Topic: To Bitstamp: Gox's coins are being sold on your exchange - page 3. (Read 5455 times)

There isn't a central issuing authority to appeal to, that's one of the key basic appeals of Bitcoin and also one of it's biggest flaws.......

Bitcoin transfers are either irreversible or they're not, you cannot have it both ways.

That said there should be legal remedies against deliberate criminal acts, but you cannot undo previous transfers.

The analogy is cash, if someone steals your cash, you have a right to try to reclaim it from the thief, but if he has spent it you cannot trace those dollar bills and demand them back from the new owners, provided they were not complicit in the theft.

In this instance, there is no way of unwinding these movements. The only remedy would be to prove that the recipient knew they were fraudulent, or did not check sufficiently, then they might be liable to make repayment, but it would be from any coins they owned now, not any old ones and only after a court battle I'd imagine. Personally I doubt it could be proved that any movements did not have some plausible reason for existing and may indeed have been genuine.

The bigger issue is that world of Bitcoin wants to be anonymous, unaccountable, untraceable and subject to no rules, until such point as bad things happen and then suddenly people want the comfort and safety that these rules were designed to create in the real real world. You cannot have it both ways folks!

Any smart thief would not do this. Bitstamp requires KYC/AML verification for any deposits or withdrawls, BTC or fiat, meaning a scanned copy of their ID must be submitted.

It's also likely they may not cash these coins out for some time in order to wait for the investigation to blow over, and also knowing they'll probably be worth more in the future anyway. There is not a lot of incentive for them to sell now.

time for bitstamp to step up

The law of dealing with any type of stolen property.  This is an old old law, dating back to biblical times and is represented in Uk, US and most modern legal systems.

Where would the legal liability begin?  Bitstamp can't be held accountable for not reading every bitcoin forum or respond to a random emails.   However, legal counsel representing the creditors should immediately notify Bitstamp that the funds are suspected stolen.

Question is are bitstamp legaly obligated to investigate solely on some online notification? I do not think so and that would be a huge mess and possible abuse by bogus claims.

If you were talking USD and a US based company, I know this would be true. But neither are true. Specifically this company isn't dealing with stolen fiat, and I know of no laws compelling companies of any country to investigate stolen "virtual" currencies.

I could be wrong, and that's why I wanted to ask... what laws would compel them to do anything?

Assuming this is correct,  what can or should be done?

It brings up the question people have asked for years now....what do you do if you know coins in your possession came from a crime or thievery of some sort ??

I believe the general consensus amongst a lot of people is not much can be or should be done.  Similar to if you took cash out of an ATM and found out that a year ago those $20 bills were stolen from someones house. Should you give the money to owner (if you can find them) and you end up losing money,  should a bank get involved?  etc etc.

This.

Gox is already under the legal lense and this forum is actively monitored for leads. This is definitely a trail that will be followed.

After being notified, Bitstamp has a legal obligation to inquire into the origin of these coins. If the court determines that these coins are stolen then Bitstamp will be charged with money laundering and their USD bank accounts may be seized just like those Gox accounts were.

It doesn't matter if we agree with the AML rules, Bitstamp is a financial service provider and the rules are clear. Bitstamp has only one legal option in this situation...


They won't be charged with accepting stolen coins, they only become liable from the moment they were notified that the coins are "allegedly" stolen. If they ignore the allegations and allow the coins to trade without investigating the source then they are willfully laundering money.

This will be a test of government involvment in bitcoin.  Since noone in governmental authority has currently declared these coins stolen, then the liability should be on the entity/person that put them into bitstamp, where bitstamp should give up the identity of the that entity/person when presented with the proper legal paperwork.  

If bitstamp is held liable for accepting coins that are later legally proven to be stolen, this will present a serious issue with the fungibility of bitcoin.

At any rate, if I were bitstamp, I'd probably freeze the funds and give the Japanese bankruptcy court an opportunity to lay claim to them out of due diligence, due to the large amount.

even if they are, it is not bitstamp's fault/responsibility.  That goes in the face of the whole decentralization of bitcoin.  Mt Gox was negligent, that is a centralized problem/loss, that shouldnt spill over into affecting other businesses in the same space.

This. Cryptocurrency is not for fools. Personally I'm glad most of the fools and weak hands have been shaken out by scammers and thieves - it was bound to happen anyway. Better it happen in one big, early crime than happen over many smaller crimes over a long, painful period of time. That scenario would be far more damaging to Bitcoin in the long run.

And if found true it could point at insider trading.

Bitstamp has been for a long time bugging people with all kinds of AML stuff in situations where money laundering does not really seem relevant at all.
see for example: https://bitcointalksearch.org/topic/bitstamp-wanted-to-withdraw-money-and-was-hit-with-these-weird-kyc-questions-406908

Now we have a situation where we have a very high probability money laundering ongoing and so now it is time to see whether bitstamp was really serious with the AML stuff or whether the all AML in bitstamp was just bullshit invented in order to bug the little people.

There are about 150k coins that caused the feb 6th spike in bitcoin days destroyed. It's a single owner and close to mtgox. It's either McCaleb or gox. I'm thinking it's McCaleb and it could be that he was trying to save the coins from bankruptcy. This has to be investigated.

I think the problem for Bitstamp and other exchanges becomes more complicated once they are knowingly in receipt of money obtained through illegal means or have been notified as such. They probably need to tread very carefully here.

There is another possibility here that could explain some of coin movements people have been observing as of late.

It stands to reason that even in MtGox's heyday holders of large amounts of BTC would be hesitant to leave their BTC under the complete control of MtGox, but still wanted access to the trading platform without having to move large amounts of coin back and forth. At the same time Gox - like any business that has preferred customers - would have wanted to accommodate these "whales" to keep their business.

Is it outside the realm of possibility that Gox held the funds of "whales" on their system in wallets whose private keys were shared with the account holder, unlike the regular pleb users who they didn't?

They could have broken it up into multiple wallets for all we know, but the point is that the "whales" retained direct access to their funds and could have moved them out at any time regardless of what was going on at MtGox at the time.

tl;dr version: Did Gox allow preferred clients to keep shared private keys to BTC on the exchange, which allowed them to independently move their funds out?

I don't think there is much that can be done. Those coins are lost. It's best to move on and learn that keeping large sums of BTC in online wallets, exchanges, etc is a bad idea.

That's for them and their lawyers to decide. We all would appreciate some public statement from them however in regards to whatever decision they take. They were emailed yesterday and have not yet responded.

Appreciate the detective work. Assuming you are correct, what should bitstamp do about it?