Mentougou stolen for 6 years: indefinite compensation, suspicion remains

With the private key, you can truly become the master of cryptocurrency.

Because of the OKEx black swan incident, the issue of user asset security has once again been taken seriously, but compared to the “accidents” of the private key custodians of centralized exchanges, the hidden dangers and impact of encryption hackers seem to be more profound.

The past decade has been a tortuous decade for the cryptocurrency industry, and it has also been a decade for hackers to conquer cities. According to data, from 2011 to 2019, about 1 million bitcoins in the cryptocurrency field were stolen by hackers.

The most influential is the theft of the Mentougou Mt.Gox exchange. 850,000 Bitcoins were looted and thousands of users suffered greatly.

The previous October 15th was the date when Mentougou liquidated the compensation proposal. However, as most people expected, Mentougou once again released pigeons.

After six years, the suspicion of the theft has not disappeared, the user’s compensation plan has not yet landed, and the sword hanging over the cryptocurrency industry is still flickering.

1. Unable to pay? Indefinitely postponed liquidation compensation date

October 15th is an extremely important date for the cryptocurrency field: it is the date for Mentougou’s liquidation compensation proposal.

However, the market situation has not been affected by this. Mentougou once again “pigeons” everyone, and users do not have to worry that the 142,000 bitcoin and BCH in the Mentougou compensation incident will bring a wave of smashing.

Since 2020, Mentougou has twice postponed the date of liquidation of compensation proposals, and the new date has been postponed again to December 15. This is undoubtedly another long wait for the victim users.

After 6 years, users still cannot get compensation from the Mentougou incident and get back their own assets. The funds stolen at that time have now increased by nearly 30 times, but these have only brought anxiety to the victims.

The Mentougou incident and the Auben Satoshi incident can be regarded as two major uncertain risk events in the cryptocurrency field, because both involve hundreds of thousands of bitcoins, and they may sell the market at any time and bring bad news.

According to a Bitcoin.com report in May, the Puerto Rican company Gox Rising had proposed the idea of ​​buying the rights of creditors in Mentougou. The company stated that it will pay a claim of $800 per bitcoin to creditors who are unwilling to wait for the conclusion of the civil lawsuit in the form of BTC or cash. The announcement issued by Gox Rising stated: “Our payment will be kept by a third party and paid within 10 working days after the claim transfer is confirmed.”

However, based on the current Bitcoin price of $11,500, the victim in the theft event will most likely not choose to sell the debt at a low price.

However, it is difficult for victims to get their assets back.

2. The stolen 850,000 bitcoins, the dark history of Mentougou

Mentougou is the Chinese translation of Mt.Gox, an early Bitcoin exchange in Tokyo, Japan that was bought by French developer Mark Karples from programmer Jed McCaleb.

Mentougou started bitcoin trading business in 2010. The trading volume once accounted for about 80% of the total bitcoin trading volume. It was called by users as the world’s largest online bitcoin trading platform in the early days.

Because the market is very large, the early security protection measures are not high, and there have been many hacker attacks.

The first attack occurred in 2011. A hacker attacked the computer of an auditor in Mentougou, and then used the exchange’s access rights to modify the transaction price of Bitcoin to 1 cent. In this way, about 2,000 Bitcoins were transferred. .

However, the attack did not have much impact on Mentougou, nor did it cause too much attention from the platform. After all, the price of Bitcoin at that time was around $1, and 2,000 Bitcoin was just a drop in the bucket.

Misfortunes often accumulate in the slightest, and it is this attitude of not paying attention to safety that paves the way for the subsequent large-scale theft in Mentougou.

In 2014, Mentougou suffered a second hacking attack, which is the “Mentougou theft incident” that is still being watched today: 850,000 Bitcoins were stolen in this incident, including 100,000 Bitcoins on the Mentougou platform. And the user’s 750,000 bitcoins.

This black swan incident directly caused the price of Bitcoin to drop from $600 to $400, a 30% drop in a short period of time.

Then users began to question the security of the exchange, and hackers became a shadow that was difficult to erase from various exchanges.

We can look at some of the history of the theft of Mentougou:

In 2016, Mentougou was still a game card trading website.

In July 2010, Mentougou opened Bitcoin transactions.

In June 2011, hackers attacked on a large scale, Mentougou began to lose a lot of Bitcoin.

Beginning in June 2013, Mentougou suspended the platform withdrawal function and there was a run on the platform.

On February 7, 2014, Mentougou was attacked by hackers, falsely claiming that all Bitcoin withdrawals were suspended due to Bitcoin problems.

On February 17, Mentougou issued a statement again, unable to give an exact date for withdrawal.

On February 20th, Mentougou office moved to Shibuya.

On February 24, Mentougou suspended all transactions, and the Twitter content was emptied, and it was in an irreparable situation.

On February 28, the CEO of Mentougou publicly admitted that he lost 100,000 bitcoins on the platform and 750,000 bitcoins from users, and filed for bankruptcy protection in Tokyo.

On March 9, Mentougou filed for bankruptcy protection in the United States.

On March 20, Fafan retrieved 200,000 bitcoins from his old wallet, and the number of stolen bitcoins was reduced from 850,000 to 650,000.

In August, Fabin was sentenced to probation for falsifying digital records.

He was arrested and imprisoned in 2015 and released on bail in July 2016. Most of the charges brought against him by the Japanese authorities were innocent, but he was restricted from entering and leaving the country.

According to the analysis of professionals, in the Mentougou theft incident, the number of bitcoins actually stolen by hackers was about 7,000, and more losses are suspected of being stolen by Mentougou. The biggest reason may be that the platform shorted Bitcoin in the early days, but it was unable to repay the user tokens because the price rose too fast, so it chose this method to solve the “debt” problem, and then let hackers go to the back.

Although Mentougou filed for bankruptcy protection, the Japanese court ruled that it still wanted to return tokens worth $1 billion to the victims of theft.

In this incident, “Bitcoin’s richest man” Li Xiaolai was also one of the victims, allegedly losing more than 500 BTC.

In the end, most of the stolen bitcoins flowed to BTC-e, which was difficult to retrieve. Mentougou could only use only the remaining bitcoins for compensation.

However, after many years, Bitcoin has risen by nearly 30 times from $40, but it has also brought a lot of trouble to subsequent compensation.

3. Compensation liquidation has twists and turns, Mentougou compensation becomes the biggest disadvantage

The compensation incident has been delayed for several years, leading to many problems: users forget the number of bitcoins in their accounts; bitcoins have risen too fast, and the value is not bad. If the compensation is based on the legal currency at the time, the gap is too large; according to the currency standard Mentougou’s Bitcoin and fork coins are not enough to compensate.

But no matter which method is adopted, it is extremely bad for the market, and there is a possibility of selling.

Between December 2017 and February 2018, Law Fat’s lawyer Kobayashi once publicly stated that he had sold 35,800 Bitcoins through over-the-counter transactions to repay the losses of users in 2013.

In March 2020, Mentougou liquidation and compensation issued a draft, the draft mainly contains three points:

1. Creditors can choose two ways to accept compensation: fiat currency or encrypted currency (BTC or BCH);

2. Other fork coins such as BSV will be sold for legal tender;

3. Priority is given to the payment of small creditors less than 200,000 yen (about 13,000 yuan).

According to official 2019 data, Mentougou’s current asset situation: about 630 million US dollars in cash, 142,000 BTC and 143,000 BCH.

However, Mentougou said that it will not compensate users whose account balance is zero. Users who pretend to be victims of Mentougou and submit claims to the trustee will be refused compensation. If the bitcoin balance is lower than the amount claimed by the claimant, their request will also be rejected, but a second claim can be made.

However, on July 1, 2020, the day before the date of submission of the liquidation compensation plan agreed upon by Japan, the official announced again that it would be postponed for three and a half months-the latest date is set to October 15. On October 15th, it was again pushed to December 15th.

In fact, if Mentougou is compensated according to the amount of legal currency when it was stolen that year, then 142,000 bitcoins can not only compensate for the shortfall of 650,000 bitcoins (calculated at a price of 400 US dollars, valued at 260 million US dollars), but also large in the future. Make a fortune, because 142,000 bitcoins are worth about $4.1 billion based on the current price of $11,700.

Of course, the user will definitely not buy it. How could it be possible to accept the fiat currency price of the year? A new round of appeals and rights protection will begin again, and the dust in the Mentougou case will never be settled.

It is difficult to give a one-time solution to the historical problem of Mentougou, and many postponements are also looking for a better solution to this matter.

At present, as far as the market is concerned, as long as this matter is not fully resolved and there is a dispute, it will be bad. Mainly the potential impact of Bitcoin in the compensation plan.

If it is to compensate cryptocurrency, users will smash the market because of the high profit. This smashing will be more scattered and have less impact on the market.

However, if it is to compensate for the legal currency, it is difficult for Mentougou to sell a large amount of Bitcoin through over-the-counter transactions, so it can only enter the exchange to make a market. The huge selling pressure in a short period of time is difficult for the market to accept, and the price of Bitcoin will naturally fall sharply. .

However, from a long-term development point of view, due to various coin loss events and a total cap of 21 million, Bitcoin’s liquidity is average. If the huge amount of Bitcoin in Mentougou can flow into the market, it may bring fresh blood. At the same time keep Bitcoin alive.

On October 8, according to Whale Alert data, 95 BTC were transferred from Mentougou cold wallet to an unknown wallet address.

The change of Mentougou cold wallet also conveyed a message that the Mentougou incident is still an industry event that deserves our long-term attention.

It is still a mystery at present when the compensation can be solved. However, it is certain that no matter what kind of scheme is paid on the date of compensation, it must be the biggest disadvantage in the cryptocurrency field in a short period of time, but in the long run, it may be beneficial to the development of Bitcoin.