It was the Lehman Brothers of blockchain. 850,000 Bitcoin disappeared when cryptocurrency exchange Mt. Gox imploded in 2014 after a series of hacks. The incident cemented the industry’s reputation as frighteningly insecure. Now a controversial crypto celebrity named Brock Pierce is trying to get the Mt. Gox flameout’s 24,000 victims their money back and build a new company from the ashes.
Pierce spoke to TechCrunch for the first interview about Gox Rising — his plan to reboot the Mt. Gox brand and challenge Coinbase and Binance for the title of top cryptocurrency exchange. He claims there’s around $630 million and 150,000 Bitcoin are waiting in the Mt. Gox bankruptcy trust, and Pierce wants to solve the legal and technical barriers to getting those assets distributed back to their rightful owners.
The consensus from several blockchain startup CEOs I spoke with was that the plot is “crazy”, but that it also has the potential to right one of the biggest wrongs marring the history of Bitcoin.
The Fall Of Mt. Gox
The story starts with Magic: The Gathering. Mt. Gox launched in 2006 as a place for players of the fantasy card game to trade monsters and spells before cryptocurrency came of age. The Magic: The Gathering Online eXchange wasn’t designed to safeguard huge quantities of Bitcoin from legions of hackers, but founder Jed McCaleb pivoted the site to do that in 2010. Seeking to focus on other projects, he gave 88 percent of the company to French software engineer Mark Karpeles, and kept 12 percent. By 2013, the Tokyo-based Mt. Gox had become the world’s leading cryptocurrency exchange, handling 70 percent of all Bitcoin trades. But security breaches, technology problems, and regulations were already plaguing the service.
Then everything fell apart. In February 2014, Mt. Gox halted withdrawls due to what it called a bug in Bitcoin, trapping assets in user accounts. Mt. Gox discovered that it had lost over 700,000 Bitcoins due to theft over the past few years. By the end of the month, it had suspended all trading and filed for bankruptcy protection, which would contribute to a 36 percent decline in Bitcoin’s price. It admitted that 100,000 of its own Bitcoin atop 750,000 owned by customers had been stolen.
Mt. Gox is now undergoing bankruptcy rehabilitation in Japan overseen by court-appointed trustee and veteran bankruptcy lawyer Nobuaki Kobayashi to establish a process for compensating the 24,000 victims who filed claims. There’s now 137,892 Bitcoin, 162,106 Bitcoin Cash, and some other forked coins in Mt. Gox’s holdings, along with $630 million cash from the sale of 25 percent of the Bitcoin that Kobayashi handled at a precient price point above where it is today. But five years later, creditors still haven’t been paid back.
A Rescue Attempt
Pierce had actually tried to acquire Mt. Gox in 2013. The child actor known from The Mighty Ducks had gone on to work with a talent management company called Digital Entertainment Network. But accusations of sex crimes led Pierce and some team members to flee the US to Spain until they were extradited back. Pierce wasn’t charged and paid roughly $21,000 to settle civil suits, but his cohorts were convicted of child molestation and child pornography.
The situation still haunts Pierce’s reputation and makes some in the industry apprehensive to be associated with him. But he managed to break into the virtual currency business, setting up World Of Warcraft gold mining farms in China. He claims to have eventually run the world’s largest exchanges for WOW Gold and Second Life Linden Dollars.
Soon Pierce was becoming a central figure in the blockchain scene. He co-founded Blockchain Capital, and eventually the EOS Alliance as well as a much-derided “crypto utopia” in Puerto Rico called Sol. His eccentric, Burning Man-influenced fashion made him easy to spot at the industry’s many conferences.
As Bitcoin and Mt. Gox rose in late 2012, Pierce tried to buy it, but “my biggest investor was Goldman Sachs. Goldman was not a fan of me buying the biggest Bitcoin exchange” due to the regulatory issues, Pierce tells me. But he also suspected the exchange was built on a shaky technical foundation that led him to stop pursuing the deal. “I thought there was a big risk factor in the Mt. Gox back-end. That was my intuition and I’m glad it was because my intuition was dead right.”
After Mt. Gox imploded, Pierce claims his investment group Sunlot Holdings successfully bought founder McCaleb’s 12 percent stake for 1 Bitcoin, though McCaleb says he didn’t receive the Bitcoin and it’s not clear if the deal went through. Pierce also claims he had a binding deal with Karpeles to buy the other 88 percent of Mt. Gox, but that Karpeles tried to pull out of the deal that remains in legal limbo.
The Supposed Villain
Sunlot has since been trying to take over the rehabilitation proceedings, but that arrangement was derailed by a lawsuit from CoinLab. That company had partnered with Mt. Gox in 2012 to run its North American operations but claimed it never received the necessary assets, and sued Mt. Gox for $75 million. Mt. Gox countersued, saying CoinLab wasn’t legally certified to run the exchange in the US and that it hadn’t returned $5.3 million in customer deposits. For a detailed account the tangle of lawsuits, check out Reuters’ deep-dive into the Mt. Gox fiasco.
This week, CoinLab co-founder Peter Vessenes increased the claim and is now seeking $16 billion. Pierce alleges “this is a frivolous lawsuit. He’s claiming if [the partnership with Mt. Gox] hadn’t been cancelled, CoinLab would have been Coinbase and is suing for all the value. He believes Coinbase is worth $16 billion so he should be paid $16 billion. He embezzled money from Mt. Gox, he committed a crime, and he’s trying to extort the creditors. He’s holding up the entire process hoping he’ll get a payday.” Later, Pierce reiterated that “Coinlab is the villain trying to take all the money and see creditors get nothing.” Industry sources I spoke to agreed with that characterization
Mt. Gox customers worried that they might only receive the cash equivalent of their Bitcoin according to the currency’s $483 value when Gox closed in 2014. That’s despite the rise in Bitcoin’s value rising to around 7X that today, and as high as 40X at the currency’s peak. Luckily, in June 2018 a Japanese District Court halted bankruptcy proceedings and sent Mt. Gox into civil rehabilitation which means the company’s assets would be distributed to its creditors (the users) instead of liquidated. It also declared that users would be paid back their lost Bitcoin rather than the old cash value.
The Plan For Gox Rising
Now Pierce and Sunlot are attempting another rescue of Mt. Gox’s $1.2 billion assets. He wants to track down the remaining cryptocurrency that’s missing, have it all fairly valued, and then distribute the maximum amount to the robbed users with Mt. Gox equity shareholders including himself receiving nothing.
That’s a much better deal for creditors than if Mt. Gox paid out the undervalued sum, and then shareholders like Pierce got to keep the remaining Bitcoins or proceeds of their sale at today’s true value. “I‘ve been very blessed in my life. I did commit to giving my first billion away” Pierce notes, joking that this plan could account for the first $700 million he plans to ‘donate’.
“Like Game Of Thrones, the last season of Mt. Gox hasn’t been written” Pierce tells me, speaking in terms HBO’s Silicon Valley would be quick to parody. “What kind of ending do we want to make for it? I’m a Joseph Campbell fan so I’m obviously going to go with a hero’s journey, with a rise and a fall, and then a rise from the ashes like a phoenix.”
But to make this happen, Sunlot needs at least half of those Mt. Gox users seeking compensation, or roughly 12,000 that represent the majority of assets, to sign up to join a creditors committee. That’s where GoxRising.com comes in. The plan is to have users join the committee there so they can present a united voice to Kobayashi about how they want Mt. Gox’s assets distributed. “I think that would allow the process to move faster than it would otherise” Pierce says. “Things are on track to be resolved in the next three to five years. If [a majority of creditors sign on] this could be resolved in maybe 1 year.”
Beyond providing whatever the Mt. Gox estate pays out, Pierce wants to create a Gox Coin that gives original Mt. Gox creditors a stake in the new company. He plans to have all of Mt. Gox’s equity wiped out, including his own. Then he’ll arrange to finance and tokenize an independent foundation governed by the creditors that will seek to recover additional lost Mt. Gox assets and then distribute them pro rata to the Gox Coin holders. There are plenty of unanswered questions about the regulatory status of a Gox Coin and what holders would be entitled to, Pierce admits.
Meanwhile, Pierce is bidding to buy the intangibles of Mt. Gox, aka the brand and domain. He wants to then relaunch it as a Gox or Mt. Gox exchange that doesn’t provide custody itself for higher security. Despite the recent crypto recession with prices at multi-year lows, he believes there’s room for another exchange with a brand tied to the early heyday of Bitcoin.
“We want to offer [creditors] more than the bankruptcy trustee can do on its own” Pierce tells me. He concedes that the venture isn’t purely altruistic. “If the exchange is very successful I stand to benefit sometime down the road.” Even if the revived Mt. Gox never rises to legitimately challenge Binance, Coinbase, and other leading exchanges, Piece believes it’s all worth the effort. He concludes, “Whether we’re successful or not, I want to see the creditors made whole.” Those creditors will have to decide for themselves who to trust.
US Border Patrol seizes thousands of fake vaccine cards and Pfizer stickers
The US Border Patrol has reported seizing thousands of fake COVID-19 vaccination cards and Pfizer inoculation seals, the latest confiscation in what has been at least several thousand counterfeit cards found by customs officers this year. The latest batch arrived at the Port of Cincinnati in multiple shipments.
The latest Customs and Border Patrol seizure of counterfeit COVID-19 cards was reported by the agency on September 16. A total of 1,683 blank COVID-19 vaccination record cards were seized across five shipments that arrived starting on August 16, according to the agency. As well, these shipments contained 2,034 Pfizer inoculation stickers.
The report came only one day after CBP officials in Pittsburgh reported that they’d likewise confiscated fake COVID-19 vaccination cards, though a lesser amount at 70. In the latest case, the agents noted that the cards originated from China and were being imported by people who lived in private residences in multiple states, including Texas and Maryland.
As with previous seizures involving counterfeit cards, the Customs officials noticed that the latest fake cards featured “substandard printing,” as well as misspelled words. Other confiscated counterfeit vaccination cards featuring the CDC logo have also been reported at ports in Anchorage, Chicago, and Memphis.
The FBI has repeatedly warned that making, buying, and selling fake COVID-19 vaccination cards is illegal and could result in penalties. Despite this, many anti-vaxers continue to seek ways to fake vaccination records in an effort to get around vaccine mandates.
HBO Max lures in new subscribers by cutting its premium price in half
HBO Max, one of the largest streaming services on the market, is luring in new and returning subscribers by slashing the cost of its premium plan for up to half a year. The price decrease makes the premium plan cheaper than the ad-based plan, at least during the promotion, giving subscribers access to new theatrical movies from Warner Bros., HBO originals, and more.
HBO Max is now the destination for streaming HBO content; the platform’s parent company recently made the move to remove its now-defunct HBO app from Amazon’s Prive Video Channels platform, leaving those customers to finally make the transition to the new service.
That change happened earlier this week, with the new discount promotion coming only a couple of days later. The new deal is available only for the Ad-Free plan, which ordinarily costs $14.99/month but is temporarily lower at $7.49/month.
The ad-free plan includes access to 4K UHD resolution content, the ability to download for offline viewing, and the rest of Warner Bros. 2021 movie premieres with same-day streaming access. It appears the new promotional pricing is available for new and returning subscribers, as well as those who are jumping to HBO Max after Amazon Prime Video Channels lost access to HBO.
Overall, this is a great deal for those who want to catch up on their favorite HBO shows or stream the latest Warner Bros. theatrical movies from the comfort of their homes. The same-day theatrical movie releases only apply to 2021, however — it’s unclear whether this holiday season’s COVID-19 cases will fuel another series of lockdowns and whether Warner Bros. will extend its hybrid releases into 2022.
Watch Apple break down the iPhone 13 differences
It’s iPhone 13 preorder day, and if you’ve been scratching your head about whether to go iPhone 13 mini, iPhone 13, iPhone 13 Pro, or iPhone 13 Pro Max, a new Apple video could help filter through the options. Announced on Tuesday, there’s no shortage of information out there on what changes Apple made in 2021, and what sets its four new smartphones apart.
Now, it probably shouldn’t come as a great surprise to you that Apple is very impressed by Apple’s new smartphones. If you’re hoping for unbiased, impartial commentary on the new iPhone 13 and iPhone 13 Pro, this really isn’t the video for that.
However, with Apple’s virtual event meaning no opportunity for hands-on reports from media, along with the fact that we’re not expecting the first round of reviews until sometime next week, for the moment we’ll have to take what we can get. Given the four-strong line-up again this year, too, it’s also an opportunity to compare and contrast if you’re on the fence about which iPhone model fits your particular needs. As ever, that’s not necessarily an easy decision.
Like was the case in 2020, for most people the iPhone 13 and iPhone 13 Pro seem likely to be the sweet spot in 2021. The iPhone 13 mini is most affordable, but the smaller display could leave it too small for some. We also need to see whether Apple’s claims that it has addressed the mini battery life are accurate, too.
At the other end of the scale, the iPhone 13 Pro Max clearly has appeal for those who don’t want to compromise: whether that’s on screen size, cameras, or anything else. With a starting price of $1,099, though, that’s a whole lot to spend on a new smartphone. Meanwhile, unlike with the iPhone 12 Pro and iPhone 12 Pro Max, there aren’t any obvious differences in the cameras this year.
Last year, the iPhone 12 Pro Max got sensor-shift image stabilization and a larger lens. This year, though, the iPhone 13 Pro and iPhone 13 Pro Max have the same camera specs. It means you don’t have to find space in your pocket for the very largest handset if you want the very best camera tech Apple has to offer.
Clearly, you shouldn’t be basing your entire purchasing decision on Apple’s video. All the same, if you’ve been wondering about new features like macro photography support, the new Super Retina XDR display with its 120Hz ProMotion refresh rate, and the new AI-powered Cinematic mode, this video offers a more in-depth look than Apple had time for during its keynote on Tuesday.
Preorders of the iPhone 13 family are open now, with deliveries expected to begin next Friday, September 24.
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