and figured that. You know, what I don't think the police necessarily going to be able to solve this out of the government's going to be able to help we might need to see what we can do. I knew roughly what bitcoin was about. On new Hyde worked on here that everything's on the blockchain in the public ledger figured like you, we might be able to actually have a look at this and see we can investigate it from the outside instead of needing police for help. So I basically started doing that got together with some friends at the Jain and had a wack at basically trying to look at the blockchain. See if I could find what had happened on gawks where there Nicole being stolen getting in touch with other people involved in the case trying to get access to more data more information tried to slowly puzzle this together into figuring out what had happened, basically. And that was the story that ended up taking years. Wow. I I wanna say the persistence of following a story for so many years like Mt. Cox is impressive. It takes dedication and commitment. How much bitcoin did you lose on the exchange just out of curiosity? Not a lot of bitcoin leg less than a dozen. It was a it was a much at the time to me. I was I was never been a big investor of Inish art I had some to play around with. It was worth a decent amount of money. So I was really annoyed, but you know, it wasn't the amount of money that you destroy your life over. So I was annoyed. That's why I kept going. And I'm very now. Talking to the persistence, what led you to persist to keep writing long length articles and blogs in digging into the research for so many years, and I'm asking this question because most people would just say I'm done after a year or two or maybe they would hit a brick wall. And they would say it's too hard. But you kept going why? Yeah. I mean, I won't lie. There were times where I hit hit those walls to places where I Gotcha point where I felt that what's the next step? Really? I've felt like I could make progress. And then every time something would happen to our. We get some new piece of data or I would look at it. Look at it from some new angle and make a little bit more progress on sort of keep me motivated to keep going. I think it helped it's such a large case up normally. It's not something single person could investigate. I think it's too much data really in my case. I think it worked out to my advantage because it means that if I grew tired or looking at one angle all research and look at something else for awhile, basically kept me going for say about three years absolved investigation listener at the beginning listener at mount Guckes losing money. Well, they didn't just lose money once they lost money. Many times overtime. Can you tell us about that? Yes. That that's a fair. But there were there were multiple incidents where Manca lost money the big one that lost them. The the bulk of the money happened spread out over time which was somewhat surprising for people to find out. And that you would normally think this puzzle because exchanges are supposed to keep a close eye on their bitcoin storage, which apparently didn't happen Mogok that was pricing. A lot of people. Can you tell us that story which you found in your best Gatien was it marks irresponsibility as the owner of? Mt. Cox at the time that led to the massive hack or the safety off of. Thousands of thousands of bitcoin and for my episode with Brock peers Brock said that Mark was literally baking instead of being responsible and observing what was happening in the operations of his exchange. Can you comment on that? I don't know if there's a simple signal answered among a very complicated case, but. Like, I mentioned earlier the big thing that I find was of course, are being stolen out over a long period of time that implies that they couldn't have been watching and that raises obvious questions. Like, okay, why wasn't Mark watching it them? My research is about data numbers. I don't try to get into people's heads. Because I can't know what anyone was thinking. I've heard rumors that Mark was busy with other stuff were spreading himself too thin and at the same time not allowing other people to look at the numbers if that's true. Yeah. That certainly sounds like it was very irresponsible. I have said in some of my summaries in my presentation on this. I consider monk ox to be originally failure of being hacked. But it was made ninety two worse by not having a proper response detection of and I think that's still today. So of course, you'd wanna speculate of what was going on in somebody's head. But what do the numbers say, what do the numbers tell you about where the Queen was being siphoned off to in house being siphoned off? I've tracked a number of different incidents. Of different values and different members at different times. The biggest one of it over six hundred about six hundred thirty thousand bitcoins. I was slowly stolen out of the hot Wallich and went to eventually went through a network of all its own by this this Russian guy that's in in prison in Greece right now. That's the bulk of the theft the roles other incidents. Some of them happened really early before markup even took over the exchange that so they happened under dead Mikhailov. Instead some of them happened during the transition bid, there's smaller thefts. There were some bugs that destroyed two doesn't Bitcoin's things like that lots of different incidents that all contributed to in total over eight hundred fifty thousand bitcoins missing or lost or destroyed or stolen. You brought a couple people dedicated and arrest guy, can you please all the people that were involved in the mount Goksel saga. All that's a that's a toll order monks, originally founded and became sort of a bit Greenwich in two thousand and ten by jet Michaela. Job by late two dozen Ted too late to Ted jed had decided that he wanted to get rid of the exchange and have someone else operated. So he could move onto other things he asked around one of the people he communicated with negotiated with for a handover was Marcus who's running Japanese company and had I think he had done some minor consulting work as well for monks. They drove an agreement Ed eventually handed over which was basically the entire company in exchange for six months of profit sharing ever since then around spring of two thousand eleven it was run by our carpenters. Mark had started off rough with some more incidents lost bitcoin. There was a big hack in June of two thousand eleven which was due to old passwords being compromised because they restored whether we cash then around September two thousand eleven this Russian hack starts happening that leaks bitcoin out slowly around late two thousand twelve or early. Two thousand thirteen monks is more or less running on the bitcoin front. They're getting by on daily transfers because people keep depositing money and enough to cover people everyone wants to resort money, but it's basically running on us. And this basically goes to finally collapses in early two thousand fourteen and that's where we see the monk spent crops start who was his Rosen guy. And did they recover any bighorns if the between were being leaked out to him in his accounts? So the Russian going jail is called Alexander vinick. He is someone that appeared in my investigation. It was one of the few names that I was able to identify. He basically acted I believe as the money launderer for these stolen bitcoins as they came out among God's they were sent into inequality. He moved them around it some which moved to be some of the move to trae hills. He moved to bitcoin ago, some of them to Joan dock itself as well to sell them office as a stolen coins and tried to transfer them into into cash really much much later. More people are going to say this on the US is starting their own investigation. As well. And they find this as well. And there's an arrest warrant for Nick that eventually called him while he was on vacation in Greece. That's this basically where that story is still on pause today because they're fighting over his extradition guys. Got you going into the ownership among the creditors of monks. Can you let us know where monks sits with the creditors? I hear multiple stories. Can you please help us clarify? Let me try to recap the bankruptcy story as well. As shortly briefly isn't young. It's by all means, it's as complicated as the monk story itself. So basically when Mongoose collapsed the website, we're going down they disabled withdrawals and whatnot. And eventually I believe it was on February twenty four th two thousand fourteen close on the website. Or was it the twenty eighth anyway. And February at that point Mongoose files for civil rehabilitation in the in the Tokyo court and that's basically simmer to filing for bankruptcy protection. In this. So basically stalling for time and looking for for how you can restructure and save the company recover from Lhasa someone it's in this time window. The Brock pairs is company sun lodge approach Markopoulo or rather to ban the company that Marcopper's owns which in turn owes monks and negotiate the try to acquire the Manco shares tavon owns, and they're they're negotiating for this. And they signed a letter of intent for it. But before any of that gets finalized, basically Mark realizes that Mangakis rehabilitation, which means that you can't do anything with other permission of the court. So he basically tries to one that back and restart negotiations probably under the court, and then that never went anywhere further from the so that basically negotiation stall never went anywhere while after that after of some push from creditors. Montgomery is instead files for bankruptcy, which means to liquid all assets and try to pay the much. Creditors, which basically is admitting failure to rehabilitate, and instead just giving up an now it became a normal. Bankruptcy dating. Where you get. Hold of creditors. You make a list of how much everyone was supposed to have. And then you look it was left in terms of money, and you pay that back out now mongo special because this quite a lot of money left in monks. There was two hundred thousand bitcoins found after the collapse. That was untouched. So those are the assets that are now everyone's trying to figure out how to pay them back to the creditors. This is a legal bureaucracies. Of course takes a ton of time. And that's why this is dragging out for years and years, basically, that's the way it's been for quite some time until coming up in two thousand seventeen with the ever increasing bitcoin price where the case run ins runs into a an unforeseen corner. Ks of the law, basically where the bitcoin price. Appreciate it so much that these. Two hundred thousand bitcoin are worth enough to cover what the dollar value of. Everyone's original bitcoins holdings worth at the time. The bankruptcy started and under bankruptcy law. Everything counts as that value. As of the commencement of the bankruptcy, which means that as of that point. There was an absurd surplus of fronts meaning that everyone would get paid out as much as their Bitcoin's worth to us in fourteen and then they were still be money left, and you would pay that to the shareholder in this case to Bonn and partially jed Michaela. And of course, being by markup list. Some of them go to Karpas now. That's obviously an outrageous outcome that no one was willing to accept, but that's the law of how bankruptcies are supposed to work. So since that point creditors have been working to instead push monks back into civil rehabilitation so back to the original sort of attempt to restructure the company in a way to handle its funds without bankruptcy liquid. Nation, and that was eventually approved by the court in the middle of last year so ever since then the bankruptcy trustee has been working instead to draw a plan where everyone's claim can be reevaluated and paid out to creditors in full instead of any of this shareholder nonsense. And that's basically where the bankruptcy is today. So just curiosity. I ran through calculator really quick two hundred thousand bitcoin at today's prices seven hundred twenty seven point five million dollars. How much of that is going to the creditors? And how much of that would go to the shareholders all of that is going to the graduates and some of those bitcoins have been sold by the trustee during the bankruptcy and there were sold at higher price. Actually, the assets of the estate is a bit more than those seven hundred million dollars. But at the moment since it's no longer, a bankruptcy that quirk of the law doesn't no longer apply. So the none of that is going to shareholders. It's just a matter of figuring out how to count everyone's creditor claims then they will get paid out to the creditors recently. There's been dispute of ownership of. Mt. Cox it seems as though with the amount of money. Involved and the possibility that some of that profit or surplus would go to the shareholders, it seems as good incentive for people to come out. And try to claim ownership is this what you're seeing. I don't know. But I wouldn't blame anyone for thinking that it certainly looks suspicious to Sunday come in and say, by the way, I own all this and be extremely focused on this surplus that as we are established. We have us creditors have spent a lot of time to make sure that that won't happen. And then suddenly now someone appears seems very focus on that surplus and talking about ownership of the company again, it seems suspicious. Don't know if that's the motivation behind it. But it doesn't help the credibility. I would say. 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That's a hell of a deal forgetting to keep your hair to receive your first month treatment for free. Go to keeps dot com slash crypto. That's K E P. S dot com slash crypto. That's a month free of treatment at keeps dot com slash crypto keeps here today here tomorrow now back to the show. This next question is about Brock Pierce his intentions with rising. Bright Pierce's stated that. Mt. Cox is anonymous with what's wrong with the crypto space, it taints, our efforts and the space in general it one of Brock's biggest cells on God's rising is paying off the creditors. But as we just established creditors are going to get paid. No matter what they will be paid first. So is Brock's intentions genuine. It's not genuine. But not just because of the reason you you mentioned it's not that creditors are getting paid back full in there to dozen fourteen variation. It's they're getting all the money that's their regardless of their claim valuation. So this horrible thing that Brock is talking about that he wants to fix has already been fixed. That's not gonna happen anymore. He's basing this information that is out of date. This hasn't been the case since early last year, and the only reason I can imagine for why he won't correct himself after this has been pointed to multiple times is that he's being. Dishonest misleading people, and I don't know. Exactly why. But yeah, it it's simply not on us at all to say that there's a surplus that's going to Markopoulo unless we let Brock come in and take over in. What ways has been resolved ready? You just said that Brooks information is out of date, and that he does not need to be involved at this point. So what was resolved to this point the thing that has been result is that it's no longer legally. Speaking of bankruptcy. It's a civil rehabilitation that distinction is important both because there's more flexibility involved in a civil revolution. When it comes to value in claims on how you pay them out. But also the fact that the process restarted, which means you can value claims that more modern values that means that you never get to that absurd point where the value of the current bitcoins held by the state becomes bigger them declaims when they were really valued. So at the moment there is no surplus because everyone's claims are valued much higher. It's a tricky legal. Quirk? It was never supposed to ever happen because bankruptcy law that never predicted the assets could appreciate this widely. But nonetheless, it is definite is a fact that this has been resolved by the fact that we converted the case back to civil rehabilitation in court. And as a result, the only way that this could ever come into dispute again is if someone gets into the case and starts to dispute the and starts to claim ownership or something like that. And that's why a lot of people are suspicious of what Brock is doing is. Why would he bring this up when his already been result talking about civil rehabilitation and from a perspective of somebody the head bitcoin Inman God's what outcome would you like to see honestly, I mean, it's been years. Everyone should just get paid back. Whatever was left. That's always been the case. The reason why this takes so long is because it has to go through a legal bureaucracy. Everything has to be confirmed you need to be able to try to filter out people who incorrectly or fraudulently claimed money so that they don't get paid. So you need to have this screening process needs to be approved by. But essentially the only outcome that creditors should see from. This is just pay all the money out because that belongs to the creditors in the first place. And then whatever you do after that point if you wanna restart new exchanges bring in you wanna plays a bid for the monks name and use that for your exchange. That's fine. That's great. I mean, Brooke likes to argue in these very wide and general terms about how any big better exchanges and things I think pretty much everyone is agreeing with that. And I think we further agree that if you wanna avoid regulation of the industry that's something that we need to solve ourselves by building ourselves, newer and better exchanges. So I mean, Brooke wants to do that kudos him mean? Great gopher what is being criticized for is injecting himself into the legal process at a point where we have this massive battle over setting things. Right. And then he Russia's in Lega bull in the China shop and seems very uninformed about it or actively spreading misinformation and confusing things. Like, no, stay out of that. Just let that run. Its course, let's fix that part. And then we can worry about the rest, you said Brooks coming in like a bull in China shop does that really matter at this point because it's been a long time. It's been years in the creditors. Have not seen any rehabilitation from your perspective in your opinion. Are you said we brought being involved because of the extra time that it might add to the rehabilitation or the creditors. See any money. I would have argued the same even if does have been just a year into the process. It's not just about him being confused and confusing. Creditors. It's about get it done. Right. Or don't do it at all. Like don't come in. And do something this on base it on dishonest claims you could have done this. I mean, it sounds the way he describes all this. It sounds like he wants to do the right thing. And once it is I mean nice for creditors. And all I'm saying is you could have done all that. And been honest about it and not been misleading. People not throwing false information into the process. An just do the bare minimum of what you actually need to do what you're claiming you're about. He can't really sabotage the process because he has no legal standing for the ownership claim, for example, the worst. There were thing. I see he could possibly do which she claims he doesn't want to do. And if it doesn't then fine. But if he thinks he has down his ownership claim he could for example, tried to litigator. He could say go to the bankruptcy trustee. Go to the court and say, no, I actually insist that I owned these shares, and we have to sort that out. And then basically he won't win that, but it will still take time and resources to at least formally handle that case. So it would it will take time. It was still be an annoyance. And meanwhile, as someone who spent a lot of time digging into this case and just trying to get to the truth of the matter. I object on a very personal level that someone is coming in on these trying to confuse the matter and rewrite the story. What are those clues that he's making these very easy for someone to say, hey, they're being designers right liquid? You said ownership, but what is using to validate those claims specifically back into dozen fourteen immediately. After monk ox went down Brooks company went to carbonless negotiated to try to by monks. That is undisputed certainly true. They signed a letter of intent which is what you're sign at the beginning of newish Asian to outline. That he goes on what you want this to lead towards at the conclusion of those negotiations you signed the actual formal agreement that sets this final terms of that position. And then you're done in this case, what happened was that they signed a letter tongues. And then Mark basically got told off by the Gordons. No, you can't do that. You're under civil religion. You can't enter into any deal Mongoose on the court being aware of it and approving so Mark went back the day after two days after went back to bronze know, this wasn't cool. We had to have to restart the process could you please sign this confirmation that we have mutually rescinded this letter of intent resigned the other day, so we can make a clean slate. Now, this is where the straight up dishonesty in my opinion starts because Brooke has refused to sign that document. And instead he us at sins that document has the chapter heading of confirmation he saying that this is where Mark confirms that he sold the company, but it was only ever a letter of intent is never finalize deal. There was no legal rights. To sell Montauk like them. But this is what Brock even to this day is claiming. No, this is actually a finalized deal. Legally binding Manca belongs to him except he doesn't ever intend to make any claims on it. But he's still insists on it. And it's there's no way you could look at the material and come to that conclusion, which makes me conclude that instead that he is intentionally misleading people are has convinced himself that this is the reality. He lives in now. I know we don't wanna speculate. Even though we might have speculated quite a bit along this journey. But I think everybody knows that ELO. I is not a legally binding document for sale or for purchase of an asset or a company or anything is it possible. That Brock actually has other documentation, or there has been other documentation filed besides the although I or the wording within the L Y that could prove or make a more substantial claim to ownership among talks. No, I don't see any possibility that if there had been. Better of it on the Brookwood show, it if not to the public onto the court because basically now there's nothing, but this letter of intent which proves nothing and in this case, the absence of evidence is evidence of upsets in my opinion. I know this speculative question again in let's keep Brock or any other actor out of this. But I want to understand the motives of trying to claim ownership of something. That's bankrupt has creditors. Coming after money, and the has Abed brand the seem no other motivation. Besides the possible payout to shareholders. If there is a surplus is that the possible benefit. I don't know if there isn't a financial benefit to it at all. I mean, the surpluses there you could possibly argue that if you're their owner, you could have a product or even gets like remaining intangible assets of the estate, for example, you can get that back to you for for nothing out or you're with the bankruptcy. It's supposedly maybe Brock Caesar. There's value in that in trying to restart the exchange may wants to as he said rebuild a new better exchange from the ashes among which is which would be an honorable. 'cause in that case, but you could do all that without. Any of the dishonesty at play, which is my man objection. I react very about people being intellectually dishonest. I think Brock may have a points in the past really wanted to do the right thing here, and he was trying to get hold among and maybe it really really disturbed him that he lost opportunity. Maybe he's still thinks Montauk something again make a big benefit from either financially or just in terms of reputation. He certainly seems to be doing a lot of milking of this for reputation. All ready, even though he's done nothing. So far except make the presentation with all the running around making interviews and with basically every podcast a newspaper get old of that kind of makes one wonder like doing just to get like some good PR because you'll get the good PR now. But no one's going to bother reporting on when you didn't follow through on it. I guess thank you for that. And I agree. I think there are a lot of times that a lot of people just focus on the headlines and don't do follow up. And I would hope I'm gonna make a commitment to myself and put a call to other podcasters or YouTubers that have had Brock yourself or other actors in. In the Mt. Cox Gok rising saga under shows to do fellow up after all of this is said and done in this schools under the carpet. Again. Let's go back. Reevaluate and see what happened and the outcome from all of this. So I think you for that statement, I think doing anything other than that is sort of lets people like this Bank on the short term memory of the media space because we look at today's news, but a lot of the stuff happening, and these especially especially in complex as like this stuff doesn't happen in a single day. I mean, you'll you'll have the start of the process today on the end of the process from eighteen months from now who's going to have the memory to keep that in mind. If the media doesn't do that properly. I mean, I kind of think that the reason that all of this looks so much like a poorly thought through media spectacle is because I think it is thought through major spectacle interesting thought so what Brock or anyone is getting from. This is PR is certainly is stomach does not even dispute. I mean, he's clearly getting a massive amount of positive meteoroid. Ignition for it. Well, I don't know about one hundred percent positive while I would say there's probably more negative than positive. Let's just say that. He he gets his side of the story out first and that can be worth about. Okay. Fair enough before we go. I want to say thank you very much for coming on. And I know it's super late in Japan right now. I think it's like five or six AM in you state up. You said your night owl. But you stayed up all night to talk to us ensure this story, so thank you very much. You're welcome. It was nice coming out. But before we go I want to ask you one last question for somebody that has been following the space ever since the early days. Are you bullish on the future of chain? Crypto currency the short simple. Yeah. The technologies hair is not going away. It's already visualized the world. It's going to keep doing that. Perhaps not as explosively some people would like to see it. But it's changed the way we look at finance for for better or worse, and it's going to keep doing them. So am I bullish in the Suns that bitcoin will never go down to zero 'cause it's never going to have zero value again? So in that sense, I think is more likely to go up than down right on Kim. Thank you very much for coming on to win one. Thank you. Thank you very much for listening to this episode of crypto one Kim if you're listening. Thank you very much for coming on the show is a pleasure to meet you, sir. I hope you Japan or at a bitcoin conference somewhere around the world in this next episode. We talked to Mr Richard Hart about bitcoin Hex and how bitcoin he feels failed as a crypto currency. This episode is an edited version of the live video that Richard. And I did last week. So if you wanna see the live video, you can go to Richard's YouTube channel, Richard Hart and watch it there or listen to this next episode, which is edited and much more concise like always apogee crypto dot com. APO G E crypto dot com. The best place for your real time prices, and I'm gonna say thank you very much to Mr. j Lobello for editing. This episode was see you in future episodes of crypto one. Oh one.

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