Mt Gox’s Mark Karpeles on the Hack That Shaped Crypto | Blockcast 22

Credited with being one of the world's first bitcoin exchanges – accounting for up to 80% of trading volume during its peak – Mt Gox first launched in the summer of 2010 but suspended operations in February 2014 amid heightened speculation about potential untoward activity. The fall of the Japanese exchange in 2014 was prompted by 750,000 bitcoin – at the time worth around $500 million, and now in the billions – that went missing, putting crypto’s future in doubt. Its former CEO Mark Karpeles remains a controversial figure.

Mark rose to prominence as the CEO of Mt. Gox, once the world's largest Bitcoin exchange. Founded in 2010 by American programmer Jed McCaleb, Mt. Gox quickly became the go-to platform for buying, selling, and trading Bitcoin, handling a significant majority of all Bitcoin transactions at its peak.

However, Mt. Gox's meteoric rise was accompanied by mounting controversies and technical challenges. From security breaches to regulatory scrutiny, the exchange faced numerous setbacks that ultimately culminated in its catastrophic collapse in 2014. Hundreds of thousands of Bitcoins belonging to users vanished, sparking outrage and legal battles that continue to this day.

Mark found himself thrust into the spotlight as the face of Mt. Gox's downfall, grappling with accusations of mismanagement, negligence, and even embezzlement. Despite maintaining his innocence, Mark faced a grueling legal battle and endured intense public scrutiny in the aftermath of the exchange's demise.

In this candid and unfiltered interview, Mark opens up about his experiences navigating the tumultuous landscape of early cryptocurrency adoption, and the state of the cryptocurrency industry a decade later.

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Transcript

SPEAKER_03: 0:00

Yeah, I mean, the only reason why I'm bringing all this up is not to put you on the spot. And then here you are again today, right? We need to talk about this, the incident, right? Like, why is that so? How did you not realize that, you know, Mt. Gox was, you know, broke?

SPEAKER_00: 0:12

Welcome back to another episode of BlockCast. My name is Timothy Mazier, the managing editor here, and I'm joined by Mark Tan, who's the CEO of Blockhead. Hey guys, how's it going? And our special guest on this video episode, Mark Capellis, the former CEO of Mt. Gox. Hey guys. Oh, Mt. Gox, if you're not familiar with the whole incident and saga, was one of the world's first Bitcoin exchanges and at its peak accounted for about 80% of trading volume. You know, it launched in the 2011 if i recall correctly when he was only 24 years old yes it spectacularly imploded in 2014 amid heightened speculation about untoward activity this story has been told many times that the fall of the exchange was prompted by the loss of about 750 000 bitcoin at that time i think worth around 500 million of course now it's you know in the billions we'll get more into that later i

SPEAKER_03: 1:04

mean for for context right it has been called the greatest hack the history of cryptocurrency, right? That's been...

SPEAKER_00: 1:09

Oh, and finance in general, yeah.

SPEAKER_03: 1:13

Right. And I mean, it just boggles the mind, right? You think about it, right? 2010, 2011, when Mt. Gox was around, some of our listeners and viewers, right, they were probably 10 years old when that happened.

SPEAKER_02: 1:22

I

SPEAKER_03: 1:23

mean, we are old, man. You know? So I guess that's something that I was thinking about, right? Because, see, you know, I meet a lot of 18, 19-year-olds right now. They are buying Bitcoin. They are, you know, getting involved in DeFi, staking their shit. Yeah, they were like nine when this happened.

SPEAKER_00: 1:44

But, you know, having said that, if you were around during that time, old enough to remember the wild west days of crypto. I mean, it was a lot of experimentation, rebelliousness, or counterculture influence in the space. And, you know, all these stories, you know, we're going to get Mark to tell us more about. But Mark, how did you even get involved in this? And I mean, you were really young when you took over the exchange and you had a background as a, was it a programmer or? Well, actually, back in 2009, I moved to Japan. And in Japan, I created a new company, which was called T-Ban at the time. the name was actually the name of my cat for a little bit of background. The company at the time was doing web hosting so we had customers all around the world or more exactly I had customers all around the world who wanted to put their website online or things like that. One of those customers actually happened to be a French guy living in Peru and because he's in Peru his French card usually would get blocked for fraud or you know it's suspicious having a French card coming from Peru. He contacted me one day and asked me if I could accept bitcoins for payments and I looked into Bitcoin so that was middle of 2010. I found Bitcoin very interesting so I still started discovering it reading the white paper there was a very small community at the time maybe like 50 to 100 people. I got involved in the community I started accepting Bitcoin payments so I had to implement the whole automatic payment system and so on. After a while I mean, I had more customers and this person who initially created Mongox started contacting me and we worked together a little bit and I helped him a little bit on different things. And that's probably why a bit later, beginning of 2011, he contacted me, asked me if I wanted to take over the exchange.

SPEAKER_03: 3:37

So what, I mean, like, I know this is quite a straightforward question, right? But it seems very straightforward now that, you know, Bitcoin is like what, like worth 65,000 US, I think, something like that, right? But back then, When you're such a small community, what drew you to it? What did you think about it in terms of like, hey, look, this could be an opportunity here?

SPEAKER_00: 3:57

I mean, the main aspect of Bitcoin really that I liked at the time was the technology. I found about Bitcoin, I tried it. Actually, I did try to mine with my CPU at the time. And one night later, I had 50 Bitcoins. So it felt like Bitcoin was very easy to get. Maybe it doesn't have much value. So I was a little bit wondering, should I be going on with that or not? But there was a market. Bitcoin was trading as maybe 10 cents a Bitcoin or something like that. So I figured that if I had to convert my price in Bitcoin and get enough Bitcoin that would cover the price. I mean, it makes sense. But more than that, what's really interesting was the idea of a shared balance database, which is a blockchain, basically, where everyone knows as a balance of everyone, a payment can be verified very easily.

SPEAKER_03: 4:46

I know that the one thing about narratives is that they kind of shift, but it feels like the Bitcoin narrative has remained fairly consistent over the past I think 10 years or so. Would you agree with that? The idea that, you know, it is essentially a store of value, it's digital gold. It's at some point an inflation hedge. I don't know, yes or no. You know, if it is, it is. If it's not, right? And back in that day, you know, it was really like a, it provided an alternative to like, you know, like the central banks and capital market systems, right? Like, did you look at it then like that already? Or was it really just like, you know? I'd

SPEAKER_00: 5:19

say at the beginning, at least at the time, people who were involved in Bitcoin were more looking at it as a new technology. There were different things that were possible, but Bitcoin was still very small and you couldn't easily spend Bitcoins. Very famously, someone paid for a cup of pizza for 10,000 Bitcoins. You had Bitcoins, there were no easy way to spend these. You could buy Alapaca socks, you could buy pizza and different things. But Mt. Gox was the first exchange actually offering automated trading. and an actual market for trading. This helped give Bitcoin a value that was a little bit more fixed than, like, 10,000 Bitcoins equal two pizzas. We went to one Bitcoin equal a few cents. And very quickly, the price grew. When I took over Mombox in March 2011, we were around, I believe, one Bitcoin equal one dollar. So we called it the Bitcoin parity. Even at the time, Bitcoin was still very far from being potential store of value because it didn't really have value yet. Satoshi Nakamoto at the time too was looking more in Bitcoin as an experiment than something that's supposed to be used widely. So he said it himself a few times, Bitcoin was really a sandbox at the time. The idea was to create different things. There was even a market planned to be included in Bitcoin at some point that was stripped from the code. I think between 0.2 and 0.3 I'm sure you have

SPEAKER_03: 6:48

some thoughts of where it was then and what it is now but I think maybe we can get into that a bit later

SPEAKER_00: 6:54

on I'm curious under your leadership of the exchange just within Three years, it's rise and fall. But before we get to the fall, how did Mt. Gox become such a dominant play in the crypto market? Well, there are differences. One thing is positioning because Mt. Gox was very much the first exchange out there. From the beginning to the end, the focus was to make it easier for people to move money in and out of the exchange. One thing I worked very hard on was to get banking partners, methods for people to move money, basically. So there was Mt. Gox in Japan. In Japan, we could do international transfers, of course. But we created Mongox Poland for handling all of Europe. We also have subsidiary in the US for US transfers. We had a banking partner in New Zealand. We were working on opening something in Ireland, too. So the main focus of the company was, of course, to make it easier to move money in and out so anyone could easily buy or sell Bitcoins. And I believe that's also the focus of most successful exchanges today. The secondary focus, of course, was to make everything, I mean, I say secondary, it's not, it's actually not secondary because it's a primary focus too, but there is an acquisition focus or a focus to make people on board the exchange and the focus to actually run the exchange and keep things running as much as possible which involves talking with regulators trying to get people to understand what bitcoin is so i do believe we talked with more than 20 countries regulators about what bitcoin is we actually hope to get between regulated because it would create a clear track on how to operate but at the time most people didn't understand what bitcoin was and i would guess that most regulators didn't guess or even imagine that Bitcoin would get big. So most of the time they would just tell us, no, it's not a regulation. We're not going to regulate any single things that come our way.

SPEAKER_03: 9:02

Personally, did you feel it was like a, I mean, I'm not sure if this has been asked before, but was it a leap for you to go from, you know, essentially you're a technologist, right? To being a CEO of an exchange where you have, you know, essentially be dealing with regulators, thinking about compliance. Like, what was that like?

SPEAKER_00: 9:17

Quite challenging Actually, before I came to Japan in France, I was working for a fairly large company that was dealing in software sales. And I was managing part of the recession development. And I was also in charge of all the payments and compliance, which means dealing with payment compliance like PCI DSS and a whole lot of things that we had to deal with at the time. So going from this to crypto was not actually this difficult for me. But it turned out that for many countries, Bitcoin was not something that they saw very positively from the beginning. In 2011, when I took over Mt. Gox, there was also the launch of Seek Road. the first very large drug market. Most regulators didn't hear about Bitcoin from us, but from news about Silk Road, which made the discussion a little bit more difficult than it should. That was where I was going with my previous question about the rise of Mt. Gox, and I think it also paralleled the growth and popularity of Silk Road. I'm curious, back in the day, what was KYC like on Mt. Gox? At the very beginning, when I took over MongoX, there were no clear KYC or anti-modeling during roles. Everything was a little bit on the, like, if anything looks suspicious, maybe we can consider it suspicious. Any large customers, like if you wanted to move around more than$10,000 a day, we would require you to submit ID documents. After that, when I took over, I started to create more clear policies on KYC. And specifically, we had new limits that were set,$1,000 a day,$10,000 a month. Afterward, the exchange became larger and we started to have regulators talking us into getting KYC on all customers. The problem is, at that time, we had maybe 600,000 customers. So getting around KYC was not... possible, at least not instantly. So we started to establish rules. lower the limits and I think around 600,000 something like that. We look at KYC for every single new customers and we worked on getting everyone else KYC too. I think there was a stat that I saw floating around that Mt. Gox's exchange volumes fell by about 30% after Silk Road was shut down. Is there any truth to that? I don't think so because actually the volume itself is mostly people doing trading. a lot of speculative trading and things like that. We did identify a few secret accounts afterwards, thanks to the DOJ request of information and so on. But it turned out that, I mean, for trading Silk Road users would only trade for one specific transaction and things like that, while day traders would trade back and forth quite a lot. So in terms of volume, it was very small.

SPEAKER_03: 12:24

I mean, that sounds logical. I mean, much has been said about how this industry actually funds the other industry, you know, or facilitates Silk Road. I mean, I guess, is there anything you want to say at this point, right? I mean, you've been through a lot. You know, you've been to jail and then, you know, you got acquitted and then, you know, you're back and then like, you know, like you were working for a private VPN as a CTO, right? And then just really in terms of just the number of interviews that you've done, you know, it's been quite rare. You know, I think in terms of, I mean, there have been a few interviews on CoinDesk and fairly recent ones have I think been, the FTX incident came up, right? But I think just to kind of somewhat close the chapter on Mount Gox, right? Is there anything new you want to add to what people already know? I mean, certain questions that have come up, right? Like who did the hack? You know, that's been asked, right? I'm not sure whether you have the information or not, right? So I'm not sure whether you want to go there, but anything you want to share about, yes, the experience, you know, life in prison for that short time. How do you feel now? They are out and like, you know, like you feel like Do you feel like you have a platform to make a difference?

SPEAKER_00: 13:39

Well, I mean, I do know as a fact that Mongox made a difference and a lot of things in terms of crypto, because especially with its bankruptcy, In Japan, actually, this was a trigger for a lot of people to learn about Bitcoin. We only had like maybe 2 or 2.5% customers in Japan, yet for some reason, the bankruptcy press conference was live on all like nationwide TV, which maybe sounds a little bit going too far. But I mean, that probably was a big story at the time. I did spend a lot of time. I mean, this was 10 years ago now. From this bankruptcy to today, I went through a lot. to say the least. But I do think a lot of the information that's right there, I mean, everything is already out there. So, bankruptcy in 2014, Mitral actually started in 2017. One week after the beginning of Mitral, finally, the U.S. law enforcement managed to arrest Alexander Venik. So, that timing actually was very important.

UNKNOWN: 14:44

It

SPEAKER_00: 14:45

didn't do much in the end because the trial for Alex Alvedic is still pending. He will be, I mean, I think his trial is scheduled in September of this year. So there's something that's probably worth tracking.

SPEAKER_03: 14:56

You made a post on Twitter about how the necessary materials that you had to acquit yourself were prepared on a calculator that you bought for like$120.

SPEAKER_00: 15:05

Yes.

SPEAKER_03: 15:06

It sounds pretty wild, but I don't like, how did that happen?

SPEAKER_00: 15:10

So actually, yeah, the Japanese system, especially the legal system is a little bit Backward, to say the least. When you're accused of something, you're typically arrested and detained until your trial, which is not common, for example, in France, where this would only be for very grave crimes or actually doing something like being a danger to society. So I was detained into a small room, about 10 square meters, and I My lawyer managed to get me all the documentation on the case, which included about 20,000 pages of accounting information of the company. One of the main reasons I was accused of embezzlement is because the company made only that much. They calculated about$12 million of money in one year, but spent$60 million. So they said, because you spent more than you earned, you took money from the customers, so you've done embezzlement. Which was, I mean, it's a lot more complex than that, but just simplifying the fact of the case. It sounded really weird to me because I knew we made a lot more money than that. But it turned out that the bankruptcy happened end of February and the end of the fiscal year in Japan is end of March. So the last year of accounting was not closed by me. And I... understood later that the trustee hired an accountant to do all the accounting and everything. They didn't do a very good job at closing the accounting. My goal was to go through 20,000 pages of numbers and accounting information, just try to maybe find revenue that was not, I mean, find out what happened to my money, the company's money. Having to go through the page of accounting without just a pen or paper is, of course, something I wouldn't want to go

SPEAKER_02: 17:10

through.

SPEAKER_00: 17:12

And I looked a little bit on the detention center I was at the time. They had a bully, actually. on the list of things you could buy. So I called the guard and I tell them that I want to buy this because I need to do a calculation. And they asked me, you sure you don't want a calculator? And I learned that it was possible to buy a calculator. It's not on the list of the things you can buy, but if your case includes anything that's numerical, like for example, embezzlement, you can get a calculator.

SPEAKER_03: 17:47

Love Japan, man. Japan is just great that way.

SPEAKER_00: 17:52

They showed me, they had three calculators I could buy. So I took the best one. But it gave you options as well. Yes. I took the most expensive one, which had like solar power and things like that.$120 is, I think, a lot more than the calculation actually was. Okay. Because it could do like addition, subtraction, multiplication, division and square root. Okay. For some reason. But still it, allowed me to go through and I spent probably more than a week after that every single day going through all the accounting information and very quickly I found about five million dollars that was not in the accounting which was just enough to go through from 12 to 17 million dollars and showing that there was more profit in the company than they assumed, which automatically means that the initial acquisition was wrong.

SPEAKER_03: 18:42

Yeah, and based on that, like, you know, I guess the prosecution's case would, it's just definitely not as strong because on the first basis, you know, the company's, you know, net profitable, you know, so it'd be hard for them to justify, I guess, that's where it is.

SPEAKER_00: 18:56

That was just the strict minimum to get this because I didn't go through everything. At least not with that calculator. So that allowed my lawyer to get me freed on bail. And once I was freed on bail, I was able to use computers and did some more calculation. I managed to find out that we actually made$40 million that year in cash alone. A lot more in Bitcoins, depending on the Bitcoin value.

SPEAKER_03: 19:22

And what was it like in the detention center? Was it, you know, I mean, I... I see no experience in the Japanese detention center.

SPEAKER_00: 19:29

Yeah, I mean, Japanese detention centers are very, I mean, every single day is mostly the same thing. Like you wake up in the morning, they do a roll call, then you get your breakfast, then you do nothing. And then there's a lunch at about 11. Do they give you

SPEAKER_03: 19:42

like metal boxes?

SPEAKER_00: 19:44

Yeah, actually you have your own plates that you need to wash yourself into the room. Okay. They would call, they would say like, today is the big plate plus a small bowl or something like that. So you prepare this they just come around and put the food inside. Like a Buddhist retreat, basically. Interesting.

SPEAKER_03: 20:02

Well, I mean, I guess then, you know, since we're on this topic, the big question here, how did you not realize that, you know, Mt. Gox was, you know, broke, you know, in the lead up to it, right? So if you think about how withdrawals kind of started in 2013 and then where it ended off, I mean, from what I understand, right? So like, you know, the people started, the kind of the bank runs started happening as far back as 2013, right? But I think it was only 2014 where it was kind of discovered or like, you know, you found out, quote unquote. Yeah. So, and this has been asked before. How did you not know earlier?

SPEAKER_00: 20:35

It's a little bit of a complex question. There's a lot of... Sure. I know I'm simplifying a lot of

SPEAKER_03: 20:39

things. Yeah, yeah.

SPEAKER_00: 20:41

One thing is that at the time, my focus was not on dealing with the withdrawal issues. Okay. And we, I mean, you can call this a bank, right? And some people may have had issues since before, but most of the transfers actually were processed as long as we didn't have an issue with the blockchain. We did have some issues because of transaction IDs. There's something called transaction malleability that... It shouldn't have been an issue, depending on the way you deal with transaction IDs, but Mongox used to, when we issue a Bitcoin transaction, track it by its hash. It turns out that transaction availability allows any miner or anyone on the blockchain or on the network to alter the transaction ID. which means that the transfer ends in the block as a different ID. So it's like if you go to the bank, you make a transfer, you send$100 to someone. The bank tells you, okay, your transfer is being processed. It's number or something. And then you come the next day to the bank. You show them the transfer ID. They tell you, no, there's no transfer on this ID. But if you look on your bank statement, you see that the transfer went

SPEAKER_02: 21:52

through.

SPEAKER_00: 21:52

So it's not going to block transfers or do anything you didn't want to do, but MongoX actually did some tracking based on this. Because we did have some transactions that didn't go through, we automatically retried transactions that we didn't see. We had customers coming to us, telling us that the transaction didn't go through. We checked the hash. Considering Monbox handles more than 2,000 transactions a day, we couldn't go through every single transaction and see did we see something or did we not see something. We check only with the ID. And in those cases, we would automatically restart Ransomware.

SPEAKER_03: 22:26

I guess if the summary here is that you did the best you can, you could at that point in time, right? Also came across, you know, like some AMAs on Reddit, I think MagicalTux, have some questions about that. Right, I mean, the reason why I'm bringing that up is because, you know, I think in 2016, you did some AMAs about, you know, like, hey, I'm the founder of Mt. Gox, you know, ask me anything about it. And... Community was pretty aggressive. And then here you are again today, right? And we need to talk about this, the incident, right? Like, why is that so? You know, like, what's in it for you now?

SPEAKER_00: 23:00

What's in it for me? I'm not sure there's much in it for me except dealing with hard questions. Actually, at some point after the trial was done, I expected that I wouldn't have to do anything with cryptocurrencies and try to move forward into a different direction. But it turned out a lot of people in the community still came to me, especially in Japan, and tried to asked me what I would do next or what would be good for crypto and so on. I'm still not sure what I can create new. I mean, I did help a lot of people to try to, for example, working on exchanges, tell them how to not go the same direction as mongox went. And I realized that there's something I can do here is to make sure that the experience, all the issues, pain caused by mongox can actually become useful. try to bring this as a positive for everyone. Even today, more than 10 years after this event, the crypto world has evolved a lot in different directions. We now have hundreds of exchanges. But at the same time, there's a lot of things I see and I feel that there are still things to learn from Mongox. Ways to We should do things differently that are not done yet. Do

SPEAKER_03: 24:20

you trust centralized exchanges?

SPEAKER_00: 24:22

Not as they are today. I do think there's a lot that can be improved. For me, an exchange needs a lot of things. They need transparency. They need a good corporate structure and so on. I mean, there's different things that can be improved. That's one reason I'm here today is to make sure, I mean, to try to bring forward technology.

SPEAKER_03: 24:44

Yeah, I mean, the only reason why I'm bringing all this up is not to put you in the spot, but really like from, you're a member of the audience looking at this, right? For the kind of trouble that you've gone through, most people would just say, okay, you know what? I'm going to find another industry. Yeah. Right? But for you to still be here talking about it, it must mean that you really care about the space.

SPEAKER_00: 25:02

Yeah, I do care a lot about the crypto space and there's different reasons for it. One is, I mean, Mongox was three years of my life, but those were very intensive years. Then there was 10 years of... going through all the aftermath, which also involves trying to help people going through the bankruptcy process because it's a Japanese bankruptcy. There's a lot of complex things. At some point, I was due to receive$1 billion from the bankruptcy because Bitcoin value increased and claims were valued at$500 million, which I also worked with some of the creditors trying to push things in the direction. I wouldn't get anything and we managed today. I'm not going to receive a single I mean in a

SPEAKER_03: 25:45

way you would kind of like you and the creditors would essentially be forced to to hold and then by definition you know like there is that you there is the upside uh there right do you think history is going to repeat itself I mean like you see well the reason why I'm bringing this up is because I mean, the most recent one being the FTX collapse. Yes. Right. And

SPEAKER_00: 26:04

I can tell you something actually here on this right now. You know, Bitcoin is on a four year cycle, right? Every four years as a return you get from mining Bitcoins, halves and so on. This halving is coming up. Yes. It's a few days from now. Yes. Good timing, guys. A lot of people, especially in Japan, see centralized crypto exchanges bankruptcy also being on the four year cycle because you had Mongox, Four years later, you had Coincheck in Japan, which was very much a Japanese exchange, so it didn't affect too much people overseas. And four years later, you have FTX. So right now, on mostly a four-year cycle, you've got this kind of big thing happening. So of course, it's not always the same reason. Mt. Gox and Coincheck were both hacks. FTX was not a hack. But there is one big catastrophe happening so far every single, I mean, every four years. So if you ask me if history repeats itself, so far, it looks like it's doing that.

SPEAKER_03: 27:03

Yeah, I mean, it gets a great perspective because the reason why I'm bringing this up is like, you know, people are saying the same things about FTX and they say it when we said about the previous exchange collapse, when we said about Mongoks, the same thing, you know, oh, it's just a bad actor. Bitcoin is fine. You know, technology is fine. You know, it's just a few bad actors in the space. It'll be fine. But for me, you can always trust human beings to act a certain

SPEAKER_00: 27:26

way. Yeah, I mean, it also affects the reputation of the industry. And each time one of these incidents happens, there's a long rehabilitation process and the whole industry needs to recover, at least in the eyes of the public. And there's a lot of PR that needs to be done around this. But along those lines, I wanted to ask you, 2011 and now, The picture of Bitcoin, its supporters, the narrative has shifted dramatically. I just want to get your thoughts on the institutionalization of crypto. Because when you were involved, there was still very much a bastion of counterculture. And now it's been co-opted by, you know, the boys in suits. I mean, in those 10 years from Mongox, things have evolved very dramatically. Very much, actually. And even today we see it with FTX, which had a much smaller impact on Bitcoin than Mongkok Zed at the time. There are different things happening, but I think the biggest is that the market is getting bigger. Right now, you have many more exchanges on the market, which means that one exchange collapsing is not bringing everything down as it did back in the days. We also have a better security system. I mean, when Moongox launched in 2011, Bitcoin didn't have any option to encrypt a wallet. I mean, encryption was not something people knew much about even back then. So now We have hardware wallets. And different custody solutions now. Yes. So many, many more options. And even for custody solutions, we have insured custody solutions. There's things we can do today that we can't do in the time. While you're always going to have bad actors, the kind of impact they're going to have on the market will be much, much more limited. So yes, things evolved quite a lot.

SPEAKER_03: 29:17

How do you personally feel about it being... I guess from a very subjective point of view, it's a lot less cool now, right? Because you have essentially your people... Wall Street is involved. Wall Street is involved. Does that change your view in any way? How you look at Bitcoin as a...

SPEAKER_00: 29:35

Well, actually, for me, the time was when it started to get involved was in 2011 after this article was published in The Times. I think The Times, yes, magazine in the US, where suddenly the Bitcoin community was no longer like a few hundred tech guys working together. But you had people coming in and seeing Bitcoin not as a technology, but as an investment opportunity, which meant And I mean, this is when things really changed for me. So if you tell me today, you've got the guy with suits. I mean, they've been here since 2011. The fact actually that there are more people coming in, you have got the Bitcoin ETF started and so on. In a way, it shows how Bitcoin has changed and things have become more stable. So I do think it's a good thing on one side because for Bitcoin, big milestone, I believe. But at the same time, as a purely tech person, I'd like to see more new things built.

SPEAKER_03: 30:40

Being built on that

SPEAKER_00: 30:41

chain? I mean, the blockchain technology to be used for more things. That's one reason why I don't look only at Bitcoin, but also other technologies. I like, for example, what Ethereum did a lot. Smart contracts and so on have opened a lot of possibilities. So I really like to see how things evolve over time. I was just wondering about if you have any fond memories of tinkering with crypto tech back in the day. I do have a lot of memories, not all fond because sometimes it was very much of a pain to get things working, especially since Bitcoin used non-solar curve in ICDSA. So I did write for Mt. Gox back in the day, a system for storing Bitcoins using, it was a Crypto PP, Crypto++ library, which was a C++ library. I didn't have a a lot of trouble to get it to work. But overall, I mean, the blockchain system and the technology itself is very interesting. It's not, it has a lot of challenges. And I think still today, there are technologies to run this kind of technologies and creating new technologies. But I do think that Bitcoin has shown that this blockchain system, where you have a decentralized ledger, public key signatures can be used to create very interesting systems.

SPEAKER_03: 31:59

Just to bring it to today, we talked a bit about centralized exchanges, DEXs, right? What would you say is the biggest impact from Mt. Gox that you see today?

SPEAKER_00: 32:11

Well, I mean, the biggest impact is the creation of a new world, Goxt. This one has probably remained for a long time. Because actually what happened when Mungox went into bankruptcy is exchanges all over the world started to publish their liquidity assets and so on.

SPEAKER_03: 32:29

And then they stopped

SPEAKER_00: 32:31

doing it. They did this for half a year, one year, and then they stopped doing it. And they did it again after FTX. And then they stopped doing it again. So, I mean, people... Don't learn, or at least don't learn enough, I believe, from this. So that's something I want to make a difference with in the future. Okay. Trying to push exchanges to be more serious. Not only publish proof of reserves, but make sure that reserves are, for example, insured or held into a separate custody company. That applies to exchanges. That also applies to stablecoins, I believe. because you want to go from a centralized exchange to a decentralized exchange, you still have a lot of risk involved. I wouldn't trust a DEX more just because it's on the blockchain. You need a lot more to be trustworthy. What

SPEAKER_03: 33:21

would you say are some of the issues that you have with DEXs right now?

SPEAKER_00: 33:24

I mean, the main issue I see today is stablecoin side of things. There are a few stablecoin options out there. Can you trust all of these? I wouldn't say, I wouldn't put my trust at least in that yet.

SPEAKER_03: 33:37

I mean, the amount that they really have with them is quite scary.

SPEAKER_00: 33:40

It's not because you go to a DEX that you can just put all your money in and just leave it there. It's always important to gather your things back and make sure you don't put more than you can afford to lose because there are so many risks. There's a risk the third party you trust is not trustworthy or has a technical issue. There's a risk your wallet provider get hacked one way or another and push an update that steals your keys or anything like that. Not your keys, not your... Yeah, even if it's your keys, the way you store these can be very important. I see a lot of people, you know, when you set up Metamask, they ask you to write words on paper. People write words on paper, they take a picture of it on their phone.

SPEAKER_03: 34:22

Oh, that's the same thing, right? That's still hot, right? Yeah. That's

SPEAKER_00: 34:28

not how you're supposed to do it, but the problem is people want convenience. If you tell them, okay, you lose this, you lose your money, they're going to want to keep it. And what better way to keep it than a picture in your

SPEAKER_03: 34:38

I mean, for me, it's always been one of the biggest ironies of this space because for as advanced as the technology is, right, at the end of the day, when you think about custody and security, right, you know, the most secure methods are still offline, right? But I also think that until that is solved, you know, if you want to see real kind of everyone essentially has like kind of like a wallet right and it's like buying coin we need to solve that because fundamentally like you know we're not used to it man everything now is just so like fast food you know like i need it now like you know like uh and no one wants to to be bothered with that yeah i think that that said something i mean like i have all my shit off offline but that's because i i i did have some money i think in ftx when it shot So yeah, not a lot, but you know, it's still like, you know, it taught me a lesson. What are you currently working on now? I mean, you're here in this podcast, you know, you're clearly looking to get your name out there again. Are you looking to rebrand yourself or are you looking to, or is that a project you're working on? What's new?

SPEAKER_00: 35:34

Well, I mean, there's two reasons I'm here. The main is as a way to come back because, I mean, the Mongoks bankruptcy is finally seeing its last chapter. We're seeing the payments being made since the end of last year. so it's actually for me a very important thing because it's been 10 years in the making and i didn't have much impact on it because it's a legal process handled by the courts the trustee if it was me i would already have made all the payments i would be done with it things are not that simple and that's done so out uh so that's one thing and the second thing is i'm thinking of doing things to try to improve the community the cryptocurrencies in general. I do believe that the Mt. Gox experience can bring a lot exchanges or even any crypto project today in a way of how things shouldn't be done and maybe to try to see how things will be done from there. One of my goals is to try to make the crypto industry safer and easier to use for everyone.

SPEAKER_03: 36:37

It sounds like you're on a mission to educate almost like a

SPEAKER_00: 36:41

Yes, I do think education is very important. Education on one side and also try to find new solutions, maybe technical solutions to make things more convenient and find the right balance between security and convenience. Because if you go to find security, it's going to get confusing. People are not going to use it. But if you go into the convenience direction, people are going to get hacked or things are going to work well. So there's a balance somewhere. I mean,

SPEAKER_03: 37:06

we are looking forward to, you know... Yeah. The next few steps.

SPEAKER_00: 37:11

I'm curious, is there a Netflix documentary or movie in the works? I don't know if it's Netflix, but there is definitely documentaries. Nice, nice. And did you manage to get Jack Black to play you? No, unfortunately. I mean... But... I think in the Reddit AMA, you said that that's who you'd like. I mean, I like Jack Black a lot and he would have been very nice.

SPEAKER_03: 37:35

The other one that I think would be great, but he's not around anymore. Philip Seymour Hoffman. Oh,

SPEAKER_00: 37:39

for sure. For

SPEAKER_03: 37:40

sure. Anyway, can we digress?

SPEAKER_00: 37:44

It's been great speaking to you and listening to someone who's had a front row seat to the development of Bitcoin and the crypto industry in its early days till now. Thanks again for coming on the show and thank you for your time. thank you very much for having me looking forward to seeing what comes next yeah thank you thank you