Mt. Gox Staff Was Concerned About How Client Cash Was Handled Reuters
Long before Mt. Gox filed for bankruptcy, employees were concerned with Karpeles' strategy
Mt. Gox is once more in trouble after it was revealed that for the past two years employees with the company had challenged the Bitcoin exchange market leadership over whether money belonging to clients was being used to cover costs.According to Reuters, which quotes three people who participated in the discussion, half a dozen employees discussed the issue with Mark Karpeles, Mt. Gox’s CEO.
The problem was first raised by staff in early 2012, which will probably end up being a key issue in the investigation launched by Japanese authorities.
It looks like employees were concerned that as Mt. Gox was growing, its expenses were considerably larger too. In fact, the fact that the company moved office to a costly building where Hulu and Google also set base seems to be an important element in the scandal.
Since Karpeles was the only one with access to the financial records of Mt. Gox, employees asked for a formal meeting with the young CEO. During this meeting, they expressed their concerns about how much Mt. Gox was spending and how this sum was much bigger than what it was taking in. The idea that customer deposits were being used to cover company expenses was a logical one given the circumstances.
Karpeles denied the claims at the time, but also declined to provide more details on how the losses were being covered. Employees were left frustrated since no clear answer had been given and Karpeles carried on as usual.
As it is well known by now, Mt. Gox filed for bankruptcy several weeks ago, after more than a month of technical issues. The company managed to lose more than $27 million (€19.6 million) in cash and Bitcoins worth of nearly $450 million (€326 million) at the current trading price. Some of the Bitcoins that were reported missing have been discovered in an old wallet, but most of them are still nowhere to be found, leaving nearly one million traders with empty pockets.
The February 28 bankruptcy filing from Mt. Gox mentions that hackers may have exploited a bug in the Bitcoin system to steal the virtual currency. This is the same bug used as an excuse by the company to halt Bitcoin withdrawals several weeks prior, as it sought to fix the platform.
Given the new information regarding the employees’ suspicions, another possibility arises that has nothing to do with hackers or Bitcoin bugs, but rather with really bad management.