>At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers.
Yes, considering Gox only had 2 bank accounts (and now are down to just 1 in Japan) I don't see how hard it is to compare balances and notice 744,000 coins are missing.
They claim that over time the cold wallet was cleaned out. If this is true then the first few customers would've complained hey I never got my coins, and he could've seen shenanigans happening due to his php wallet implementation and halted all trading. Then thousands more customers. I find it hard to believe 744,000 worth of coins disappeared over months and nobody noticed until recently
Re:MtGox.com is offline
by FireBeyond on Tuesday February 25, 2014 @12:04AM
(#7295736)
Which is just another aspect of the travesty - that someone responsible for routinely trading tens of millions of dollars per transaction should feel the need to cover up a $20,000 loss.
Leeson tried to cover it up because he wasn't supposed to be trading at all, he was supposed to a broker and he decided to try to make some extra money.
At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers.
If the numbers differ by more than timing differences, shut it down, debug it, and prevent a small problem from becoming a big problem.
The Barings backstory is that the billion-dollar loss started with a 20k bad trade, Leeson tried to cover it up, and it snowballed.
It wouldn't be surprising to learn that MtGox followed a similar trajectory.