Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Hiding in Plain Sight

Episode Date: March 10, 2014

Topics covered in this episode: The curious story of Dorian Satoshi Nakamoto Recent transactions indicating MtGox may still possess large amounts of bitcoin Mark Karpeles’ shady Past Blockchain.info’s acquisition of RTBTC The new VAT guidance on Bitcoin in the UK This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/010

Hi there, today's March 10th, 2014, and this is Epicenter Bitcoin, Episode 10. Hiding in plain sight. On today's show, we'll talk about the curious story of Darien Satoshi Nakamoto. We'll talk about recent transactions indicating Mount Fox may still possess large amounts of Bitcoin. We're talking about Markapeli's shady past, blockchainodeInfer's acquisition of RTBTC, and the new VAT guidance in the UK. If you like the work we're doing and you'd like to support the show, please go to epicenterbitcoin.com slash tips for our tipping address.

Hello and welcome to Epicenter BitPoint episode 10. Yeah, nice. We've made it to 10, well, 10 plus all the special episodes we've done. Yeah. It's awesome to be here. Seems like such a milestone. My name is Sebastian Kutur. I am a Canadian-born user experience designer and developer based in Lille, France,

and also the founder and organizer of Bitcoin Talks to Lidl. And I'm Brian Fabian-Krain. I'm a Berlin-based entrepreneur, and I'm also the founder of the Bitcoin Sarabers Spilling Group. How are you doing this week, Brian? Yeah, good. It's very good. I've started working kind of on the content because I'm working on these Bitcoin investment workshops, So it's so much work, but I'm kind of, you know, developing the content for that workshop.

So I've been working quite a bit on that this week. Can you tell us a bit more about that? Yeah, so the idea is it's going to be a one-day workshop for retail investors. So people who, you know, buy stocks or bonds or real estate. And the idea is to teach them about Bitcoin, how it works, what it means as an investment. how it would affect their, you know, portfolio, how, you know, how private public keys work. Also the technical stuff, how security works, how you buy it, how you store it, what the tax implications are, just kind of everything.

So the idea would be to take someone who, you know, maybe he's heard of Bitcoin and is interested, but doesn't know much. To that, at the end of the day, they'd be comfortable of, in terms of understanding Bitcoin and knowing that if they wanted to invest in Bitcoin how it works and how to go about it. And you say retail investors? Well, I think retail investors

is a term for people who invest their own money. Oh, okay. So just kind of normal people, you know. Let's see. Okay. Not, not, it wouldn't be designed for, you know, financial institutions or funds or things like that. Okay.

That's really cool. It seems to be kind of a need for education there in that kind of field. I think so, yeah. And so these are workshops you'd be giving as part of the meetup? No, no, this would be separate. Separate. This would be kind of like the business, I guess. Oh. So, yeah, it would be full-day workshops and I would like to do them here in Berlin and maybe other German cities and maybe Switzerland and England.

And so that sounds really cool. Yeah, it's, it's, I mean, I'm, I'm working on the first part, which is sort of how Bitcoin works. Uh-huh. And I've looked actually through the slideshow that I found and I don't really. So I'm doing everything from scratch and it's, it's a lot of work. Yeah, the how Bitcoin works presentation, I guess, or slide deck is kind of hard to put together. I'm having the same problem too. I'm going to be doing a kind of a mini conference at a co-working space where I work.

And I'm trying to determine what angle to take. So this is going to be kind of a just introductory conference to Bitcoin. I don't want to go into like it's very much kind of introductory. And I'm debating on what kind of angle to take. So should I really just cover kind of the practical aspects of it and where it's going and how it can benefit us and how people can use it in practical terms like from day to day to day use or should I go into the technical aspects at all like is that even interesting to people like yeah you know in most cases when you explain bitcoin to someone you end up going into these technical

kind of realms which for most people I think is not very interesting so it's kind of challenging to try to I yeah I completely agree with you I think often when you talk with people, the kind of really important things are, you know, it's peer-to-peer. There's no middleman. It's really cheap. It's global. It's not controlled by government, et cetera. And then you talk about the possibilities.

I think that's really important and that's really relevant. But then people will start asking about mining and, you know, how Bitcoin's are mined, because a lot of people have heard about that. And so they want to know. Then when you start explaining mining and blocks and the blockchain, et cetera, that's just really, really hard to grasp for people. So I think it's,

it is, it is very tricky indeed. And especially the target audience here would not be technical. So I,

I will talk about mining and all those things because I think one doesn't need to understand them, to understand

Bitcoin. But I would not want to have that as the sort of what is Bitcoin, not in that section, you know. I think that there should be a section of like, what is Bitcoin, why is

important, and then you can have a separate section of going more in depth and also kind of with a clear premise that to understand why Bitcoin is important, you don't completely need to understand that section. So, because it's not, it's not essential really. I mean, I think if you, if you understand, um, just roughly, you know, for example, that you can be, you can, there's no middleman so you can't be censored. You understand this importance of low transaction costs, etc. You can understand why Bitcoin is a huge change, a huge invention. Right, without having to go into related technology. Without having to understand exactly how the blockchain works. And for example, then if you talk about why is mining important for the security of the network,

then you kind of, I think you have to start talking about the 51% attack. And that's just, That's just for people completely new to Bitcoin, it's just not where you want to go. Yeah, I completely agree. I think there's a good balance to have between just kind of educating on the underlying principles and having to go into really the technical aspects of it. And that line is really difficult to place on the spectrum. Like that cursor is what I meant to say? cursor is difficult to position on the spectrum. Like, where do I stop? Like, because it's easy to get

into that kind of technical rabbit hole. It's like, oh, so yeah, so this works like this. And then like, you know, the blockchain works like this. When you mine, like they get, so, um, yeah. Yeah, I agree. I agree. And if you go to slide share and I looked at a lot of the Bitcoin presentations there, they tend to be more technical and not really on why is this important. So I, I think this is not, the right emphasis for a general audience. Yeah, and this is what we're going to need moving forward if we're going to try to attain some sort of mass adoption is to bring it to a level of understanding where most people will understand the underlying principles, why this is a good thing, how they can benefit

from it, how they can use it on a day-to-day basis. If they want to learn the technical aspects, those people will go in and learn the technical aspects. I always bring it back to email or any. any sort of technology that people use daily, those who are interested in the, in knowing how to, I don't know, how to code or how the underlying protocols work. Those people go into it, but most people just, you know, use Gmail every day and not worry about how email gets sent.

Yeah, completely agree. Exactly. And you can totally understand why email is super important, why email has changed your world, et cetera, without understanding how exactly emails to send it from one server to another and how the protocol works. Yeah. I agree very much. So just briefly before we get into the topics, I just want to mention that the Bitcoin

Taxil Meetup number two is this week on Wednesday. Sorry, Thursday, 730 at La Machine. The details are on meetup.com if you search for Bitcoin Toxile. And I'll be doing a talk about Mount Cox and, um, just kind of to explain everything that's been happening over the last few weeks. Definitely this research we've been doing for the podcast has been a lot of help in building that presentation. Also, we've got some people coming from Paris to do some presentations and kind of a recap of the recent meetups in Paris.

And there was a meetup just this week, actually, on Thursday. And Nick Carey of blockchain. dot info was there. It was quite successful. It was like more than 60 people. And in fact, their next meetup, which is next, which is this month, later this month, is going to be taking place at a co-working space where Paymium is, where Paymium's offices are. And they've limited it to 60 people. Like there's a waiting list of, I don't know how many people to get in. It's really crazy. Like the community there is just really exploring. Yeah, it seems like there's a lot going on in Harris as well.

Yeah, yeah. But the little meetup has kind of taken notice from the Parisian community. I've had some people contact me. Like I said, two people are coming from Paris. Some people that wanted to come that couldn't, that can attend. But yeah, I'm looking forward to going down there for our meetup soon. Oh, actually, it's funny. We, ours is on, our next meetup is on Thursday, too.

Oh, cool. We should teleconference. Yeah. All right. So let's get into these stories. There have been many. Once again. There's a lot to speak. Yeah. Of course, the story on everybody's mind is have we found, Satoshi. Yeah. It was crazy because when was it Thursday?

Or Wednesday? It was Thursday, March 6th. I saw this and I texted you for something completely different. I said, so did you hear about the Satoshi thing? And you're like, no. Oh, my God, what the hell is going on? It's funny, kind of going back, after a few days have passed and kind of gauging our reactions at the time, when this was all happening, I was thinking, how was it possible that, how would it be possible that this is not true? You know, and you were saying, no, I don't believe this. I don't think this is

this is complete bullshit and it turns out well most likely that's the case right that this is just completely like nonsense yeah no I mean

I think if you this is just horrific what this journalist is done it's such such as a shitty job and extremely my poor journalism. I mean, I think we can go through all the details, but, yeah, really embarrassing, I think.

Especially for Newsweek, though, was trying to kind of kick off the new paper magazine. I mean, I just hope they'll leave it at one issue and don't have the silly idea to continue this experiment and actually publish a regular magazine. I think they can, it was probably a good idea that they stopped with that. Yeah. So let's kind of go through what happened. So on March 6th, Newsweek published a story, a very long story for like 4,500 words entitled The Face Behind Bitcoin, where the journalist, and her name is Leah McGrath-Goodman,

an experienced journalist with many awards and acts. accolades and has worked for many, many years in journalism, claims that she found Satoshi Nakamoto living in Temple City, California in a small home, and he drives a corolla. And so, you know, this story kind of, I think for a lot of people was in the Bitcoin community, the impression that I'm getting and the kind of feedback that we've gotten from the Bitcoin community is that like who cares you know if we found him or not and who cares who he is you know and this guy should just be left alone so later that day he was completely just surrounded by journalists you know all the journalism community just kind of gathered around his house to try to get

more information from him. And he chose to go with an associated press journalist to kind of clear his name. To get a free lunch. And to get a free lunch. And so a video was released later that day in which he denies having any involvement. And that essentially the journalist, the original journalist, Leah McGrath-Goodman, misunderstood him or misquoted him because of his lack of English skills. This is a Japanese American man who's been living in the United States for several decades.

He also said, I have never communicated with the Bitcoin. Yeah. Just the way he talks about it is pretty, it just goes to show that he doesn't really know much about it and states that he hadn't heard about Bitcoin up until recently. I wonder, though, if this has, I don't think this has been talked about, but I wonder if other people had not previously approached him to, to ask him, like, are you Sidushu Nakamoto of Bitcoin or are you involved in Bitcoin? Yeah.

I'm sure this wasn't the first time that somebody had approached him. Yeah, that's possible. I mean, I think the interesting thing. So there was like an interview. I watched two or three interviews with the journalist after that, where she was basically kind of justifying her story. And, you know, I think there was a good one on Bloomberg where they're very critical. The one guy's like, is this journalism?

So her rationale was, which is completely ridiculous, but her rationale was that, the way she proceeded with this was by exclusion. So she looked at different people and it's like, you know, is it not you and then no evidence? So we move on to the next one. Of course, that's presuming the name is real, right? So if you assume that the person really was called Satoshi Nakamoto, then there's a bunch of them in the US, I don't know, a handful. So I think she went to like through each of those and then the one that sort of roughly wasn't completely.

off because he once studied physics and, you know, done some sort of IT stuff. And I guess was unemployed. So for a few years before Bitcoin was created. So, you know, it could be that he was working on Bitcoin, of course, can't prove otherwise. So she was like, by exclusion, it must be him. Which is absurd, you know, completely ridiculous way of going about it. Yeah. So the way that she deducted that this guy was, in fact, Satoshi Nakamoto of Bitcoin, is that the day where she went to his house and confronted him about it or asked him about it. Well, first of all, he called the police because for whatever reason he didn't want to talk to her. And his response to, you know, are you involved in Bitcoin or are you Satoshi Nakamoto of Bitcoin is,

I am no longer involved in that and I cannot discuss it. And so he dismisses it and says that it's been turned over to other people. They are in charge of it now and I have no other connections. So, you know, mind you, this is a man who perhaps has a limited understanding of English. But just, yeah, one important thing is we don't have a recording of the whole conversation. So even if the quote is correct, we don't know what it refers to. So, I mean, from, you know, sort of my question. experience of a journalist that there's a who knows right i mean this is very very possible i mean

i think likely that this was taken out of context i think so but but but the police that were there that were present who witnessed this conversation came back to say that you know the quote is actually correct that this is what he said yeah sure i'm sure the quote's correct but you know how much does that mean i mean if you just look at the quote there doesn't prove anything So she's basing all of her discovery on this one quote. And so we can dismiss it as either him just wanting to get rid of her, or we can kind of say that perhaps he's talking about other things. Like you said, it's out of context.

He was involved. This man has worked for the U.S. government on multiple projects where he's apparently under some sort of an NDA and can't talk about it. So perhaps he was referring to those projects. Perhaps he was just, you know, didn't express himself correctly. So there's the logic behind her, you know, finding of Shatoshi Nakamoto and the kind of evidence that she has is based completely on this one quote. So out of this 4,500 word article, there's like three lines that this is what I'm basing my claims upon. Like it's completely just.

Yeah, and some circumstantial stuff, you know, is that like his family says, they say he's secretive and things like that. And, you know, he's one studied physics, et cetera, you know, which, of course, do, at least, you know, I mean, they perhaps make it more likely, but it's far from evidence. Yeah. Now, what are some of the kind of counterclaims? If we take the information that was, that has been released, well, like, so what Satoshi Nakamoto, the guy who disappeared from the internet a few years ago, has said information we now know about this man, Dori and Satoshi Nakamoto, what are the counterclaims or the things that don't line up? There's a few things.

I mean, I think one thing I looked at, which is sort of extremely in the face, is if you look at Dorian Nakamoto's Amazon reviews, there are a few reviews of him, like buying some razor blades. and there's just terribly written. Like his English is really bad and also kind of incoherent. So if you compare that to the Bitcoin white paper or Satoshi's foreign posts, it is extremely hard to believe that that should have been the same person. And then of course there was Satoshi's own posting.

on the P to P.2P Foundation site after. I mean, I guess that was after the story, but still. Has that been confirmed that it was actually him? So, yeah, let's just briefly say it. So there's a site called the P2P Foundation, I think. And they have some kind of forum there. And that there's an account on there, which used in 2009 to post a description of Bitcoin and a link to the white paper.

So that was, I mean, just at the time when Bitcoin came out. And of course, that supposedly was Satoshi Nakamoto who posted that. And there had been no activity since then, really. And so he made a comment on there saying, I am not Dorian Nakamoto. Now, most likely that is indeed him because at least he was in control of that account, most likely, in 2009. And I think the person running that site did confirm that the email address linked to the account. linked to the account is the same one that's on the white paper. So on the white paper, he has this GMX email address, which is a German free email provider, kind of like, you know,

hot mail or something. So, I mean, it seems, I would say it seems very likely that it is him. Of course, there are no 100% for sure. Well, at least if there's one good news out of the stories that Satoshi's still alive. We know. Exactly. We've got some information from him if it's not, you know, if it's not this Dorian Nakamoto guy. Exactly.

So, I mean, I don't know exactly when the last time was that there was any kind of sign of life from him. But I think from in mid-2010, he stopped his involvement in Bitcoin. I don't know if there was something afterwards, but I think no. So first sign of life in many years. So that's cool. Yeah. So kind of my thoughts on this and what I've seen a message a while ago is that the Bitcoin community's reaction to this is like we don't care who Satoshi Nakamoto is.

It really doesn't matter. It doesn't matter if it's this guy or some other guy. Like this is not what's going to make Bitcoin advance or not or disappear or not. Like it's completely irrelevant. And the overwhelming kind of reaction to this from the Bitcoin community with regards to Doors. in Nakamoto is that this guy should be left alone because he's old, he's in bad health, he deserves his peace, especially if like my thoughts is like if this guy is really Sthoshi Nakamoto, he deserves to be left alone just because of what he's created, you know.

Yeah, but that's also unrealistic, right? I think if they did find him, the guy would have no, I mean, now it seems reasonable that perhaps in a few months he will have his relative piece back but if it really was him and there was evidence for him, you know, knowing, you know, if you look at how journalism works, there's no way he would ever

be in peace again. And again, also if you think about it, let's say Bitcoin achieves the potential that we think it has, so it becomes a sort of dominant currency, payment system, etc. Then he will have enormous wealth. So in a sense, it's, we shouldn't expect that he'll be left alone. So yeah, just kind of a couple of things on that.

So regardless of whether this guy is Doshi Nakamoto or not, which I think we can probably say he isn't, this journalist was. very irresponsible in publishing this paper because it's speculated and quite with a lot of certainty that Sadoci Nakamoto, the creator of Bitcoin, has a lot of bitcoins up to a million, right? Is that correct? Yeah, yeah. I think that's the estimate, the million. And so this would place who, this person in a lot of danger because, and his family in a lot of danger because he could open him up to being vulnerable to attacks, to theft, to murder, or what have you. So this was really kind of irresponsible from this journalist's, for this journalist to do this.

Yeah, I completely agree. I also saw this interview on, I think it was with her afterwards, and she was like, oh, of course, I didn't want all these journalists to harass him afterwards. This is just so hypocritical. After she posted pictures of his house and his car and license plate. And the response, the news response is, you know, we engage and to be respectful of privacy and rights of individuals. Like, what the hell, man? You can't say that after you posted like the guys' pictures of the guy's house, which were then like picked up on a street few minutes later.

It's just completely just preposterous. Yeah, go ahead. No, I guess the kind of good thing out of this is that there's kind of an outpouring of support from the Bitcoin community. Andreas Antonopoulos has put up a fund where people can donate money to this guy for whatever legal or health problems he might have to pay for. And so far, there's like 42 Bitcoins in there. So at least, I don't know, I feel really bad for him. But I think the whole Bitcoin community as a whole just really really feels bad for him, regardless of who he is and are ready to support him and kind of maintaining his privacy. Yeah, I think that could be actually, you know, that could be a very good story to come out of this as well.

You know, it's kind of, okay, it's settled. It's not him. But, you know, here's some, you know, some serious support. I mean, if it's like 42 bitcoins, you know, that's some very decent amount of money. And I think that might actually make a difference to him and really help them. So I think that would be great. Yeah. I think if we think of, like, you know, why did this happen?

Of course, I think this has a lot to do with Newsweek, be launching the print magazine. You know, let's say she's been working on this for two months. I mean, she obviously did a very bad job as a journalist. But still, like, let's say she wasn't there and they pushed her. It's like, hey, you know, the magazine is coming out. We have this editorial deadline. This is a huge story. Can we publish this?

You know, and then she was probably like, yeah, yeah. I think, you know, I guess I'm sure she wanted it too because such a big story if it's true. And I guess she really did believe it. So I think they just sort of, in my view, they were just. too greedy and too excited about having this big story, and they kind of threw out proper journalism and proper way of researching out of the window and went ahead very irresponsibly with this story based on clearly insufficient evidence. Yeah, and how could they not see where this would take them if, in fact, it was not

correct how could they not you know one thing i was thinking about yeah it seems very clear here that they did got zero feedback from the bitcoin community yeah you know i think if they shown this to bitcoin people they would have been are you aware that you're like the 10th publication in the last years to try exactly the same thing and are you sure that you actually do have the evidence. And I think they just clearly didn't do that. Probably don't know the Bitcoin community. You don't understand Bitcoin all too well.

And they sort of latched onto this and, hey, you know, we have the name and now we've tracked him down. And so I think that's also part of the reason why they didn't just went ahead of this sort of ignorant of. Yeah, ignorant off the sort of circumstances of what they were doing. Absolutely, yeah. Bad journalism, bad decisions, irrespectful, you know, just completely disrespectful to this man and his family.

And his family who's spoken out, by the way, like his brother posted on Reddit, kind of explaining his thoughts about it. Yeah, it's a pretty funny post. Yeah, she says asshole a lot. Yeah. Because absolutely everyone, including himself, his brother, and the jail, is an asshole. But yeah, he seems to be a nice guy, which is very, very angry. Yeah.

It's just understandable. Anything else for me? Okay, I mean, yeah, I think that's, I guess perhaps we'll come back to it. I don't know, if there's some sort of more developments, if there's definite proof that it's not him and or, I think it will be, I think it would be very interesting to see as well is the effect this has on Newsweek. I saw a quote somewhere where someone in, on their staff,

said, well, this has been a huge success. And of course, in a sense, if you think of, you know, what would be the best way to get attention for the newspaper or for the magazine, then yes, that's it, right? But if you look at the journalistic reputation of the paper, then this is perhaps the worst thing they could have done, at least if it really turns out that this story was wrong. So I think it would be interesting to see how does this affect Newsweek. I hope them the absolute worst. So, you know, maybe we'll come back to that to see kind of what's happened and how this all turns out next week.

But, yeah, I think we've kind of covered it. And hopefully the guy will be left alone. And yeah. Yeah. Well, let's show our support. And, you know, everybody should go out and donate maybe like five, five milliseconds. Yeah, I would do that. I have been wanting to do that.

I haven't yet. But I will all send 5 milibade as well. So the address, if you go on Reddit, you can find it easily. If you just look up Endros, Antinopoulos fundraiser, he's got a post on Reddit where he has the address there. He also proves that it's him, so it's not a scam. The address is one, Dorian, and a heck, so you'll notice it. Yeah, just look for Dorian. Nakamoto

fundraiser. And then it's the second post. So how this works, the donations are accepted until the end of March. At the end of March, donations will be converted to

USD and delivered to Dorian. If the donations are rejected by Dorian, then the funds will go to a charity of his choice. If he doesn't want to choose charity, they'll go to the EFF.

In any case, the EFF is going to get some money, probably. And so after the, any funds, after the deadline, would go to the Dorian or the charity or the FF. And apparently he's going to try to document this all while trying to preserve Dorian's privacy as much as possible.

I think one thing they should also, of course, offer him is to keep the Bitcoin's if he wants. Yeah, yeah. I don't know why that's not in that procedure. Yeah, maybe. You know what we extremely funny too is if there was some donation from. Satoshi himself. Yeah. They should open up a doge coin address.

Why isn't there a doge coin charity? Yeah. Okay. Should we move on to Mount Cox? I mean, I think we've said we, yeah, we've announced last time they will probably come back to it and there has been some news, not not too much, but some interesting new angles and stories about Mount Gox. Absolutely.

So perhaps we can start with the first one, which is that there has been some movements of money that's linked to Mount Gox. So if we kind of remember, they've claimed that the 850,000 Bitcoins have gone. They've been stolen. They don't have them anymore. Now, people have definitely questioned that.

And of course, with the blockchain, you can do some analysis and you can speculate in a kind of evidence-based way on what's been going on. And now in 2011, there was a hack of Mount Cox before, and people were suspecting that Mount Cox is bankrupt. And what Mark Kerrpelle's did at the time was that he proved that he was in control of a very vague, large amount of Bitcoin, I think it was about 420,000 Bitcoins by creating a transaction from the address controlling those. So we know that at the time, they were in control of that. And that amount of money has not moved very much. So I think kind of from the pattern, it seemed likely that they were still in control of it, but of course it wasn't exactly clear. Now, or at least

there's still control of parts of that. Now, a few days ago, there was a large transaction of 180,000, that Bitcoin's that was split in different ways, and people were thinking, like, is this Mount Cox doing those? And now Mount Cox has this withdrawal API, so it's kind of a feed of Mount Cox transactions. And apparently that's their database, that's kind of with the transactions they create,

that's available online. I don't know why that is available. It doesn't make sense to me, but it is. And so what one guy is done is he's gone through that, and he was able to, so he was able to trace back at least one of those to that 180,000 transaction a few days ago. So essentially this proves that they are in control of that. I mean, at least it proves it to, you know, a very high degree of certainty, I think.

Yeah, it gives pretty strong evidence. It's pretty strong evidence that Mount Gogh's, Markipelius, is still in control of that. Yeah. Which we'll tie into, you know, this other stuff we're going to talk about right in a few minutes. But I'm interested in, like, trying to understand why, so why are these bitcoins being moved? So regardless of who's moving them, why would they be, why would they be moved? And why are they being split up into so many small fractions? So the 180 bitcoins were split up into two addresses, and then those two addresses were split into four.

And then like there's about six or seven or there's many, many levels deep of splitting these into smaller, smaller amounts on individual addresses. Why do you think that is? I don't know. I read somewhere that they had a certain standard way of, you know, kind of taking cold storage to hot storage and things like that and that people were like looking at the pattern and saying like, oh, they're probably perhaps doing that. But I don't know. I have no clue. Yeah, but if that was the case, like, why would anybody do multiple levels deep? of transactions of splitting, why not just split the 180 right from the beginning, you know? Well, I think one, yeah, I guess that's true. You could create one transaction with many outputs. Yeah, I don't know.

Yeah. I have no idea. I think I'm pretty sure we will find the truth out about this at some point. I'm very hopeful at least and yeah it should come out I think what happened here we still don't

we still really don't know right I mean we still just don't know what happened with Bangkok's yeah surprisingly there's been very little news about it this week even though all these kind of stories have been coming out and especially stories about

Mark Carpellis so there's there's a few articles that were published on sort of not very mainstream blogs or sites, but kind of just went unnoticed.

I mean, at least to me, I didn't say anything on like the big other sites like CoinDesk. So we're starting to kind of understand where who Mark Carpalus is and details about his past and some kind of shady deals he was involved with in the past.

So there's two, in fact, three articles that I want to point to. One is on Cryptocon's News.com. And this was originally published in French by Deanna NGO.

And she describes in this article kind of a deal that went sour where Mark Carpalis, who also, by the way, has another company called Caliho. their hosting provider. So web hosting, so if you have a website and you want to put it online, you use services from a web host provider. And so the story goes like this. This guy, this French businessman wanted to get a website made. He approached a Moroccan freelancer to do the work,

kind of like on a site where you can post jobs and be hired, kind of like an O-desk or something like that. That contract was not fulfilled by the Moroccan freelancer, and that businessman took the Moroccan freelancer to court, basically. And in that court proceeding, the hosting provider was asked by the court to do kind of an expertise, kind of give his expert opinion on the state of development of the site, right? And that host was Kelly host. So Mark Carpellis's hosting company, which... I think, didn't the guy, the businessman asked him, I think, to do it?

Right. So this is afterwards, right? So the communications between this businessman, who will call Monsieur Dubois, as they call him in the article, and Mark Carpellis began when Mark Carpellus was asked by the court to give his opinion about whether this site... was usable or not, like the site that was developed by this Moroccan guy. And this is where the relationship started, and this is where they started exchanging. So during this time, Mark Carpellus, who also apparently had some sort of a business where they was making websites, said, well, I can take care of this for you. So while you're doing this, while you're taking this Moroccan guy to court, like, we can work

on your website. Okay. So basically, we're good guys. We'll do it for you. And here's the price. right so i think it was 20 000 euros or something like that yeah and this was in 2010 so the deal is signed and uh there's a deal that's agreed upon and a contract that's signed where the site would be delivered in three steps so this is usually how this works right like you have a first step which

is kind of the um the guidelines and then you have another step which is like graphic work and then a third step which is development and the site delivery and usually there's three pages payments. This is how it works usually, anyway, here in France. And so a few months pass and the businessman hasn't received anything yet. Mark Carpellis kind of puts it off as being like his graphic designer didn't advance on the work. And that graphic designer would later attest that he had never had anything to do with Mark Carpellis. like he wasn't he wasn't involved in this project at all

and then more time goes by and Mark Rappell still doesn't provide any work and is unreachable and finally Mr. Dubois tries to take him to court and an expert determines that like 5% of the work has been done

so this is kind of well and what he also did right he he told the other guy um oh i mean financial difficulties uh please pay me the money in advance and the guy paid him the money even though

carpalas hadn't done the work yet because the other guy trusted him because i guess he had a very good impression of capelli's which obviously turned out to be false yeah so i mean i think i guess the takeaway from this

that he just behaved in a very, very shady to bordering criminal way in this case. And of course, that makes you wonder, what is the guy capable of? Yeah. And so this is pretty recent, right? So there was a judgment that fell in 2013 in which Mark Carpellis was, had to pay for damages to this businessman, okay? This is pretty recent. And this article was published on March 3rd.

So this was, I believe, Monday or Tuesday, right? Yeah. And this, to me, anyway, went completely unnoticed. Nobody, I didn't hear about this, like on Reddit or on CoinDesk or any of the other magazine sites. And then this morning, as I'm researching this, I'm kind of going into it and searching also on French sites for information about Mark Garpellis and perhaps this past. And I fall upon this article written in Daily Tech, which was published on March 5th. So that is Wednesday. Wednesday.

Yeah. This really, really long article that kind of details Mark Carpels his life since early 2000s when he was in his early 20s and where he started from and all of his, all the problems that he's had. and this dishonesty and whatnot. So this led me to his blog, magicaltox.net, which is both in French and English. This blog has been up for many, many years. There's posts dating back to early 2000s.

And so on, so he's got this blog post, and the name of the post, it's in French. It was translated, I believe, parts of it was translated. by this other guy. So here's how it goes. So the blog post is called Ponce Nocturno, which basically means like sleepless night thoughts. So he writes this post like he says it's 2 o'clock in the morning.

No, it's midnight. I can't sleep. I've been turning in my bed for two hours. I'm thinking about Japan. And in this article, he talks about how he's always been attracted to Japan ever since he was a kid and some friend gave him a CD full of SNES games like manga games. He says that in his youth, he did a lot of bad things, especially concerning payment systems. And he spent two years taking very large risks because it was exciting to him.

And finally, he got arrested. and that he was kept in under arrest for four days, so essentially in prison for four days. And then he was released under judicial control with the orders of not leaving France and had to regularly go to the court so that they could see that he was on the right path. In addition to this,

they tried to get a better idea of who he was of his personality, So I'm reading this article. I'm translating it as I read it. So just briefly, that's still on his blog. That's still on his blog. Yeah. I'm looking at it right now. So it's blog.

Dot Magicaltux.net. It's published on February 12th of 2006. Yeah. And you could find it also on Tumblr. So on Tumblr, some guy translated part of it. So it's John. Burkow. com.

So John B-R-C-O-D-R-C-O-D. And he's got a picture of him and like naked there. I don't know what the hell that is. So just to continue in this article. So he was released, placed under judicial control, with,

so having to stay in France, not being able to leave France. And so the court tried to get a better idea of who he was, and they made him see a psychologist. And that psychologist asked him to do various tests, IQ tests and things like that. And he developed a relationship with a psychologist who was also very interested in Japan and visited Japan quite often. And they made sort of a deal.

This is what he said. So the deal was simple. I had to do research on the history of Japan, which was pretty easy for me, given that I was quite, fond of Japan and knew a lot about it. I don't know if he had been to Japan yet when he wrote this article. I think so, yes. He had been to Japan already because he had a few, he had one trip to Japan for 10 days in 2006 and then came back to France and went to Israel and then eventually moved to Japan permanently.

But I'll get back to that a minute. So he had to do this report and gave the report to the psychologist, and the psychologists gave the report back to the court saying that he was not responsible for his actions and that the abuse of cannabis was bad for his moral health. And so he says, I was pretty shocked by this because I can put my hand to fire that I've never smoked anything illegal. And so he was given a three months suspended sentence. So that means that you've got a jail sentence, but if you don't do anything bad, then you're not going to go to jail. but if you get arrested again, then you will get that sentence plus whatever you get after,

and that that sentence would disappear from his record after five years. So he was convicted of some sort of... Yeah, I mean, three months, too, it's not nothing. Yeah, yeah, three months in jail. Yeah. He didn't go to jail, but he got a three-month sentence in jail that would have been, that he would have had to do if he ever committed some sort of a crime again. Yeah.

And so this is kind of gives us an idea of who this guy is and what he's been involved in. He's been involved in this kind of illegal activity before surrounding payment systems. And what I find interesting is how he says, just to say that this concerns payment systems. I did bad things. It's concerning payment systems. I spent two years taking risks, larger and larger risks. maybe because it was exciting, but finally I stopped. So I don't know.

I mean, in my youth, I mean, I didn't do anything like this bad, but I did kind of like sometimes hack into people's computers on IRC channels. And, you know, it was also very exciting. But so I see where this is coming from. If you have a high technical knowledge and. Yeah. You can hack stuff. It is exciting.

And that kind of gives you an idea of, so if he was dealing with payment systems, it kind of gives you an idea of how far he was willing to take this at the time. Yeah. Yeah. No, I mean, I guess we can take away again. It's that he's definitely had a very questionable pass, and especially a whole bunch of different stuff.

It's not like once as a kid he did some stuff, but then, you know, he scamped. other guy and, you know, more stories. Yeah, there's more to this. So there's a lot more to this. This is just the article on his blog. Yeah. Then there's the article in the Daily Tech

that paints a picture of who he is and kind of goes through his life. And in this article, they talk about one thing, which was just barely brushed upon. They talked about it on Reddit a little bit. But this week, somebody posted. on somebody went on the Mount Cox RC chat, this apparent guy, this guy who's apparently Russian, saying that he has 20 gigabytes of documents, which would be like database dumps and identity information. So when you create a Mount Cox account, you have to give your passport, like a scan copy of your passport. So apparently a lot of these documents are in the hands of hackers.

So he says also that he's not the hacker. He's just posting for the hackers, I guess, in very bad English, by the way. And he posts also some source code of Mount Cox's PHP Bitcoin implementation, so proprietary proprietary php code, which you would have to have access to their servers to get, or at least somebody would have to send them, like, leak it to you. And he says that Mount Cox's servers were in fact hacked, and he cites a vulnerability in their implementation of Linux. So they use Gen 2 Linux, and they use an old version, which has vulnerabilities in it. And he goes, he goes to say that whoever this guy is like the people who have hacked Mount

Cox and gotten this database dump and all this personal information of the customers that they don't have any bitcoins. Now, that's not to say that other hackers don't have bitcoins, but they just want to make this guy go to jail for being so negligent. Yeah. No, I think it seems to, I think it seems to, extremely unlikely that they didn't get hacked. You know what I mean? They got hacked in 2011 and they perhaps got hacked once or several times since then. But the question is really assuming that they had some kind of cool storage and it seems

incredible that they wouldn't have had one. And then the question is where did those bitcoin's go? Yeah. And were they really all? stolen the way Carpellius said they were, which just does not seem plausible, or did he perhaps, does he still have some, or did he just make this out in the first place and stole them himself? And of course, if we look at these stories here, it certainly paints a picture of someone who might have been capable of, you know, lying about this and stealing the stuff.

himself or parts of it. Yeah. I encourage you all to go to daily tech.com and read this article because there's lots of stuff here that I don't think we're really going to get him into, but where, you know, it talks about relationships he's had with his previous employers and just kind of like being in misconduct and not working while, like working on personal projects all day long while he was working for this other company, being arrested apparently another time after, because he went to Israel in 2005 and was apparently fired and had to come back to France and was arrested by the the basically the French tech police when he arrived back. So it's really, it's very long article.

It's super long, but it's it's very, very interesting and insightful about him and his personality and who he is really. And if you, if you understand French, if you can read French, also read some of us posts on this blog. It's kind of crazy that they're still there, actually. I don't understand why he wouldn't have taken them down. It's also what's astonishing as well about all of this is how this was not a story before, how people didn't really look into this

and kind of say, like, are we sure this is the right person to run the biggest Bitcoin exchange? But I guess now those are coming up as people kind of dig into his past. of course they should have come up much earlier. Or perhaps they did come up at some point, but they didn't get the tension they should have. I'm just kind of astonished that the people that have worked with him

before in France haven't come forward to say, like, I've worked with this guy, he's completely dishonest. Yeah. Because he was working for quite a few companies in France beforehand. So he worked for an MMO RPG. developer company. He also worked for a photo vista, like a stock photo platform. And yeah, so. Yeah, so it's kind of worrying news we have there about Carpallas and about Mount Cox. And I guess we will come back once again to this. I mean, I think we've been

covering it every week for a month now. and more. And I'm sure this is not the last. Yeah. Of course it's not because now there's a lawsuit. So I just want to touch on this briefly. There's a lawsuit by a London law firm, a Klausassian lawsuit that's representing over 200 claimants from China, the U.S., Canada, and 12 European countries.

And that will launch proceedings against Carpellis. There's possible fraud accusations there. So I think in any case, we're going to hear more. about this if this lawsuit which probably will go through like once it goes through yeah no absolutely so i guess let's let's stay tuned and we'll come back and i'm sure at some point we will hopefully kind of have the whole story and be able to go back and say okay here is exactly what happened so forth we still don't know yeah but uh worrying signs about mark capillis yeah so let's let's move on we have a few more kind of more brief stories that we can cover

happened this week. One is that a blockchain. Infa has acquired another company. They're called RTBTC, which stands for real-time Bitcoin trading. The company is created by a guy named Clark Moody, who apparently is known, I didn't know him before, but apparently is known for creating a lot of Bitcoin charts. So charts like price charts with, you know, candlestick or line charts, etc., all those things. Now, RTBTC was kind of a dashboard that you could connect your Bitcoin accounts with on different exchanges. So it allowed you to trade on different exchanges like using one central platform. And, you know, it has its own analytics and charts, etc.

Charter Kennedy, I guess, make sense of the differences between exchanges, maybe the order book. So I guess the target of this was the day traders who wanted to maybe leverage differences between exchanges or if they felt like one exchange leads the other one in price, maybe they would recognize the price changes first and things like that. Now, blockchain is going to combine this with Zero Block, which they've acquired a few weeks ago. And Zero Block, of course, is a very popular iPhone application and Android application. And now also a kind of a web news feed and chart site. and they're going to combine that. So now you're going to have a central platform to trade Bitcoin on different exchanges plus a newsfeed plus the charts.

So the idea is to have this trading terminal for professional investors and I guess they traders. So I saw somewhere that they call this that they kind of strive to be the Bloomberg of Bitcoin. Bloomberg, of course, is a big financial news site, but they're most famous for, and I think they make most of their money with terminals. So Bloomberg terminals are very expensive. They cost, I think, $20,000 per terminal per year. And they're kind of computers, and they have a special access to news, data feeds, price fees. etc. So if you care a lot about having the information about financial markets the fastest in order to make money on top of them, then you would get one of those Bloomberg terminals.

So, you know, if you go in an investment bank, the trading floors, or everyone has a Bloomberg terminal. So I think they were trying to do something similar for Bitcoin. Of course, a very different price point. This is going to cost $20 per month versus $20. thousand dollars per year for the at bloomberg but this is really interesting because i think we were talking to dan hell that uh at the berlin conference and he was saying that i think it was dan yeah yeah he was saying that you know moving forward they want to offer kind of premium services for bitcoin traders uh you know APIs and such so this kind of goes into i think the strategy which is really interesting and yeah yeah no i mean he said he can't quite go into detail what they're

doing but he was sort of hinting at it or i guess this may in it. I think this was what he was hinting to us about. Yeah. So this is being integrated into what's interesting is, yeah, so this is being integrated into zero block and not blockchain. Yeah, so I guess zero block will be like a separate property of blockchain, which makes sense, no, because blockchain is that, I mean, they have a whole bunch of properties now. There's a blockchain. dot info, which is the block explorer, then there's blockchain.com, which is the wallet, or I guess it's still a blockchain and info, but it will be a blockchain.com. And then Zeroblock will be the sort of professional trading, financial information, a platform.

So, well, Zero Block is actually going to be also Bitcoin market information, but for free, it's already there and for everyone and then zeroblock dot com slash trading is going to be the premium paid for service

that's that's being developed together with RTBTC so yeah they have a whole bunch of different products yeah it's interesting how this kind of spawn like Zero Block and

all of what they're building upon zero block is just really spawned from from dan's app because dan had originally developed the app and and sold it to to blockchain no that's right right the app was really nice i think it's great ui and i i like serabok a lot but you know it was really a price a news feed and and some charts and that was it and now they're building this into uh you know really a comprehensive platform so yeah it's great yeah what's also really cool. So there was an interview on Bloomberg with

the CEO of blockchain Nick Carey. And I didn't know this, but apparently blockchain. Info is a hundred percent Bitcoin company which goes as far as that he said they don't even have

a bank account. It's pretty awesome. So I guess they must be able to pay their rent with Bitcoin and they obviously pay all their salaries with Bitcoin. Perhaps people use Coinbase or something like that to trade some to US dollars to pay for their rent and things like that. And so yeah, it's really cool. That's really interesting. I'm really disappointed. I didn't get to go down to Paris as we can see him. Yeah.

But also, I was watching, I think, in an interview with Andreas Antonopoulos, who says also that like they don't even hold any of the keys everything's in the browser of the yeah that's right i mean it's it's encrypted on their side uh so in it's i think it's decrypted in your browser and you use your password so if you do have a blockchain not info wallet um then you know in a sense they can get hacked and uh if you lose the password i think it's not recoverable I mean, we were talking about that with Dan held a bit too, that apparently, you know, this is really strong differentiation between Coinbase and blockchain and Info. And apparently they were part of this, they were part of why combinated together and then they split up.

And which was that a blockchain. dot info wanted to be sort of a pure Bitcoin company and they didn't want to hold the private keys of the users, whereas Coinbase wanted to go more into, you know, making Bitcoin accessible. And I think once they said they want to be the Gmail of Bitcoin, so really a lot about usability and easing that friction. And now, of course, Coinbase very much is a U.S. dollar, Bitcoin. company, you know, who works

a lot of banking relations and all those things. So it's very interesting how those split and how those have really different approaches. And I think both are really needed, very important. Yeah, but you know, you're right, both are needed, but I think we need

to just very, you know, be very careful of how how we approach as consumers and Bitcoin users, Bitcoin custodian companies like Coinbase. And so not that they can be trusted, but they need to be held accountable and transparent. And this kind of goes into what we were saying last week about transparency and accountability. But those companies need to be held, especially those companies, they need to be held to be a very high level of transparency and accountability.

Yeah, I totally agree. Hopefully that will come now with the, with them. Kong's disaster. And it, I mean, they, Coinbase has already let Andreas and Trenopoulos in. So he looked at their, at their, you know, internal security tools and monitoring tools,

which is one step. But of course, what would really be great is if they made somehow their holdings public on the blockchain or, you know, so it could be independently verified at all times. And I think, it seems likely to me that some companies will do that in the future and they could have a real competitive advantage that way. Actually, I do remember now, I think there has been some audit

of BitSamp last week and they were able to prove that they do own all the funds they're supposed to own. Really? I didn't see this. I think so. I did not read the story in great details so. I may maybe slightly wrong, but that's how I remember it. Well, that's good. At least, you know, the responsible Bitcoin companies out there are working towards gaining trust from the customers, which I think is a feature. Yeah, yeah. Cool.

So we have another story from the UK, which is a very positive story where we have been having a lot of negative stories recently. And in the UK, it's been. The Bitcoin regulations have been very vague and unclear. And there's been a kind of confusion about what the Bitcoin is, I guess, as in many other places. And they did classify for a while as a voucher. Now, that has certain tax implications, particularly about VAT. So apparently if you sell the voucher, then you're supposed to pay VAT on the value at a voucher.

Although this doesn't really make sense to me. But apparently that, at least there was a lot of uncertainty around that. And now there's been a guidance released by the HMRC, which means, I think, her majesty's, HMRC, her majesty's revenue and customs. It's good to know the Queen's getting involved with Bitcoin. Yeah, yeah. So they've clarified the BAT status of Bitcoin.

So if you sell Bitcoin, there's no BAT. And also, there's no VAT on the profit margin. So let's say I buy a Bitcoin for, or let's say I'm an exchange and I buy a Bitcoin for $650, necessarily for $680. There's also no need to pay VAT on that margin. and there's no VAT on mining revenues. Now, the most important thing of those is that there's no VAT on the sale of Bitcoin. If they had been, this would have been completely disastrous.

Like, just if we think about that, too, like, let's say I buy from you in a store, I pay for my meal of 20 pounds with Bitcoin. Now, if Bitcoin had been, you know, if this had been treated as some sort of good, then I would be selling you the Bitcoin and you would have to pay VAT on that and then you'd be selling me some good and you have to pay VAT on that. So it would be twice paying VAT there, which would make it completely impossible to use Bitcoin for. for transactions and it would make it impossible to operate a Bitcoin exchange. And so this is all been fine. So essentially you can use Bitcoin. It's treated in terms of VAT just like other money, just like British pounds, for example.

So this is a very positive news. Yeah, that's very cool. It's also interesting, I think, that there is no Bitcoin exchange in the UK, not one. and I don't know if it's because of this uncertainty that there was around VAT treatment, but it's possible at least. So hopefully we will see a Bitcoin exchange in the near future in the UK. I don't know if there's any plans, but I think it's something that's really needed. I think at the moment, the biggest volume in the pound Bitcoin,

market is through local bitcoins and you know as great as local bitcoins is that's not really ideal yeah now do you think that it now that this um guidance has been suggested that this would open up a possibility for a british bitcoin exchange i certainly hope so i i mean i think the other difficulty from what I've heard is that banks are not particularly welcoming. Of course, one side is the regulations and that seems to be pretty straightforward now. But if you can get a bank account, then that doesn't particularly help. So maybe that's also a reason why there hasn't been a Bitcoin exchange. So I don't know. But at least it seems that in terms of VAT regulations now, it's straightforward to do it and there's no hurdles on that side anymore.

Thank you, Your Majesty, for your Bitcoin guidance. Yes. So does Her Majesty have a Bitcoin wallet? We don't know yet, but... Well, this is good news. Yes, definitely good news. I wonder how this will affect Bitcoin trading in other European countries. Of course, you know, the UK is not in the Eurozone.

That's right. So I'm actually not aware of any country at the moment that charges VAT on Bitcoin sales. There may be one and I missed it. Of course, if there was, that kills Bitcoin in a lot of ways. I know it's actually interesting because I know a guy here in Broin who's really looked into this and he thinks there could be even here. Because I guess there's different sides to me, right? there's the financial regulation side and then there's a tax side.

And those are different entities that regulate those. So you may have the financial regulator saying one thing about Bitcoin. You may have the tax authorities saying another thing. Yeah. So, but yeah, so far, I also hear, you know, nobody charges Bitcoin on VAT on, on, a VAT on Bitcoin sales. And hopefully that will never happen. I don't think it will. Well, yeah, I know it's good news and hopefully we'll see much more activity in the UK.

I do think that the London Bitcoin scene is quite active, a lot of startups. I'm going there actually in two weeks, a few days. Cool. So I'll try to meet up with some people there too. Now, you lived in London for a while. Yeah, I lived in London for three years. Right. So do you must have some friends there.

Do you get a feel of what the Bitcoin community is like there and how things are progressing? Well, I know that the first Bitcoin ATM launched in London a few days ago. It's actually right opposite of the bar I used to go to. And I know the pop where they've been accepting Bitcoin for a while. Actually, the pop owner built his own point of sale system. It's pretty impressive. So I do think it's quite active. Also, I know the meetup group is really big.

They have more than a thousand members and very active. I think from my understanding is it's quite active. In terms of real world acceptance, like physical places except in Bitcoin, there's definitely much more here in Berlin. But in terms of, you know, there's a very active tech startup scene in London. And yeah. Yeah. So, yeah, I think it's pretty positive. Awesome.

Yeah, so I think that was it for this week. Yeah, lots of stories. We could go, we had more stories, but we're out of time. Yeah, I think we've covered the most important. Absolutely, yeah. Yeah. All right, thanks very much for listening to our, and thanks for everybody who's been tuning in since the first episode.

We're really excited to be on episode 10, and really excited about this journey that we're on with the podcast and everything around it. We're going to be releasing, I think two or three more episodes. I forget how many about the conference. Now we're going into, like we're done with the interviews. Now we're actually getting into like talks and presentations

and the panels that were there. So we'll be releasing as always on Wednesday for the next few weeks. So please keep tuned. into those and send us your praise. People have been talking to us on Twitter saying how they appreciate that content. Also, you can follow

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