Monday, February 17, 2014

Bitcoin Updates February 17 , 2014 -- Mt. Gox: Bitcoin Withdrawals Will Resume Soon .... Mt Gox seems to be stalling as despite the ability of BTC-e and Bitstamp to already resume withdrawals completely for bitcoin and fiat , Mt Gox still will not when any withdrawals will resume ( only saying soon ) and withdrawals will begin at a " moderated pace " with daily and monthly limits ( no statement as to what either might be or precisely why these capital controls are needed for their system ) and also market conditions will ba a factor impacting withdrawals ! So , no withdrawals today , check back Thursday for the next set of excuses ! Canada's Last Bitcoin-Friendly Bank ( Bank of Montreal ) Closes Accounts Nationwide ...... BTC - E customer complaints regarding withdrawals ?

all 17 comments
[–]davidshares 8 points  ago
TOKYO-The chief executive of Bitcoin trading platform Mt Gox shows remorse. He apologized "many times for any delay in our replies," Mark Karpeles said in an interview with the Wall Street Journal. At the same time, he refused to give details for the protection of customer deposits.
In the conducted via e-mail interview, Karpeles remained silent to the growing concern among customers about the financial circumstances of the Bitcoin platform. He wanted to rule only on technical issues, said the CEO. The platform had payouts with set reference to technical problems for over a week on ice .
Click to enlarge
Screenshot The site of Mt Gox.
"We understand your concerns on this issue," Karpeles wrote in the e-mail Monday. "All of the information to customers but are confidential."
On Monday, Mt Gox published on its website a statement , according to which a solution to the problems was found and "withdrawals will be soon possible." Payments should, however, be resumed in reduced speed. Moreover, it is new daily and monthly limits on withdrawals give to prevent problems.
The company's customers are pushing the platform to publish more information about their financial condition. On Monday at Mt Gox Bitcoin were traded at a substantial discount of more than half compared to other Bitcoin exchanges - a clear sign of distrust of the market.
Questions after the bankruptcy stay open In the e-mail to the Wall Street Journal, the French manager responded to questions about the financial solvency of the company several times with the reference to the fact that such information was confidential. The company has, however, its business model agreed with Japanese authorities "to ensure that we move within the law," he wrote.
More about Bitcoin
Bitcoin Exchanges Bitstamp and Mt Gox pay off again Ten amazing facts about Bitcoin Bitcoin panic is not justified according to expert Bitcoin glitch puts the market in a panic Mt Gox has struggled since July due to technical problems, as the platform for the first time put dollar payouts on ice. On 7 February, the company put all of sudden withdrawals froze and made this mistake in the Bitcoin software responsible.
Three days later, Mt Gox was damaged by its own account through fraudulent payment orders for which a function of the Bitcoin protocol called "transaction malleability" has been abused, which allows of updating the checksum of an already implemented Bitcoin transaction.
Problem with the "transaction malleability" Initially, many argued in the Bitcoin community that Mt Gox was simply failed to take the necessary internal measures to protect their own accounts against manipulation by the "transaction malleability", an already long-known and deliberately created function in Bitcoin protocol.
The very next day, the problem expanded, however, because hackers a previously unknown bug in the special software of major trading exchanges exploited to overwhelm them with a wave of manipulated transactions.
When asked why the company did not respond sooner to the concerns of customers, Karpeles replied: "I suppose you refer to the malleability problem. We sincerely apologize for this incident. Please be aware, however, that we are NOT the developers of Bitcoin. "When trading platform Mt Gox trying" to do our best to repair the problems and make it better for our customers. " Mt Gox've been struggling with a problem that was "known since 2011, but was overlooked by the Bitcoin developers," he added. "We are very surprised that somebody Mt Gox can be blamed for it instead of Bitcoin Software. "

    Canada's Last Bitcoin-Friendly Bank Closes Accounts Nationwide

    FEBRUARY 17, 2014

    In the course of technological development, there are a few occasions when fundamental breakthroughs push the human race forward by solving core human problems. In the past several decades we have seen technologies such as computers, the internet, and cell phones transform the way human beings interact and create all-new industries centred around them. In 2009, Bitcoin was released and has since begun to change the way the people of the world exchange value. Thousands of businesses have been started, jobs created, and the potential of human creativity has been ignited by another emerging industry.
    At Cointrader, we have prided ourselves on pioneering this exciting new technology in Canada. By and large, Canadians are receptive to new technology and the IT sector has thrived in this environment. This is why our local projects have been such a resounding success. We started the World's first physical Bitcoin brokerage, operated the World's first Bitcoin ATM, and have launched our own digital exchange. As of writing, we are also working on POS solutions, secure storage, and a hardware project. In less than a year, we have grown from a part-time staff of 3, to a full-time staff of 10, and are planning on doubling that base in within a few months. This type of growth and innovation is being replicated by passionate start-ups around the country. This trend has been noted by national media, some even expecting Canada to become the Silicon Valley of bitcoin.
    Given that 1.3 Million Canadians are currently unemployed, that economic growth in 2013 was the worst since the recession, and that the widening trade deficit reached $1.7 Billion in December, it is profoundly disheartening to witness Canada now attempt to stifle the flourishing local Bitcoin economy.
    This past week the Canadian Finance Minister, Jim Flaherty, singled out Bitcoin, not in terms of its potential and growing positive economic influence for Canada, but as a threat:
    "It is important to continually improve Canada's regime to address emerging risks, including virtual currencies such as Bitcoin, that threaten Canada's international leadership in the fight against money laundering and terrorist financing."
    In addition, a freedom of information request revealed an even more aggressive stance being debated by FINTRAC. The request revealed that Canada has been considering "chok(ing) bitcoins oxygen (sic)” by denying Canadians access to the foreign-exchange market and even the possibility of forcing exchanges underground.
    In the wake of this rhetoric, we were informed this morning by our bank that the last remaining Bitcoin-friendly charter bank, Bank of Montreal, is closing all Bitcoin-related business accounts across Canada. Despite the fact that Cointrader has already implemented an anti-money laundering regime to comply with potential FINTRAC regulations which was vetted by BMO itself, the bank has decided to sever our account as well. These actions were taken immediately following the remarks made last week and without any other provocation or evidence of wrongdoing.
    Cointrader has already been working on expanding our business internationally, with a home base here in Canada. Unfortunately, as a result of these recent events, we are being forced to consider relocating our headquarters to a more innovative jurisdiction where dubious fear-mongering does not pre-emptively close doors on the entrepreneurial spirit. If Canada continues it's negative stance, and chooses not to help this thriving economy grow in accordance with the law, then we will be forced to relocate to more forward-thinking economies which are able to encourage innovation while also effectively deterring criminal behaviour.
    Regardless of the future direction taken by Canada, Cointrader will be continue with it's expansion plans. We have ATM locations and brokerages planned for London and Singapore in March, and we will be continuing to expand our marketplace on, which will integrate into our ATMs. The experience of pioneering this industry has allowed us to develop specialized software for potential bitcoin brokers, and tailor our exchange for ATM operators. We have a secure storage solution, POS system for merchants, and ATMs linked to our exchange in development. We are excited to work with our partners around the world and to bring the best bitcoin-related products to market.
    Bitcoin, and the world of crypto-currency, is here to stay and will create thousands of jobs, generate wealth, and give consumers better options for all kinds of financial transactions around the world. Whether or not Canada wishes to encourage and benefit from these innovations remains to be seen. But perhaps the government-sanctioned 'Mintchip' will enjoy an auspicious monopoly in the region, at the expense of small business.
    In the mean time we are continuing operations as normal and pursuing alternatives. We do not expect any downtime and will post a new update shortly with progress.
    Paul Szczesny
    Co-Founder and CTO
    Cointrader Exchange Inc.

    ( BTC - e having issues too ? Seems like this is a recent problem to be fair .....)

    submitted  ago by JamboRambo
    Please upvote for visibility.
    Although, BTC-e withdrawals may be working at the moment. There are a bunch of us who have not received our withdrawals for a whole week.
    People who submitted a withdrawal request on Feb. 10-11th, have not received any funds, including myself. BTC-e support has been less than supportive and they are replying back with one word responses, not getting anything done. When we reply back, they do not respond back.
    We are not sure why they are not sending us our funds, many of us were holding a lot of bitcoins in there. The following threads below are being kept current by some of us who have not received funds. In addition, I will update this post when/if I receive my funds!
    Also, if you sent a withdrawal request in BTC-e and have not received funds, please add to this posting! One week without support from BTC-e is too long! Be careful!

      [–]btc-rawted 5 points  ago
      I am also having issues. I have posted about it in the threads linked above, but here is some additional info for naysayers. BTC-e is either selectively scamming, or their system is completely messed up. However, I find it difficult to believe that a support agent can visit a ticket several times and never once notice that no funds have been sent to the destination address.
      My initial withdrawal -
      Support's first response -
      Support's second response -
      Support's third (final) response -
      My btc-e tx : #343391292
      I've done thousands of transactions and am a relatively high rated member of the forums and WOT on #bitcoin-otc. (so you can see my gpg registered WOT addy matches the withdrawal addy on BTCe)

        Why Mt. Gox May Be Headed for Bankruptcy

        Ezra Galston is currently a venture capitalist at Chicago Ventures and the former director of marketing for CardRunners Gaming.

        It has been a tough week for bitcoin: a freeze on withdrawals at Mt. Gox due to transaction malleability, multiple DDoS attacks across the exchanges, and a consequent plunge in price.

        In my view, however, Gox should be everyone’s biggest focus. While their price spreads and cash-out delays have plagued the site for more than six months, I believe their current situation and recent statements belie transparency and suggest insolvency. Namely, that their business model and recent past raise a number of red flags that make comparing the company to now-bankrupt online gambling operators highly relevant.
        Three weeks ago, I took to Re/code to describe how the evolution of online poker is likely to be correlated and instructive to bitcoin’s development. In it, I wrote: “I believe we could see a major exchange go under, especially if regulations and wire transfers become more complex, or if the cost of acquiring customers becomes more competitive.”
        I have seen this story play out nearly a dozen times before during my tenure as an executive in the online poker world and, in this article, I want to set out why I think Mt. Gox is in big trouble.

        Fund seizures

        Mt. Gox had nearly $5 million in funds seized from its bank accounts in 2013. It’s unclear whether these were operating funds or customer deposits. This is highly reminiscent of seizures in the online gambling world, which deeply affected operators’ solvency.
        These fund seizures, such as $115 Million from Full Tilt Poker, or $33 Million in a 2009 DOJ Seizure, were initially smoothed over by their operators. Players were typically reimbursed and withdrawals were honored.
        What outsiders hadn’t realized at the time was the strain this placed on individual operators. In order to keep the business running, operators had to remove the ring-fence that protected customer deposits and borrow from customer balances to support operations.
        While everyone believed that the poker sites were making billions, their overheads due to staffing and marketing was significant. More importantly, each new seizure forced the operators to move downstream to less and less reputable transaction processors and banks. These processors charged heavier fees because of the heightened risk, and often absconded with deposits, because, well, they could.
        We see this with Mt. Gox as well: the company lost its relationship with reputable processors, such as Dwolla, and has never managed to integrate with Skrill or Neteller.

        Phantom deposits

        It appears that Mt. Gox has long known of, and suffered from, transaction malleability. As explained in this Coindesk post, if a user claimed not to have received their bitcoin (either truthfully or maliciously), Gox was likely to have re-sent the funds to avoid negative press as a result.
        This process of fronting money – either in the hopes of recovering the initial transactions or to maintain positive perceptions – is a vicious cycle that depends on deposits outpacing withdrawals to be sustainable. Once that balance reverts, it’s an effective bank run, and the operator will eventually not have enough deposits to cover user balances.
        It is highly analogous to the working capital model that caused the insolvency of Full Tilt Poker, once a billion-dollar industry leader. In their case, the black market ACH (automated clearing house) processors they had contracted to transfer player funds from bank account to virtual wallet struggled to convince banks to process those transactions.
        Full Tilt, wanting to maintain a dominant image and not lose player liquidity to competitors, chose to credit attempted (but failed) withdrawals to player accounts, hoping to recoup those transactions as their processors improved. This backlog of ‘phantom’ deposits ultimately reached $130 million. Executives later admitted that it started small and spiraled out of control.
        Although I have not seen any indication as to the scale of Gox’s equivalent phantom transactions, the ramifications are considerable – especially if malicious customers exploited the issue to their advantage.

        Excuses, excuses…

        Mt. Gox’s public statements have been only partially accurate, initially blaming bank/processor delays in June 2013, and now admitting a systemic technical issue. This evolution of excuses mirrors those of gambling operators who were quick to blame a difficultly in transaction processing before admitting internal issues.
        Eurolinx was a popular poker site from 2006 to 2008. However, in 2009, withdrawals began slowing considerably. Initially, it claimed:
        “The situation is only temporary because we have had an unusually high number of withdrawals that, in combination with increased security checks, have caused a backlog and delays throughout the system.”
        Weeks later they admitted: “Most of the delays occurred due to payment processor issues we experienced in May and June. The problem has now been fixed, however, we have some withdrawal backlog to deal with.” And, months later, they filed for bankruptcy – leaving players millions of dollars the poorer – and ultimately admitting that they gambled player deposits in the stock market and lost, big time.
        FullTiltPoker enjoyed market dominance from late 2006 until their DOJ indictment in April 2011. Soon after being banned from servicing US players, the DOJ gave them permission to repay all depositors, but they failed to do so.
        On May 15th, FTP claimed: “Full Tilt Poker faced numerous challenges and hurdles to ensuring the smooth operation of its international business and the orderly return of US player funds. We are absolutely committed to making sure that US players are refunded as soon as possible. We apologize for the delay and the fact that we underestimated the time it would take to work through these issues.”
        On May 30th, they repeated:
        “We still do not have a specific timeframe for [paying back players]. There has been, and remains, no bigger priority than getting US players paid as soon as possible, and we have been working around the clock to get this done.”
        However, at this point, they admitted solvency issues for the first time, saying: “We are raising capital to ensure that the US players are paid out in full as quickly as possible.” The company admitted total insolvency three months later, on August 31st.
        In these cases and more, the operators cited seemingly legitimate reasons for process delays. All were rooted in industry truths – difficulty of bank processing or technical complications of implementing a mass refund – but were ultimately covers for deeper issues.
        Most worrisome is that in the weeks prior to nearly every major online poker bankruptcy, the operators marketed deposit bonuses and perks – a last attempt to buy solvency and time.
        This was true in the case of Full Tilt Poker and Eurolinx, as well as Ultimate Bet, Absolute Poker, GoalWin Poker, Poker in Venice and more. Mt. Gox did the same – offering discounted trading fees as recently as December 19th – a curious move for an operator clearly aware they were facing transactional hurdles.

        Tell-tale pattern

        I am hopeful, along with the wider Bitcoin community, that Mt. Gox can overcome its difficulties and rebuild consumer confidence.
        As Mt. Gox has struggled with both bitcoin and fiat withdrawals, it should be noted that, in a public ledger cryptocurrency, it is possible to certify the solvency of reserves with digital signatures showing the location of all deposits – although no exchange currently utilizes this feature of bitcoin.
        While that would solve questions surrounding bitcoin solvency, it would leave fiat concerns unresolved. That said, my experience over the past decade has shown that insolvency tends to follow a pattern, that Mt. Gox clearly fits, and I feel the company is likely to fail unless outside capital comes to the rescue.

        Mt. Gox: Bitcoin Withdrawals Will Resume Soon

         (@southtopia) | Published on February 17, 2014 at 11:34 GMT | CompaniesExchanges,Mt. GoxNews

        Mt. Gox has issued an official statement saying it has found a workaround for its bitcoin transaction malleability problems, which will see bitcoin withdrawals resume “soon”. This comes after the team worked over the weekend to begin implementation of a new transaction system.
        It said the workaround was “thanks to our friends at“. As expected, when withdrawals recommence they will do so “at a moderated pace and with new daily/monthly limits in place” to prevent a run that could put too much strain on the company’s resources.
        The statement said:
        “We apologize for the inconvenience caused by the recent suspension of external bitcoin transfers. Fortunately, as we announced on Saturday we have now implemented a solution that should enable withdrawals and mitigate any issues caused by transaction malleability (please see our previous statements for details on this issue.
        Thanks to our friends at, MtGox now has a workaround that will use a unique identifier created by Blockchain to show whether transactions have been modified or not. This will prevent any fraudulent use of the malleability issue and protect the assets of our customers.”
        Implementing the workaround involved re-indexing the entire bitcoin block chain with its 32 million entries, fully deploying the new NTX ID, and implementing a new bitcoin withdrawal queue that would need to be tested before withdrawals could begin. Mt. Gox also implemented new security measures, including email notification for users after logging in.
        The latest statement is a little different in tone to previous Mt. Gox statements, apologizing for delays and promising a new update “by Thursday at the latest”, suggesting the company has realized the importance of clear communication with its users.
        Bitstamp, another of the ‘Big Three’ bitcoin exchanges, has already allowed withdrawals to begin again after experiencing problems due to the transaction malleability issue.

        Protests continue

        The small but determined protest outside Mt. Gox’s Tokyo office continued over the weekend and into Monday, with visitors reportedly dropping by from different parts of the world to join in.
        Original protestor Kolin Burges claimed he had spoken to a Mt. Gox representative but was still not 100% satisfied the dispute could be resolved to his satisfaction, unless all withdrawals could begin again without holdup. Local trader and bitcoin entrepreneur ‘Aaron’ said he hoped for a meaningful solution, but had personal doubts Mt. Gox could actually deliver all the bitcoins its users supposedly held in their wallets.
        So far, there has been no proof or official indication that Mt. Gox does not control all the bitcoins it claims to, and the company maintains its withdrawal suspension is due to technical problems caused by the bitcoin protocol’s transaction malleability bug, an issue that was first documented in 2011.

        itBit Offers Incentives for Bitcoin Traders to Switch Exchanges

         (@danielcawrey) | Published on February 16, 2014 at 14:13 GMT | Companies,ExchangesNews

        Singapore-based exchange itBit recently built a trading-specific platform for bitcoin; now it is offering a cut-price promotion in an attempt to draw in new customers.
        The company has not had any of the problems that other exchanges have been experiencing lately. In fact, itBit CEO Rich Teo has said that recent events have led to increased interest in his company’s platform.
        “Based on the way our wallet is built, we weren’t affected. We haven’t seen any issues,“ he said.

        Cold storage

        Some exchanges have been struggling with transactional problems, but itBit’s cold (offline) bitcoin storage methods have allowed the company to avoid these issues altogether. Teo said:
        “No customer coins are ever exposed to a hot wallet.”
        “At itBit, bitcoin and fiat deposits and withdrawals are business as usual,” said Antony Lewis, business development manager for the exchange.
        “For withdrawals, we enforce a 72-hour withholding period,” Lewis said. “This can be reduced to 24-hours at a user’s request, if they enable multi-factor login authentication.”
        These waiting times are for user security purposes, which is something itBit takes seriously. The company provides a flow chart that shows how it handles transactions and the processes that are in place to protect investors.
        “Although some clients say they don’t like this, it gives them protection against unauthorized withdrawals,” Lewis explained.
        itBit’s banking partner is Singapore’s Oversea-Chinese Banking Corporation. In 2012, Bloomberg Markets ranked OCBC as the “World’s Strongest Bank”. For 2013, the bank ranked second.

        Top ten strongest banks. OCBC is #2. Source: Bloomberg
        Top 10 strongest banks: OCBC is at number two. Source: Bloomberg

        Free trades

        Because the company believes its secure bitcoin storage features will attract customers shaken by the recent events at other exchanges, itBit is doing a promotion – waiving some commissions for new customers
        “We are giving out trading credits so people can essentially trade for free,” Teo said. “If you deposit over $10,000 worth of BTC or currency, then we’ll provide you with a $50 trading credit.”
        For customers who deposit between $5,000 and 10,000 there will be a $25 trading credit, while those who fund their account with $2,000-$5,000 will get a $10 credit.
        itBit is currently attempting to get money transmitter business (MSB) licensing in the 48 US states that require it. Because of this, it is only accepting US banking customers who reside in New Mexico or South Carolina, because these are jurisdictions where state MSB licensure is not required.
        An alternative for customers in the US is to wire itBit money from an offshore bank account. Many US-based customers, who Teo terms as “institutional”, go this route. “We also don’t charge any withdrawal fees or any transaction fees,” Teo pointed out.

        Big in Asia

        Teo says that itBit has a diverse and global clientele, and it has a large customer base in the Asia region. itBit has proved very popular with traders in Singapore, Hong Kong, China and Australia.
        While most customers are trading in US dollars, the euro and the Singapore dollar are also available trading pairs.

        USD exchange trading volume has been big business recently. Source:
        USD exchange trade volume has been big business the past 30 days. Source:

        itBit’s 15-person headquarters is sited in Singapore, but the company has offices in New York and Shanghai as well.
        Teo used to work in the finance industry in New York, and he believes the city will be important for cryptocurrencies.
        “We do have a very New York-based background. We think that New York will play a role in digital currencies over the next decade.”
        The company is hoping to expand its reach to mainland China soon. Yuan-to-BTC trading is not available on itBit at the moment, and will not be within the next few months. However, it is “something that we want to do,” according to Teo.
        The exchange’s waived-fee promotion, called the Rebate & Reward Program, will last until February 16. (See also itBit’s announcement concerning malleable transactions.)

        As Mt.Gox Implodes, Rival Bitcoin Exchanges Remain Surprisingly Stable

        Next Story

        Watching the gyrations in the price of Bitcoin has been spectator sport the past several days. However, unlike with prior busts and races, the price of Bitcoin has diverged heavily across its several exchanges. This has led to the Bitcoin market itself becoming siloed.
        Bitstamp, BTC-E, and Mt.Gox halted withdrawal of Bitcoin from their exchanges for varying amounts of time due to a potential exploit. Both Bitstamp and BTC-E haveresumed withdrawals. Mt.Gox, the first to force users to stop removing Bitcoin from its exchange, remains closed in that regard.
        This had led the cost of Bitcoin on Mt.Gox to fall dramatically. Sitting around $900through most of January, following previous highs north of $1,200, Bitcoin is now worth under $300 on Mt.Gox, where it has traded in recent hours on the low end of the $200s. Those who own Bitcoin on the exchange are betting that Mt.Gox won’t be able to solve its problems, and that their deposits are not secure; they are willing to let their Bitcoin go for far below-market rates.
        And that’s the most interesting part of this. Bitcoin, widely mocked as immature, starry-eyed, unstable, and far-fetched — often by myself, it must be said — is enjoying something akin to price stability on other exchanges. Even following two of its largest exchanges suffering from technical issues, and a once-important exchange implode publicly.
        This shakes out in the following way: Those who believe in Bitcoin have continued to do so — just not on Mt.Gox, really — even in the face of public shaming through potential technological weakness, and the effective death of Mt.Gox itself, a once high-flying member of the larger Bitcoin fabric; who will trust it now?
        So, we can take the above to mean that Bitcoin, despite painful setbacks, remains mostly stable in terms of its market price on exchanges that are fully open. Would that have been the case six or 12 months ago? I think not.