Mt Gox Bitcoins Reportedly Moved To BitFinex, The Day Before Black Monday

On Monday, there was a global stock market price plunge pummelling many stock markets, including China, Asia, Europe, and the USA. Some in the mainstream media are referring to it as the worst day for stocks since 2008. Despite hopes for Bitcoin to receive all of this money fleeing the traditional markets, the bitcoin market had quite a bearish day overall as well, dipping beneath the $200 mark for the first time since January.

Bitcoin prices have already recovered from that damage, which is far better than any of the stock markets have performed. Upon closer inspection, the reasons causing bitcoin’s price plunge were numerous and it seems completely unrelated to the world’s stock markets, which appears to make the correlation between Monday’s performance a coincidence.

Among the world’s stock markets, the hardest hit was China’s Shanghai Composite Index. After Monday’s loss of 8.5 percent was declared the worst single day loss in more than eight years, it didn’t fare much better on Tuesday and the crash has been estimated at losses of more than $1 trillion in value.

The rest of the Asian markets followed suit and in the US, the Dow opened at an unprecedented 1,089-point decline on Monday, closing at 588 points down, which makes it the worst for the DJIA since August 2011 and the largest point loss ever during a trading day.

The bitcoin exchange price experienced a similar sell-off on Monday, driving bitcoin’s price to an average low of $198.81, the lowest since January 14, according to our global price index. The largest decline of the day was to $193.70 on BTC-e, however, the price soon recovered across all major exchanges.

Unlike the world markets, however, Bitcoin’s price dive shows no relation to fears over China’s economic slowdown.

The single-day sharp price decline across the bitcoin markets coincided with problems on one of Bitcoin’s biggest exchanges, Bitfinex. The exchange announced some post-trade processing issues and had to close its order book for almost five hours.

“….we encountered an issue with post-trade processing, upon which we decided to halt trading to ensure consistency in the order book. Any unprocessed orders will be removed from the order book before trading resumes. Once we have resolved the issue we will give users a 15 minute window to cancel any orders before trading resumes.”
— – Bitfinex

Whether related to Bitfinex’s troubles or not, bitcoin prices hit a six-month low soon after Bitfinex halted trading, but regained ground shortly afterwards.

Bitfinex chart courtesy of BitcoinWisdom.com

The problems are not completely solved over at Bitfinex, the largest US dollars trading platform based in Hong Kong. There have been various twitter announcements warning of more issues, and the exchange halted trading multiple times citing data corruption issues and a need to update positions and balances.

In the Bitcoin community, speculation about the ongoing development argument over bitcoin’s block size limit contributing to the downturn of bitcoin’s price has been a common sight across the Bitcointalk forum and Reddit. However, just before the major downturn, one Reddit user posted interesting evidence that some of the coins bought at, or belonging to, the defunct bitcoin exchange, MtGox, had just been moved to Bitfinex.

According to Blockseer’s report from the blockchain, three batches of 5,000 coins each, worth $12.4 million in total, were moved on the Aug 23, after several months of lying dormant. One of the batches, 5,000 of these coins, were sent to Bitfinex.

courtesy of Blockseer

It is not known who moved these coins, and the possibilities are many. However, since so many people lost large amounts of bitcoins to MtGox at the end of 2013, several people are actively watching the coins still listed at old MtGox addresses, in hopes of finding a clue to where their money is today.

It is quite unusual for “Gox coins” to be moving at all, so this movement from a MtGox address to a Bitfinex address could not have gone unnoticed, and it is quite likely that several of MtGox’s victims, or perhaps law enforcement representing them, are in talks with Bitfinex now about identifying the owner of those coins.

Tokyo-based MtGox’s CEO, Mark Karpeles, was taken into custody earlier this month by the Tokyo police but had been held without formal charges for three weeks until Friday, when the authorities issued a fresh arrest warrant for him over claims that he stole several million dollars from clients.

Both occurrences, Bitfinex experiencing downtime and MtGox coins being moved to Bitfinex, could have contributed to the price plunge on Monday. However, bitcoiners can take pride in the fact that as the prices across major stock markets have not yet recovered much of their losses from Monday’s dive, bitcoin’s price by Tuesday night had recovered 100% of Monday’s losses, driving all the way up to $232 on Wednesday, a full $3 higher than before Monday’s madness began.