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Timeline since beginning of DOJ Silk Road investigation

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Mar 4th, 2014
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  1. April 12, 2013 Mtgox starts an AMA on reddit. States 90-95% of coins are cold storage and does not run a fractional reserve. (either we assume he is solvent here or he’s been running a fractional reserve since June 2011’s hack)
  2. http://www.reddit.com/r/Bitcoin/comments/1c7ahh/we_are_mt_gox_ama/c9dpwct
  3. https://www.facebook.com/MtGox/posts/443093862439476 (proof of date of AMA)
  4. https://bitcointalk.org/index.php?topic=23938.msg1177353#msg1177353 (security practices dated 9/10/12)
  5.  
  6. May 14, 2013 Mtgox’s dwolla account is seized by Dept of Homeland Security for violating money transfer regulations. (it is revealed in Nov 2013 that the real motivation for the seizure was part of a larger operation to take down Silk Road)
  7. http://techcrunch.com/2013/05/16/mt-gox-dwolla-account-money-seizure/
  8. http://thegenesisblock.com/mt-gox-seizures-linked-silk-road-fed-testimonies/
  9.  
  10. May 30, 2013 Mtgox now requires all users who deposit or withdraw fiat to verify their accounts.
  11. “Until now, Mt. Gox has tried to strike a careful balance between anonymity and money laundering laws, allowing anyone making trades under $1,000 to do so without a verified account and only demanding identification for larger trades. “
  12. http://techcrunch.com/2013/05/16/mt-gox-dwolla-account-money-seizure/
  13.  
  14. October 2, 2013 Dread Pirate Roberts (DPR) is arrested and Silk Road is shut down.
  15. http://www.forbes.com/sites/alexkonrad/2013/10/02/feds-shut-down-silk-road-owner-known-as-dread-pirate-roberts-arrested/
  16.  
  17. Dec 20, 2013 Three Silk road 2.0 employees are arrested in a global coordinated crackdown on the darkweb drug marketplace.
  18. http://www.forbes.com/sites/andygreenberg/2013/12/20/at-least-two-moderators-of-the-silk-road-2-0-drug-site-forums-arrested/
  19. http://www.forbes.com/sites/andygreenberg/2013/12/20/feds-indict-three-more-alleged-employees-of-the-silk-roads-dread-pirate-roberts/
  20.  
  21. Dec 21, 2013 131,000 bitcoin days destroyed.
  22. https://blockchain.info/charts/bitcoin-days-destroyed-min-year?showDataPoints=false&show_header=true&daysAverageString=1&timespan=&scale=0&address=
  23. http://www.reddit.com/r/Bitcoin/comments/1tfcad/there_were_an_awful_lot_of_bitcoin_days_destroyed/?utm_medium=twitter&utm_source=Fancy+Show+Tech
  24.  
  25. Jan 26, 2014 Charlie Shrem is arrested for money laundering for Silkroad using his company Bitinstant in connection with Mtgox.
  26. “Shrem then filled the orders by transferring funds into an account controlled by Faiella and hosted on a third-party, Japan-based Bitcoin exchange. Together the two allegedly sold over $1 million in bitcoins to Silk Road users,”
  27. http://business.time.com/2014/01/27/bitinstant-ceo-charlie-shrem-arrested-for-alleged-money-laundering/
  28.  
  29. Jan 30, 2014 date of meeting between Japanese Mizuho bank and Karpeles. Karpeles acknowledges Bitinstant users are being investigated and that he's investigating money laundering cooperatively with us gov. Banking representative informs Karpeles they will be closing his Mtgox account soon. Karpeles asks why since he is following all rules and regulations but receives vague answers. Jan 30, fits the timeline of banking issues after Shrem got arrested.
  30. http://picosong.com/Y7di/ (original audio) (audio file was leaked anonymously on March 3, 2014)
  31. http://www.reddit.com/r/Bitcoin/comments/1zepgt/mark_apparently_leaked_conversation_with_a_bank/cft1kgq (japanese conversation is translated)
  32.  
  33. Sometime between Feb 1- Feb 24 DOJ issues subpoena to Mtgox. http://www.businessinsider.com/report-mtgox-subpoenaed-by-us-prosecutor-2014-2
  34.  
  35. Feb 5, 2014 former bitinstant users are now required by gox to verify id by mailing notarized documents by mail to Japan.
  36. http://www.reddit.com/r/Bitcoin/comments/1wyrdu/mt_goxs_ridiculous_new_documentation_requirements/
  37.  
  38. Feb 5, 2014 reddit user ‘coinsearcher’ flies to Mtgox headquarters and confronts Gonzague Gay Bouchery to question where his bitcoins are.
  39. http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_at_mtgox_offices_5_to_7th_february
  40.  
  41. coinsearcher tells us his attorney friend sent him info suggesting the US authorities is ‘squeezing’ Mtgox.
  42. http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_at_mtgox_offices_5_to_7th_february/cfberiu
  43.  
  44. Feb 6, 2014 135,000 bitcoin days destroyed an unusually large transfer of coins (potentially to the DOJ?)
  45. https://blockchain.info/charts/bitcoin-days-destroyed?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=
  46.  
  47. coinsearcher adds more detail on his conversation with Gonzague further implying there is a criminal investigation that is related to the inability to release bitcoins for withdrawal.
  48. “If you look at the bitcoin days destroyed in the weeks / days leading up to the withdrawal suspension, there are two huge spikes. If you assume these coins moved had a medium age of 1 year, you get almost 730,000 BTC. i.e. divide the total days destroyed by 365. https://blockchain.info/charts/bitcoin-days-destroyed-min-year” (first spike was Dec 21, 2013 the day after SR2.0 arrests)
  49. http://www.reddit.com/r/Bitcoin/comments/1z3ld0/rbitcoin_markets_the_us_government_has_control_of/cfqn1zr?context=3
  50.  
  51. Feb 7, 2014 user is locked out of his account for previously using bitinstant, he needs to get id verification.
  52. https://bitcointalk.org/index.php?topic=453760.0
  53.  
  54. Feb 7, 2014 Mtgox stops all bitcoin withdrawals citing technical problems. (note that this is the day after the massive bitcoins days destroyed)
  55. https://web.archive.org/web/20140224133422/https://www.mtgox.com/press_release_20140207.html
  56.  
  57. Feb 10, 2014 Mtgox issues press release that TX malleability is causing the bitcoin withdrawal problem. They blame the protocol. Bitcoin experts have stated the protocol is fine. Gox’s internal code is sloppy thus causing the problem. (This is a possible stalling tactic of Mtgox)
  58. http://www.cryptocoinsnews.com/2014/02/10/mt-gox-blames-bitcoin-core-developer-greg-maxwell-responds/
  59.  
  60. Feb 15, 2014 Bruce Fenton (potential investor) contacted Karpeles to offer capital and help to fix the exchange to get it running. Financial statements were given to Fenton but the deal did not move forward. Karpeles gave no indication that coins were missing.
  61. http://www.reddit.com/r/Bitcoin/comments/1z6phy/my_conversation_with_mark_from_mt_gox_my/
  62.  
  63. Feb 15, 17, 19, 20 2014 Mtgox website announces will be working on restoring withdrawals soon, eventually moves due to ‘security issues’ and more delays.
  64. https://web.archive.org/web/20140221015037/https://support.mtgox.com/home
  65.  
  66. Feb x, 2014 crisis pdf is circulated among potential bailout investors (secondmarket, winklevoss?, Circle?). I've been told the crisis strategy pdf was deliberately shown to investors not with the intention of acquiring investment but to get them to instill fear and panic in the market about Gox's insolvency. Someone with insider knowledge about Gox's temporary insolvency (govt seizure) would benefit by buying a lot of cheap coins at $100 knowing that in the near future Gox would come back and rebrand itself as a new exchange and solvency suddenly restored. Shrem has mentioned in a podcast that Gonzague has been running Mtgox for several months now as the de facto CEO.
  67.  
  68. Feb 22-23, 2014 “SecondMarket was, in fact, approached by Mt. Gox some time last weekend. Mark Karpeles approached Barry Silbert to solicit an acquisition offer”
  69. “However, when the magnitude of the theft and potential fraud became free, Silbert and his team quickly pulled out of discussions,”
  70. (I question the sincerity of the intent of Karpeles approaching Silbert for a bailout, no sane person would bail out Mtgox. Surely Karpeles must know the reaction of a VC that is already well known in the bitcoin community would be to panic and distance themselves from Mtgox right? Maybe this was a way to leak that Mtgox was insolvent thus inducing panic and fear on their own exchange? Or maybe Karpeles was actually delusional enough to believe what was written in the Crisis pdf)
  71. http://two-bit-idiot.tumblr.com/post/77920927310/i-retract-nothing-i-have-written-so-far-regarding-mt
  72.  
  73. Feb 24, 2014 Crisis Strategy pdf is leaked to public via twobitidiot's blog. All major bitcoin exchanges issue coordinated joint statement condemning Mtgox insolvency. Mtgox has massive panic selling throughout the whole day and abruptly shuts down. Karpeles becomes public enemy #1. (Twobitidiot is invested in a FDIC style insurance for bitcoin. The exact type of service that would be in demand after a bitcoin exchange disaster)
  74.  
  75. Feb 25, 2014 Jon Wickedfire, an alleged news journalist for Fox news, interviews Karpeles on IRC. Gives vague links referring to a 9gag.com site. Karpeles drops hints alluding that coins are not “lost” but “temporarily unavailable”.
  76. http://www.wickedfire.com/shooting-shit/179038-my-conversation-mark-karpeles-mtgox-2.html#post2164682
  77.  
  78. Feb 26, 2014 ne0futur, an IRC Mtgox support mod, says Karpeles can not speak about certain things by the US government
  79. http://pastie.org/private/qjdf6xtxohxa8qxsnjtmq
  80.  
  81. Feb 28, 2014 Mtgox files for bankruptcy protection. This is covered in the global media.
  82.  
  83. March 2, 2014 the Jan 30th conversation between Karpeles and the Japanese banker is released by anonymous user 'nanashi' in the IRC chat room. Karpeles acknowledges Bitinstant users are being investigated and that he's investigating money laundering cooperatively with us gov. Date of Jan 30, fits the timeline of banking issues after Shrem got arrested. Who and why would they leak this audio file? Karpeles? Is it standard business practice to record a conversation with a banker in Japan?
  84. http://pastebin.com/2xF9VCXj (IRC chat log)
  85.  
  86.  
  87. user 'nanashi' says he is a messenger and that hackers are trying to find out the truth. That a random lease document pdf, employee info, mtgox's trading engine source code and that audio conversation are released. My speculation is that the audio may have been leaked by someone who's trying to protect karpeles reputation. Maybe someone wants to make it public that Karpeles is working with the DOJ and did not steal customer coins. Maybe Karpeles leaked this information himself.
  88.  
  89. however he says: [02/03/2014 21:35] <nanashi____> want gox boss going a jail for crime against user
  90.  
  91.  
  92.  
  93. At this point, there seems to be a lot of activity happening behind the scenes that is not being explained in the official statements or actions of Mtgox. mtgox.com shows they are under bankruptcy protection. That leaves them the option for civil rehabilitation meaning that they may have ability to reopen business in order to pay customers back. That was explicitly written by Mtgox's attorneys.
  94.  
  95. "In order to increase repayments to our creditors, it is necessary to explore the possibility of having MtGox Co., Ltd. continue its business. This is why the civil rehabilitation procedure has been chosen, Rebuilding MtGox Co., Ltd under the supervision of the court in a legally organized procedure while giving proper explanations will not be for the sole benefit of the company but for that of the whole bitcoin community.
  96.  
  97. All efforts will now be made to restore the business and recover damages to repay debts to creditors. We hope for the understanding and cooperation of all."
  98. https://www.mtgox.com/
  99.  
  100. Mtgox can not possibly pay back their creditors if they only had 2000btc left like the Crisis Strategy pdf stated (unless they ignore the 740k btc missing as a liability). I infer this to mean that in the near future Mtgox or a rebranded company will soon have a large enough bitcoin injection (possibly from the cold storage wallets seized by the Feds) to run a profitable exchange. Although this is just an option and does not mean they are yet approved for this.
  101.  
  102.  
  103. ** speculation: notice the timeline implies that in April 2013, business was running smooth with no withdrawal delays in either fiat or btc. After May 2013, verification becomes a requirement. Payouts in fiat become harder. 5 months pass before DPR is arrested in October 2013. Within 2 months, SR2 employees are arrested in dec 2013. Jan 26, 2014, shrem/faiella are arrested. Afterwards Mtgox insanity ensues.
  104.  
  105. ** I also left out the Coinlab lawsuit for breach of contract in May 2013. That doesn’t have too much significance regarding the 9gag theory. (govt seizure)
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