Tokyo Police suspect internal system manipulation behind 99% of missing Mt Gox bitcoins

Most of the bitcoins missing from bankrupt exchange Mt Gox has now been attributed to internal system manipulation by a major Japanese newspaper.

Japan's Yomiuri Shimbun newspaper citing sources in the Tokyo Metropolitan Police Department said only 7,000 bitcoins or 1% of the total 650,000 missing from the exchange could be attributed to external hacking attacks.

The report added it is highly suspected that the remaining 99% disappeared after the system was fraudulently operated by an unknown party.

The newspaper said there is evidence of unauthorised transactions by someone that did not correspond to any customer accounts. There's no indication of who exactly was responsible for the fraud.

The 650,000 missing bitcoins are worth about $208m at current market rates.

While filing for its bankruptcy in February 2014, Mt Gox said a bug in the bitcoin system was responsible for the problem.

"We believe that there is a high probability that these bitcoins were stolen as a result of an abuse of this bug," the company said.

"We are investigating the causes of these problems. Since there are probably a variety of causes including hacking by third parties, we need to investigate a huge amount of transaction reports in order to establish the truth."

"There's not much I can say at this point, except the fact that I will continue investigating in order to find what really happened," former Mt. Gox CEO Mark Karpeles told PC World via email.

Japan-based Mt Gox, which once hosted 80% of the world's bitcoin trades, collapsed after losing about 650,000 bitcoins. The company has filed for bankruptcy protection in Japan on 28 February.

The exchange later filed for liquidating its assets following its failure to restructure its business under the country's bankruptcy protection scheme.

Subsequently, a Tokyo court ordered the administrator of the bitcoin exchange to start liquidating the company's assets to pay back its creditors.