Bitcoin Big Bang | Crypto Heist | Japan | Documentary on Cybercrime | Mt. Gox

police in japan have arrested mark capelas the ceo of a failed bitcoin company mount gox was one of the world's largest bitcoin exchanges until last year it lost millions worth of bitcoins leaving angry investors without their money [Music] i had no idea who was mark carpellis some guy who has a first bitcoin exchange and he's sitting on top of you know almost a billion dollars worth of money and where did it go [Music] this whole burgeoning ecosystem and technology was essentially entirely dependent on this you know 20 something french guy sitting there in tokyo you know with his cat [Music] all of a sudden this website just crashes and burns seemingly out of nowhere there are up to one million accounts so it's a hell of a lot of people out there who've got reason to be angry this is almost more like a wild west robbery [Applause] [Music] [Music] just imagine imagine a bank you can trust a bank that knows imagine above all a world without banks or bankers a world in which the governments no longer control their currencies or its value this new world is a currency digital free universal as easy to use as a credit card but it's discreet as cash and its name is bitcoin [Applause] are you ready to bypass the system in 2008 this was a period of financial crisis the system almost failed again but the central banks came to the rescue printed trillions of dollars to bail out the banking systems and all the the large the large mortgage holders there were bailouts all over the world it created this whole new desire to have a financial system that existed outside the bounds of wall street outside the bounds of central banks there was this desire to kind of return money back to the people [Music] at the time there was a small group of people that were working on the idea of a new digital money that would be entirely private be not connected with the government be global and purely digital the immediate reaction to thinking about electronic cash is that it can't be possible because if it's digital you can make a copy of it if i make a copy of it then aren't there two of them now like it just naturally wants to fit in your brain and it was 2008 when satoshi nakamoto you know which is a pseudonym for somebody else or maybe several people we still don't know but came up with this idea of a ledger and a ledger that would belong to everybody that everybody could see and there would be a protocol to enter and exit the ledger and there would be a very carefully scripted algorithm that how many of this new unit called bitcoin could be created when you start reading about the blockchain and distributed ledgers it just clicks like oh wow there really is this way to do this decentralized authentication of transactions where you really could have a digital cash system and then it sort of turns on another part of your mind to this whole world of possibilities that weren't possible before it was very apparent to me early on that it was going to be a big deal the very first product that i bought was a pair of pliers i didn't need pliers but that was the first thing and i was in a hurry so i clicked that and i said okay now um scan this code this qr code so i scanned it and sent us some money so sent it and they said your transaction is done and really the i had a sense like a breathless sense they didn't know my name they didn't have to know my identity uh it wasn't based on a trust relationship they didn't have to access my credit history nothing matters except that i owned something so you have to understand it was like a cash transaction except the person i'm transacting with is not in front of me the person is somewhere else could be anywhere in the world nothing like that has ever been possible in the history of the world and when i realized this i thought i can't believe this i can't believe this just happened so i got up and i remember just dancing around my dining room table just kind of like doing a little dance going that's the future i just saw the future and i realized at that moment if this works the relationship between the individual and the state and our whole public lives are going to change forever when i don't know but it's going to happen bitcoin was really fed by some of the same [Music] philosophical impulses as the internet and also some of the same sort of technological concepts as the internet um you know both are really on a technological level about taking power away from the center at the core the internet and bitcoin are really about decentralizing power [Music] [Applause] [Music] if you study economics you realize the more economic freedom people have the higher their standard of living if you or i print a bunch of money in our basement and go around town spending it we would go to jail for counterfeiting because it's economically destructive and is stealing from everybody else when governments do the exact same thing when they print a bunch of money it doesn't change what it is it's stealing and it's wrong for the exact same reason and as a voluntarist and a libertarian i have a huge huge problem with that so the invention of bitcoin strips that power away from every single government in the entire bitcoin could mean different things to different people one of bitcoin's strengths is that you know it had all these different elements to it and somebody could be into it because of the political aspect and some of somebody could be into it because of the you know technological advances that it made and you know everybody could you know kind of have their own connection certainly in the first few years the typical bitcoiner was a guy who spent most of his life in front of his computer you know and not a whole lot of time with other humans but these were people who kind of lived you know one degree or another sort of in their own world and could inhabit this abstraction which was this new money there was no reason to think it would work and so you had to be a little weird to devote any time to this week the technical you know i got into economics because i realized the quality of money has a lot to do with the quality of our lives you get the money wrong you get everything wrong with bitcoin we have a chance to get the money right and it can liberate the world at least a third of humanity is unbanked today this provides them financial power access a chance for a better life for everybody equally democratically all over the world regardless of race sex religion and nationality that's awesome that's beautiful that's utopia to me [Applause] [Music] [Music] all right now [Music] [Music] [ __ ] itches us libertarians we don't like uniforms too much of course when mark bought mount gox he'd expect to end up four years later handcuffed to the back of a cop car did you mark huh and whatever beginning of 2011 mount gox became the first credible internet site to exchange dollars into bitcoins the thing is at the time well a bitcoin wasn't worth a buck so let's be honest nobody really gave a [ __ ] but just a few short months later the media dragged bitcoin out of the shadows and mount gox went from 3 000 to 60 000 clients in just a matter of weeks and that that was the beginning of the glory days favre mark isn't that right mark [Music] moun cox was the first place where you could turn your fiat currency into bitcoin it was the exchange there wasn't really an alternative this was the mount cox was the bank of bitcoin essentially they had like 98 of the world's market share if if you think of bitcoin as being an island at that time mount cox was the only bridge to the rest of the economic world the growth in mount cox was very quick as we saw you know very large increase in users the first few months after i joined it started changing and we were getting a lot more structure and actually we're seeing a lot of the business side of the company as time went on and big coins became more valuable people would leave larger deposits for a longer amount of time in mount cox so someone might have ten or fifteen thousand dollars in their account at mount cox and have it there for two or three months while they were waiting for a good time to trade for bitcoins so mount gox became very popular very quickly became very successful very quickly mark was always a believer in bitcoin and he really thought that um you know this could do something and he wouldn't want to make the company work he was always like in front of a computer late at night early in the morning and you know he'll be in the office for a long time it seemed like he was always busy and stressed out but that he was always like doing something and trying to um actually make bitcoin into something very useful in the future because he really believed in it and he did talk a lot about his mongols is like you know his his i want to say like his baby [Music] i think was trusted as the place that people could uh manage their bitcoins could manage their money it was the website where everybody wanted to store their bitcoin it was the it was the most popular place once you become the central bank of bitcoin basically you become a target any bitcoin company was a target for hackers i mean this was just digital money that was just sitting there this was kind of the simplest bounty system in the world where you know you got the password you had the money but certainly mount cox was the biggest of them all so it was the biggest target the news we started using something called the cold wallet which means that the bitcoins in the wallet can only be accessed from using physical means that prevented hackers from ever being able to access the cold war because they would have had to have access to the physical piece of paper that had the secret to be able to get into that wallet so bitcoins would initially go into the hot wallet or the main wallet be kept there for a little while and it would be eventually sent to the cold war bravo really that was rich what fat mark forgot to tell you was a lot of that money he made was off guys like himself too stoned to go to their dealers hey talking about me why should i freeze my ass off in the streets with a couple of clicks on secret i could have my [ __ ] delivered to my door silk road was this website that was sort of incredibly you know you could you could order drugs as easily as you could order a book from amazon the only way that they would purchase drugs and other items on silk road was by using bitcoin that was the only currency that was accepted um you couldn't pay in dollars you couldn't pay in euros you couldn't pay using a visa card you had to pay in bitcoin no credit card no trace he pays in bitcoin it's like he was a ghost ugh [Music] no thanks without mount cox i don't know um you know if silk road could have been what it was you know this was the way that people turned their dollars into cocaine you know this was the central mechanism that made that possible the silk road was probably the most successful startup company ever in the entire history of the world it went from absolutely nothing to probably billion plus dollars in in sales over the lifetime of the silk road wow congratulations i don't think that uh mark carpel has tried to become the you know bank the online bank to drug lords or anything but that was certainly what it became is [Music] all of that popularity and success went towards making mark feel he was important he was originally interested in lamborghini for himself he also bought himself a large house and then a penthouse and all of these things seem to say that he wanted to show everyone that he was making money and his status in the world was arriving as that sort of thing started happening more and more many of us started becoming uncomfortable and mark replied that his grandmother owns a castle in austria and said that if we can't trust him then there's nothing more for him to talk with us about there was no way to tell how much money the company was making how large its expenses were or where the money was going in the company because mark was the only one with access to the accounts and he refused to share that information with anyone else he always thought that bitcoin because it wasn't a real currency none of the laws really applied to [Music] [Music] [Applause] [Music] [Applause] [Music] my name is tigran gamberian i'm a special agent with a restaurant investigation we've been around for almost 100 years and we go back to the days of organized crime you know al capone of course i have to put that out there that was that was a famous irs case you know we're always on the lookout for emerging currencies or methods of payment that could be used to facilitate crime uh when a bitcoin came out at least in the early days that was kind of like how do we even track this i mean it's just numbers floating around in um the bitcoin world and to us that was kind of it was a hurdle well government was just starting to take notice of bitcoin and uh like with a lot of new technology it's it's unclear how how the law applies to it no one really cared that much until the silk road because you had you know people selling drugs and telling chuck schumer you can't do anything about it all he can do is kind of cry about it on the senate floor so they started looking for ways to to regulate it and how to make a statement heroin opium cannabis ecstasy psychedelic stimulants they're all listed in the in the light of dead it's unbelievable and it's all hidden because they don't use dollars they use this surrogate currency [Music] i think it was in the spring of 2013 that the financial crimes and enforcement network uh put out a one-page regulation just like one page and they faxed it to everybody that said if you're going to be exchanging dollars for bitcoin and back again you have to have a license getting this money these licenses cost more than a hundred thousand dollars because you have to give a license in every single state and it's a that's a terrible regulation there's lots of people in government that just they get furious inside when they think people are doing stuff without my permission people are engaged in free trade with each other without my permission people are smoking or growing plants without my permission they get angry and they want to steal money from other people in the form of taxes and then use that stolen money to lock those people that are growing plants without their permission and lock them in a cage or people that have a white powder that makes them feel happy they have to lock those people engaged this is madness this is craziness just because it's a new emerging technology doesn't change the fact that you're still dealing with money and there's still potential for criminals to use your services the reason that there are these laws is to prevent that so even if you have a new company if you have this new idea great do it but you're still bound by the same laws that are in place for these types of businesses which are money service businesses you know or financial institutions the major importance of the fincen ruling was is that before that um you had a lot of people who still wouldn't agree that there was any value to bitcoin right like it was just software software really can't be money right and then this you know financial crimes ruling comes out and it says no really this this is money it was it was just a different world after that at that time there's sort of a cottage industry of day traders people who are trying to make money for themselves on the side um by buying and selling bitcoin at one point i did a story where i was talking with some people in a chat room who were doing this and it really sort of surprised me the kind of range of people that were doing it there was a business student there was also a biology doctoral student there was a bunch of different kinds of people who you know decided it was worth their while to buy and sell bitcoin that's when real silicon valley firms andreessen horowitz union square ventures in new york started to make uh their first investments in this space there was a lot of hype in the media amongst journalists like trying to figure out what bitcoin was so you know i thought you know this is definitely exciting this is definitely something i want to be part of and since mount gox was the largest player in the world i thought you know what a great opportunity to to get involved with that bitcoin movement at the time for creatives this is a dream come true you have a company that's ostensibly flush with money who has a huge customer base in a a market that's just beginning to explode has no brand really everything needs to be updated i mean this is this is a dream come true it was just heaven it was actually quite exciting to be a part of this when i spoke to people in japan and abroad that we were working on the gox account and working with bitcoin everyone was just fascinated it was really amazing how much interest it was from from outside you know from these major vcs and hedge fund guys and high net worth individuals in new york china all around the world interested in doing business with us not necessarily investing in the company but buying a [ __ ] ton of bitcoin it was let's make something that's [ __ ] amazing that everyone is going to look at and say well this is the exchange that we're going to uh put our faith in [Music] the first thing that we did we decided that any press communications that came in should go through me we all agreed on that i come in second day like 9 00 am first thing walk in the door and there is mark sitting on that blue ball being interviewed by i think it was reuters and i just walked in and said what the what the [ __ ] is going on what's what's going on in here what are you doing and i said oh mark is being interviewed by by reuters we just discussed this like not even 24 hours ago and of course that ended up backfiring spectacularly that was the first time i'd seen mark was the picture of him on the ball and immediately i looked at the whole aesthetic of this larger gentleman sitting on this ball and thinking this is not putting forth a message of trust trust in us we would try to explain to him you know mark don't bring your pizza into this meeting with this important customer or mark stop playing with the robot now you know it's time to do some work and he would just ignore you and keep playing with his toy there was no cto there was no co it was just mark at the top and then pretty much everyone else it was like the the widest shortest pyramid ever evidently [Music] [Music] my first uh you know official full-time day at malgox was quite interesting as well i remember arriving and then it was one of the executives just plonked a bunch of papers on my desk and said okay we're involved in like several um sort of legal uh issues right now uh can you like read these documents and summarize them for us and at the time remember thinking hmm legal issues uh number one and number two like shouldn't this be given to the lawyer people crying people not knowing what's going on people backstabbing in there people who would come and go the the guy with the the big swirly scarf round these stories about nails near throwing stuff at the walls and shouting matches and all of this all of the stuff that was going on there every day it's like you walk in there like i can't believe like this oh we just thought this is just this is the cream on the on the top that chaos we just thought no one's going to keep their job here i thought eventually would we'll just be replaced they'll grow so big they'll need they'll need a global agency to handle every everything that they're doing but this will be a great story ah ignorance is bliss a bliss so complete it makes you forget your obligations obligations like you know compliance with us government regulations i need that chair buddy excuse me just a few weeks after the new laws were passed in the states the government seized five million dollars from mount gox's accounts now in and of itself not a big deal for a company of this size but little did they know ship is about to get a whole lot worse [Music] and they weren't doing this from the start they're supposed to take two forms of id bank account information all these things to verify who the users are it makes a good strategy for law enforcement if you can get everyone roped into this one central uh database then you just take that database and go after the criminals uh um [Music] following the department of uh homeland security investigation and the seizure of our accounts in the u.s japanese banking partners freaked out i remember seeing the executives from the banks visiting our office more and more frequently and then over time they impose limits you know in terms of the amount of transactions we could do with them per day in terms of the currencies that we can actually be dealing with and which eventually um you know enabled us to survive as a business only on enabling um like transfers in japanese yen domestically and when you consider that more than like 95 of our customers at the time weren't based in japan and weren't transacting in japanese yen this was a major major blow to how we could operate the only way to send people money was from the post office that was it [Music] come on [Music] mark to his credit busted his ass trying to send money to people people did get withdrawals just real slow [Music] we wanted to communicate and say the banks are screwing us but we couldn't say that right because then the bank could easily just shut down all of our accounts and we would be screwed we wouldn't have any banking partner in japan our hands were kind of tied in many situations where we wanted to communicate i was concerned when there started being fiat withdrawal delays at mount cox so i agreed to make a video for them and i i wrote the words myself i read my own script and i chose my words very very carefully and even to this day everything i said in that video is true i regret having made it for them i'm roger veer long long-time bitcoin advocate and investor today i'm at the mount gox world headquarters in tokyo japan i had a nice chat with mount gox ceo mark karpeles about their current situation i saw that he had over 100 million u.s dollars in their bank account that's a lot of money and then he showed me a letter from the same bank that all that money was held in and that letter from the same bank told them that they're allowed to send 10 international wires per day and they're allowed to send about the equivalent of a million us dollars domestically per day obviously that's not enough uh for for for a business of malcox's size to keep up with the demands of their customers i'm sure that all the current withdrawal problems at mount cox are being caused by the traditional banking system not because of a lack of liquidity at mount gox for now i hope everyone will continue working on bitcoin projects that will help make the world a better place i discovered bitcoin in 2013 in april 2013 the market for bitcoin just went crazy it went from 20 to 240 within a space of two weeks and the price was jumping up and down by 50 or double every day at that point i realized okay trading is what i want to do uh so i gave up my free answer work and i started trading full-time march 2013 there were bank runs in cyprus and that's when the price of bitcoin first spiked and it went to about 160 and i was really kicking myself if i had just you know made a simple investment at 10 right i could have made a ton of money and that's when i said that's it i'm going to find a good time to buy i'm not going to look back and uh i you know i wired mount gox uh some money and then i was in the game so there was a period of amazing excitement towards the second half of 2013. bitcoin was going up from it was hanging around 100 140 for a while then it stayed around 200 for a bit then it just started shooting up nobody was really sure why and then the silk road bust happened that's when i got kind of nervous there was a lot of speculation in the forums by people about well is the price going to collapse what's going to happen to the volume on the exchange and i think some people started selling this was i believe the end of october and i just held and sure enough uh when november happened when november 1st hit the price started to go up and that whole month in november it like it didn't stop and i i had held the whole time and i just kept holding i put my money on mount gox to do some trading quickly realized that i had no idea what the hell the market was doing i shouldn't be trading uh i just held and watched it go up it was just rising like crazy so went 120 240 and just kept going up and up and up and suddenly it was a thousand dollars i'd be in front of my computer just like kind of cheering on the price it was it was great uh yeah i go to the gym to work out and i couldn't stop looking at my phone right tracking what was happening it was it was a wild ride and so at the end of that month uh november i think the price was around 1200 or something i i didn't really want to sell my bitcoins yet but i wanted to get them back off mount cox after trading i asked for the coins back and it was a slow response it was actually my birthday i remember it very clearly i was in paris in a hotel i don't know why but i was thinking i really should withdraw my bitcoins from my gox i went to my computer and started a withdrawal and i checked an hour later and they hadn't come out they told me i needed to verify my account which they never asked for before uh when just dealing in bitcoin to receive a bank wire they'd want it and that's when uh things started to go downhill [Music] customers were getting angry and angrier sometimes you know even myself i would be given like transferred calls um you know from people who would just like shout and insult me on the phone and that's when i started to to look for uh you know an exit or a way out because i realized that things were going to to get crazy up until early 2014 uh mark had been able to say i can't get dollars or yen through to you because of these limits that they're imposing on me but once people couldn't take their bitcoins out that pointed to a much more fundamental problem because if he had the bitcoins he could have sent them immediately and a couple of days later i woke up and i already knew i had to go there i think my mind had decided while i was asleep you must go to japan there was a snowstorm that day in tokyo there was literally an igloo on the street of mount gox it was freezing i went down there there was the street was almost empty i pulled out my sign and i felt monumentally stupid and then capela's suddenly starts walking up the street the journalists start scrambling to get their video cameras out and then i try and stop cappellas to talk to him he has clearly no interest in talking to me okay i came all the way from london all the way from london to try and get my big clients from me to find out what's happening no problem he started launching into the standard response oh sorry that is not possible um there are technical problems but of course as a techie i knew that there were that a technical problem wouldn't stop them giving bitcoins back do you still have the bitcoin do you still have everyone's bitcoin he was pretty concerned about that question um eventually he pushed past got into the building and said don't come inside i don't expect their company's going to last much longer i think it's about to collapse and i expect that no one's going to get the money back but we'll see by that time i i just left tokyo actually and had relocated back to hong kong this was in early february 2014 and i remember a friend of mine who was aware of what was going on with man gox called me directly and said remove uh like any mention of man gogs from your linkedin profile and then i asked him like okay why he said like just don't ask any questions just do it mount gox unexpectedly shut down today one of the world's biggest bitcoin exchanges has filed for bankruptcy bitcoins the scale of it it was just so absurd oman cox in hundreds of millions of pounds and prompting the sharp fall in the value of the currency i felt like i had been punched in the stomach and i couldn't believe it what the [ __ ] like what do you mean that there's like no bitcoin what do you mean we're missing this many bitcoin how can you lose 800 000 bitcoin you can't lose all of them before you notice that just seemed absolutely insane if he had said like oh we lost a few million dollars like you lost a few million dollars are you kidding me now tell someone that you just lost like 800 million dollars a billion dollars like at the peak it was a billion isn't well over it now and see how they react this is the problem with this whole thing in general is that people really got [ __ ] on this right like really badly i think people lost their life savings people lost loads and loads of money and i don't want to be seen as making light of this in any way because but it's it's it's just so absurd i had three just over 300 bitcoins in mount gox which before they crashed the price would have been worth about three hundred thousand dollars of course after they crashed the price it was worth less than half that at the time that the the bankruptcy announcement was made i had been traveling around with some journalists and they we stopped around the mount cox office and they heard words from some of their fellow journalists that there was a big announcement about to be made at his press conference in japan i think he was wearing a dark suit and i remember there being a lot of microphones and the thing that i took away from it was him bowing a lot and which i guess is customary in japanese business culture uh if you make a mistake that you kind of make a big kind of public showing of um saying you're sorry and apologizing [Music] foreign [Music] is um um people really want to know what happens like what's the real story behind it after the the crash the bitcoin let's say ecosystem took a major hit in terms of respectability public perception even like for me personally i thought okay well bitcoin is is dead like there's no way that any governments or banks will tolerate something like this happening again there's no insurance in bitcoin there's no government backing for bitcoin and obviously you know early on that was the whole allure of this thing was there's no government uh meddling in this but as soon as there were losses people realized oh there's also no government to back this up when i get my bitcoin stolen they're gone that's it that's the end [Music] during the first half of 2014 a lot of people started investigating this and seeing if there was anything that could be done well there are probably two reasons for why it can be really hard to trace bitcoin despite it being inherently traceable first in the case of mount cox purely scale mancox had an immense number of bitcoin addresses it's too large for a human to easily see because there's just so much information to take in the other problem is that if you deposit a bitcoin to a service like bangkok and if you withdraw that bitcoin later it's not necessarily the same bitcoin you might have gotten a different bitcoin deposited by some other customer as a result uh when a bitcoin is deposited to one of these places you can't follow the trail of that particular bitcoin i think a lot of people at that point just suspected that someone in mount cox had stolen it simply because there was no way to know one way or the other i think the best clue of what happened to those bitcoins is that mark was able to find 200 000 of them after it was reported that they were missing how many people in the history of this world could actually claim that they had accidentally misplaced 200 million dollars it doesn't chime what is wrong with this guy you found it under your mattress like what what what are you doing you're a person who is supposed to be running a company you're a person who's supposed to have experience in security or a person who's supposed to be very knowledgeable about bitcoin it was baffling to understand like how you could just lose that much money and then just find it again magically after the fact [Music] this pg-13 language i can only use here or people were really pissed at them and people hated them i always felt that he didn't really get the gravity of the situation it was just terrifying to read what was what was going on [Music] foreign the question everyone wanted to know is where are the bitcoins what happened to them and at some point he went on to twitter and he started tweeting about things like oh the sunrise in tokyo was nice today everyone was still in limbo waiting for him to to say what happened to this half billion dollars and he's talking about the weather in tokyo [Music] i had been working at the the law firm this guy came to us who was a former mount cox employee nils nils arteshdod he had a lot of information about mount gox so he was very interesting to us because he could give us a lot of insight and uh if mark had done something criminal he was gonna you know be a good source to help us learn about it and help us prove it and so he had this story about mark giving him a death threat i went with him i walked with him back to the mount cox office i kind of looked around with him but i and i believed his story i did and he seemed credible there was some woman for some from some bitcoin company who died right she was in singapore i think she fell off a building there was rumors online that maybe that was somehow connected i went and had my apartment you know my hotel room moved from like the the 10th floor to the second floor in case i had to get out easy it was kind of kind of kind of scary but yeah most people speculated that he was a total thief or a crook and actually it was really hard to escape that thought someone with that amount of money and you know has a lot to protect and you hear a story like this uh it's believable and of course a lot of people speculated [Music] to protect your anonymity we will reenact this interview so do you prefer to be a woman or a man come on will be fine [ __ ] foreign foreign [Music] japanese [Music] [Music] [Applause] [Music] [Music] [Music] i have been in contact with mark karpeles a few times but our conversations have been very brief sometimes when i've asked him direct questions he hasn't responded at all or has responded in a very elusive way we were able to reach his mother she herself said that she had no information from him you know it's a bit strange that he doesn't seem to have anybody who he really trusts or that who he communicates with he doesn't communicate with his family he's divorced from his wife he doesn't seem to have any allies as far as i can tell he lived in this world of hackers where you proved your worth through your code you didn't prove it through you know what you wore or what you said you did it by what you typed into a computer [Music] [Music] [Music] three or four times his wife came to the office crying and begging mark to spend time with his son and he just ignored her until she left mark is a very strange strange person it's easy to believe that maybe he has some sort of mental illness asperger's or some other social disability he is not like most people and he doesn't sort of have the human emotional range that you expect of most people he's kind of a still character and so i think it's easy to kind of imagine him as sort of non-human form because he just doesn't have a lot of the human traits that you expect situation [Music] [Music] [Music] he moved to japan seemingly because he was just interested in sort of the japanese culture for some reason he just sort of fell down this rabbit hole of being interested in japan and wanting to live in japan and really took to that [Music] i think mark loved japan but i think mark was still in the you know everything is sparkly and shiny and japan is a wonderful phase of his life [Music] this is a guy used to leave his computer on a park bench right and was amazing people in japan would bring it back not everyone is so kind but i don't think he saw what was coming i i think that one of the facts is because he's not japanese and and he doesn't have a lot of street sense i don't think he actually anticipated that i'm going to be grabbed for the failure of this company and be put in jail and that's a hell of a wake-up call [Music] we authorities in tokyo arrested mark karpeles for allegedly falsifying financial records in the mount cox computer system by one million dollars in 2013. responding activity foreign master yes indeed there's strong evidence that this was needed a bot running at man cox and then doing these trades and furthermore he was running without any real money backing it so definitely fraudulent this was clearly a very interesting phenomenon phenomenon a very suspicious phenomenon and a strong candidate for what could have happened to the bitcoins but if you look at the later parts of wooly in 2014 it suddenly flips around and instead of fraudulently buying lots and lots of bitcoins it seems to be just selling them back to the same bitcoin market and roughly the same amount that it initially bought it would sort of cancel each other out or at the very least it made us think that maybe this is maybe this isn't the whole answer maybe there's something else i think it makes for a very uh gratifying villain in this case uh he's slightly odd and quirky uh he seems out of place as here's this normal socially awkward geek that runs one of the biggest bitcoin companies ever it should be swimming in money and of course it makes for a great story if he is also some sort of a master villain that steals all the bitcoin and makes everyone think someone else did it so yeah i think he just makes sense from a narrative point of view that paint him as the villain it makes perfect sense for a detective story but maybe not in reality [Music] [Music] you know japan is a wonderful place the japanese justice system is [ __ ] up japanese prosecutors are not interested in a fair trial they're not interested in justice so karpos mistake may have been that he believed the system is about justice no it's about finding someone to take the blame and getting them convicted and then moving on the police thought that if they arrest him on some charges that he would confess but he didn't confess and thus they kept rearresting him and rearresting him they still didn't confess and i think by the time this whole trial has gone over you still won't know what happened to the missing bitcoins and that's what really everybody cares about [Music] i know [Music] arrested for one charge and for one another and for one another is it something common in the japanese system if bitcoins had not disappeared mark wouldn't have been arrested right [Music] to me it looked like the authorities just wanted to get rid of this thing right and in japan there's something like a 99.7 conviction rate because they arrest you and you'll go to jail and then you'll plea bargain right you'll just accept it and that's what happened to mark he was pre-trial detainee for months [Music] [Applause] [Music] a [Music] can you imagine when the police interrogated him that they probably wanted to go and commit suicide like it'd be the most frustrating interrogation ever you know it's like 23 days uh detainment in japan without even having a lawyer without a phone call or anything they hold you like 23 days and so you know by the time 23 days comes up like they've deprived you of sleep they've slapped you around 23 days is way long enough for bruises to heal for example and they could have made him a punching bag every day and he just would have been it's like stone cold because he just wouldn't have wouldn't have like reacted to it and didn't did they charge him with something else so that they could keep him for another 23 days after that yeah mark mark said actually they they said his lawyer said before well when you walk out they're just going to arrest you okay so he just like walked he was released he walked into the lobby they arrested him again and brought him back accusations of foreign foreign i think it's a very big and complicated case it has many parts it's not something where you instantly grasp what the entire case is about to some extent it might be the same for the police in that the case is so big and complicated that you you'd forgive them for going for something that looks a bit easier first like mark karplus is being accused of embezzlement and misappropriation and to the police these are probably the first things that you would find that you might actually be able to prosecute him for because other parts of the case like the missing bitcoins are so big and huge that you would have to invest large resources into investigating them and you might never find a crime it might not be who you thought it was for example and then that amount of time would be wasted so from their point of view you would go for the low-hanging fruit first of all i was really concerned that there'd be a real risk that this might not be investigated thoroughly because there might not be the necessary expertise in the correct place in the police or they might not be able to to find the right people because it might require some on the street skills and you might need to know the right people to hear this this or that rumor or just purely a question of technical expertise that's when we sort of decided that now we have to look at the blockchain we have to try and match it even though it's a huge amount of data we have just tried to attack it somehow if indeed all the money had been stolen at once it should have been very easy to discover the transactions through which it moved the problem is that there was no such single transaction it seemed to have been that between autumn of 2011 and towards up to the middle or the even the end of 2013 there were bitcoins stolen in chunks over time almost continuously throughout that entire period we have no idea exactly how they were gotten into the systems maybe some combination of social engineering or just plain hacking or compromised code or something but first and foremost to do this particular theft you need patience because they've been doing it over years and quite slowly and deliberately and been quite careful in how to move the bitcoins out afterwards several times in the past distinctly suggested that they had a very strong security system they had very properly designed cold storage and this suggested that their security would have been good and they thought very deeply about these things but you don't need to steal the cold storage necessarily if you just keep draining the hot wallet and this works only as long as no one at mount gox is actually monitoring how much money is in the cold storage how much goes in how much goes out [Music] foreign [Music] if these people are to be caught then it'll be because they made some mistake of how they used bitcoin or who they sent it to or something like that if they did it flawlessly then there's a good chance they might never be found even if they find the person who's responsible for the collapse of mount cox and all the missing funds and the bankruptcy that doesn't necessarily mean that mark will go free the system doesn't want to lose face they see something clearly went wrong someone has to pay some kind of price so i think right now they're at this point where they're trying to figure out well what are we going to do about this they're buying time i think they're still trying to build their case [Music] foreign [Music] [Music] [Music] [Music] [Music] um [Music] um [Music] a [Music] [Music] [Music] um [Music] foreign [Music] [Music] foreign there's a lot of suspects in the collapse of mount cox and of course mark is a great suspect himself [Music] however you know if you're trying to figure out what happened to this company where did the money go where are the missing bitcoins i'm just suggesting that there's a lot of people that we would look at i don't think the police have contacted them honestly because it's a pain in the ass we got a giant envelope full papers uh looked like it had been sent from close to where the police headquarters were of all these documents relating to mount gox and the buyout and the takeover and amongst those documents which was probably like 400 pages was this back and forth between mark and jed the original owner of mount cox in which basically jeb is saying oh you know i i forgot to tell you uh that you're we're missing about 80 000 bitcoins there's a whole bunch of different ways you could sort of make up the difference good luck mark is just thinking he's getting you know a wonderful deal on like a solid gold horse but he doesn't know that it's basically a trojan horse that's painted gold in english we usually say a fall guy you know someone to take the heat someone to take the wrap uh a fall guy um a sacrificial lamb i mean there's many ways you could say it it's like oh i got this company i'm really it's really indebted if i don't get myself out of this hole it could be a real problem oh but here's this guy who wants it so if he signs up and takes it on he takes on all the debt too so it's all mark's problem we have tried to reach jed mchale several times nobody seems to be able to find jib and we know that it's alive hopefully running a business is a lot of responsibility right and this is one of the things that i did not explicitly did not want to have here right because there is a lot of risk in this kind of business there's regulatory risk there's like people are always going to try to be hacking you and stuff like this it's like it's uh a kind of headache that i didn't want to have right so i explicitly looked for somebody else to assume this responsibility mark purported himself to be this like security expert so he seemed like a you know he had done he'd done like lots of stuff with banks before it just seemed like he would actually be a good person to run mount cox i don't think jed just wanted a fall guy i think he wanted mount gogs to actually work that's why you kept 18 or sorry 12 if you just wanted a fall guy you just sold the whole thing off jed wanted some benefit without all the risk that's that's what it was the bitcoin loss actually happened after he took over like basically i gave him access to all the servers and then then like a week later or something like that uh there was someone compromised them and was able to steal like from our hot wallet essentially 80 000 bitcoin sounds like a tremendous amount now and it is a tremendous amount right now but back then it wasn't a big deal right so when mark bought the company or got the company that was 80 000 bitcoins worth maybe 20 000 that's a doable debt but two months later when the price of bitcoin surged up that is an 800 000 debt and that is not something that mark had that may have been the birth of willie bot williebot if i say [Music] that um for example [Music] is buyer agrees to indemnify seller against any legal action taken against buyer or seller with regards to mount gox.com or anything acquire under this agreement okay well it just says that uh mark's going to indemnify jed if if any action is taken against uh you know against jed regarding mount cox it's not nondisclosure i mean he can talk about whatever he wants to talk about it's like pretty standard legal clause where you know as a seller of something the buyer identifies you to make sure that they're not going to come back to you later and be like sue you for something that you no longer have control over right [Music] jed had some real experience in the technology world running things building things and i think that gave him a sense of his own limitations run by anyone competent it would be a billion dollar business like he totally just screwed it up right mark had done projects he'd done real work but i don't think he had come up against his own limitations probably with bitcoin you know he was forced to become at least somewhat aware of them quite quickly but i think mark also had an ability to blame others rather than to sort of accept his own role in his own shortcomings some people are good at running a business some people are good at coding some people are good at like writing you know that people have different strengths right and it's it's unfair to expect someone to be able to do all of it but it's not unfair to realize where your weaknesses are and like try to find people that can help you fill in the gaps right and i think that's that's part of being successful is like knowing what you're what you where you need help and like you should get people to come help you with right mark knew you know he learned i think pretty quickly in the first few months that it was a lemon and what the problems were and that the you know his passengers in the car right the customers he didn't tell them about those problems and they ended up getting hurt um [Music] [Music] um um [Music] uh [Music] um [Music] i'm good good to see you again come on in let's see [Music] may have been the most high profile and devastating incident of its kind when it came crashing down in early 2014 declaring that hundreds of thousands of customer bitcoins worth nearly half a billion dollars had gone missing and now it's finally time to find out how deep the rabbit hole goes at least 865 000 bitcoins were lost on the bitcoin side due to the numerous thefts and incidents over the years the single by far most damaging act occurred on september 11 2011 when hackers who had penetrated the main servers silently made a copy of the hot wallet private keys at least 630 000 bitcoins were taken out through these private keys if you imagine making a small hole in the wall of the bank vault and it's enough to get your arm in and you can grab any coins that you can reach what happened was that throughout mount cox's history over the next few years enough funds passed through this hull or within reach of the hackers that they were able to take all of it until there was literally nothing left the typical pattern is that the coins are sent from the compromised private keys and they're sent from those addresses into a new address controlled by the thief a big majority of all the funds goes to the btc exchange not only is it funded with coins stolen from mount cox but also coins stolen from other exchanges as seen in the corner of the graph other thefts flow into the same network of money laundering there's stolen coins from bitcoin again there's stolen coins from bit floor all moving into the same group it's possible to connect a lot of this activity to accounts but of course the hard part would be to then connect that to an actual real-life person and more to the point being able to do something with that information that's not the job of an independent analyst like me all i can do is dig up the forensic evidence that i can and then i pass that information along to people who might be able to make a difference with it did your investigation had been related to the mongbok case i can't really talk about that right now it's a hacker group with a connected money laundering what is your partner's personal view on the mongoose case and especially the potential theft of 650 000 bitcoins i can't talk about that and all signs point to russia as far as i'm concerned do you think we'll ever find the guys who've done this i can't talk about that so what what did you know that it didn't tell us we shot jfk [Music] arrested alexander winnick accused in bitcoin billions of dollars trout according to bbc a 38 year old co-owner of the btce exchange was arrested in greece winnick is accused of more than four billion dollars laundering it is known that he had been charged with 21 counts including laundering stolen funds from mtg ox no public comments have been received from alexander vinnick experts believe that in general this situation is even positive for bitcoin [Music] too many people were naive you know you have to remember that the early people in the bitcoin space they were not sophisticated investors monetary economists high flying financial guys whatever they're just really naive uh code monkeys really just just nerds and geeks nice people playing so they didn't know they got robbed i got robbed [Music] there are companies that do business in bitcoin they have conferences they have meetings they wear suits they exist i think in the way that any other tech startup exists and lots of companies are trying to figure out how to integrate bitcoin into their operations it has now become pretty much kind of almost background noise to silicon valley in the earliest days when i got involved in bitcoin 99.9 of the people that were on the first bitcoin forum there they all saw the world so similarly to myself and we're excited for the same reasons but this this is the next step for bitcoin if bitcoin is going to grow to influence and change and improve the entire planet then everybody has to be using it not just the early libertarians or early computer nerds we need the businessman and the bankers and everybody else has to be involved we need everybody all together so change is sad but it's part of life too there are a few utopian schemes that manage to survive the real world and you know bitcoin was no different even if it doesn't you know fulfill somebody's philosophical beliefs it works is it quite inherently a bad thing is it an evil thing no but it can be used for bad things everything from terrorist financing to ransomware hacking public corruption drugs drug trafficking organizations that's the thing it's money now like as a monetary economist or and even as a technological enthusiast what you would really like is for something as wonderful as bitcoin to be handed to humanity like on a cloud you know just coming in here is your gift and everybody will start using it you know but that's not the way it happens it has to enter in through financial markets and become economically viable meaning that it has to pass through this weird stage where people are testing things and buying it and selling it every technology does this it was the same with railroads you know back in the 19th century there were all kinds of scams uh bankruptcies injuries accidents terrible things happen but at the end of the day we got railroads and that's awesome you know mark carpal issue is almost like a theoretical physicist put in charge of you know landing a man on the moon um you know probably not the right man for the job i mean it must be frustrating to to be mark and have once been one of the most influential people in the world of bitcoin have access to a huge amount of money and now be here in japan and limbo accused of crimes he didn't really commit his reputation destroyed no money and certainly not the missing 500 000 bitcoins lots of people angry with him and he is just the guy who got in a little bit over his head well at first i you know i wanted to find him and punch him in the face for losing the money and like everyone and then you know i i talked to him and i i realized he didn't steal the money and uh i said okay well you know let's let's just not be so angry at him and yeah it'd be very difficult to be mark carpolis and have to face the face the press after losing everyone's money i probably would just never go online again if it were me [Music] [Music] a foreign [Music] [Music] [Music] [Music] [Music] foreign [Music] [Music] [Music] [Music] [Music] um [Music] hmm [Music] swami [Music] [Applause] [Music] [Music] what's the moral of this story greg yeah look i'm not i'm not sure what the the moral is here apart from uh you know you know if you're selling a product make sure you've got that product before you tell everybody we're open for business [Music] [Music] i was born from 3.54 [Music] megahertz xylo crosstalk oh motherboard or motherboard by side i always feed [Music] check the rate gas you better wake you too greedy losing your solar [ __ ] has always been your boat full of cons when somebody buy a house or a lambo try to ride but don't forget [Music] new boys in the band but they don't understand that in peace we rust but in cruelty we trust

Channel: Moconomy

Views: 563

Keywords: documentaries, best documentary, youtube documentary, full documentaries, free documentaries, economy, finance, business, Bitcoin Big Bang, mt. gox case, Mark Karpelès, bitcoin heist, mt. gox, mark karpeles, bitcoin documentary, crypto documentary, documentary bitcoin, film bitcoin heist, film bitcoin, stolen bitcoin, digital currency, crypto currencies, bitcoin movie, satoshi nakamoto, Crypto fraud, crypto heist, cryptocurrency heist japan, bitcoin heist tokyo, bitcoin

Id: HDA3RPrWuqI

Length: 104min 17sec (6257 seconds)

Published: Tue Oct 12 2021