Reposting what I commented in the other thread since the post was deleted.
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I just saw this also in ##mtgox-chat.
What legitimized this was the fact there was a portion where MtGox connected to Eligius's servers to broadcast free transactions.
Eligius and MtGox had a partnership where MtGox provided free hosting for their pool in return for their acceptance of MtGox's transactions with no charge.
What legitimized this was the fact there was a portion where MtGox connected to Eligius's servers to broadcast free transactions.
Eligius and MtGox had a partnership where MtGox provided free hosting for their pool in return for their acceptance of MtGox's transactions with no charge.
I will say that the article you linked is almost garbage. It glances over the "clues" very quickly which I will assume due to lack of knowledge.
The complaint that passwords were displayed in plain text is not anywhere near recent. Even in 2011 when I started using MtGox, passwords were hashed. Granted, early on the passwords were only hashed with 1 pass of SHA256, but later on passwords were stored to much better standards.
How do I know this? Because they got hacked twice in 2011, both through SQL vulns. Once a database dump being leaked, and another time a user's account balance was changed and the attacker cleared the bid side of the market book. Trades were rolled back, and MtGox took the loss; nothing remote of this severity ever happened again.
Another thing I do remember [is this](http://imgur.com/xMeW43a), and it seems much more aligned to what the article is talking about. But seriously, look at the URL. The only issue is when someone looks at that user's browsing history, but even this wasn't an issue in 2011.
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Banking problems were not apparent until last year. It was well understood that banks and Bitcoin exchanges had harsh relationships. Bitfloor, the most popular US-based exchange was shut down due to banking problems; they were unable to find any banking partner that were willing to accept them. MtGox having delays in fiat withdrawals were understandable since it was by far the biggest exchange.
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Most people who call us idiots for not connecting the dots earlier are those who haven't been here long enough. For many of us, MtGox went down over the years but all to recover. Both Luke-Jr and gmaxwell (core dev) had a significant sum of coins stored on MtGox too. It shows the trust we had in MtGox over the years.
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One last thing though, is that I will attribute Bitstamp's late popularity causing them to dodge a bullet. The reason MtGox had written their own bitcoin implementation was because the bitcoin reference client was unable to handle their volume of Bitcoin transactions at the time.
Transaction malleability was documented, but not well known issue for Bitcoin. Even the reference Bitcoin client was affected.
So the fatal flaw that MtGox's implementation made when resending transactions (because a different transaction id was accepted and their system did not see it) was it did not reuse the same inputs when resending the transaction.
In the reference bitcoin client (bitcoind), it makes sure to use at least one of the same coin inputs, so if the original transaction (but different tx id) did get accepted into the network, the client would attempt to resend using the same input, but it would get rejected by the network because it was a double spend.
Losses can only be taken on your initial investment amount if you have Bitcoins in MtGox. This means that if you invested $10k a year back, and your Bitcoins are now worth $1000k, you can only take $10k in losses.
Luckily I have realized my gains which means I can deduct $3k every year in losses with infinite rollover.
It was only up until these few months that Bitstamp became of any competition to MtGox. Its liquidity sucked, which was why many early adopters like me stayed.
In this incident I lost a bit more than $500,000 USD that was in my MtGox account. I sold my Bitcoins a few months back, but the USD have been sitting in my account waiting to be withdrawn.
This was a massive fuck up by MtGox, but I really do feel sorry for Mark Karpeles. He seemed really enthusiastic about Bitcoin. Right by MtGox's offices in Japan was a Bitcoin Cafe being built. You can [see here](http://si.wsj.net/public/resources/images/BN-BS458_mtgox0_G_...) the sign of a Bitcoin logo waiting to be unraveled.
Bigger than all the victims (no pun intended) was Mark himself. He lost more Bitcoins than any of us, and it's likely he'll be going to jail. Not to mention the death threats he has and will be receiving.
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One of the (features?) of Bitcoin is its inherent irreversibility. You only have one chance to get things right. Combined with Murphy's Law, something like this was bound to happen.
I've been a Bitcoin enthusiast and have been mining since early 2011, and Bitcoin has been a huge part of my life, but I will admit my confidence in Bitcoin ever _practically_ succeeding has diminished a little.
