Goxxed again?

Friday 06 June 2014

If you thought the problems associated with Mt Gox were fading into a bitter, yet distant memory, for some it seems, that is not the case. One unlucky reddit member has learnt this the hard way to the tune of around $520,000. The member recently posted on the site that he “messed up big time” in his post entitled, “If you just received 800 Bitcoin out of the blue, it was from me.”

Mt GoxIt appears he didn’t at first know where he sent the 800 bitcoin as he then admitted, “I previously sent this address 300 bitcoin a year ago, and for the life of me I cannot remember what that was!” Luckily another reddit user came to the rescue by pointing out that the address that received the 800 bitcoin belonged to the now defunct bitcoin exchange Mt. Gox.

Mt. Gox is of course the Tokyo-based bitcoin exchange that was at one time the largest in the world, in terms of trade volume, until it declared bankruptcy in February, claiming that it had lost the private keys to 850,000 bitcoins. (Valued at about $553 million at the time of this writing).

It is quite possible that the reddit user in question, TheDJFC, won't ever see his 800 bitcoin again and advice from fellow reddit members includes contacting the lawyer handling the Mt Gox bankruptcy case.

Of course, this raises the issue again of the lack of recourse for someone who has sent bitcoins to an address. The owner of the wallet receiving the coins, is under no legal obligation to return them.

It does, at the very least, allow us bitcoiners to discuss the situation and use it to clearly show

both a major strength and a significant weakness in the use of bitcoin.

The importance of securing wallet passwords and addresses cannot be overstated and can be found in our passwords article and discussed further here.

As TheDJFC has demonstrated, once you’ve sent money to the wrong address, or if you have lost the password to your wallet, there is often no way of getting those bitcoin back. On the upside, the huge mistake highlights once again the brilliance of the blockchain: the transaction is fixed and traceable to a specific wallet provider, leaving some room for hope that TheDJFC will one day be reunited with his 800 bitcoins.

However, if Mt. Gox claims they lost the private keys to the addresses holding the 850,000 bitcoins, it tells me

  1. Mt. Gox might have lost the private key to that address as well, and
  2. I really need to double check the addresses before I send bitcoins.

As always, it pays to Be Alert, Be Accurate, Be Aware.

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