The willy report was quickly debunked as being FUD.
Those bots were just the dark pool bots that larger players paid Mt Gox to buy large amounts of Bitcoin on a drip feed system over time so as not to spook the markets.
I don't remember any 'debunking'. What I remember was some half-assed speculation that maybe possibly it could be that the Willy bot was a dark pool (even though it's not clear this explained all the anomalies with that account).
The 'debunking' was an alternate theory that didn't hold up to real scrutiny.
If the idea was a 'dark pool' to obfuscate their trades, not signal the market, spike the price, or avoid front running - then they failed spectacularly on every account.
the bots made up a large proportion of total value, they traded in a predictable pattern and were spotted quickly within days (and then taken advantage of by other traders), had unlimited buy demand which continued through a 2x+ increase in the btc price - defeating the purpose of spreading the order out.
it also doesn't explain why the bots trades continued while the API was down.
and finally, connecting to a dark pool should still show normal trading patterns, which the bot patterns were completely unlike (hence them being spotted).
The sort of bot he's describing would be designed to mask large purchases and prevent them from sucking all liquidity out of the market temporarily or spiking prices.
Let's say I want to buy 500 BTC at $1000 (to make the math easy). I wire Mt Gox half a million bucks, and try to buy up 500 BTC all at once. This moves the market massively because that's a sizable chunk of existing sell orders. To prevent this, I could instead buy a few BTC a minute for the next couple of hours and I wouldn't drastically shock prices or be as notable. Prices would still move upwards (because more demand in the network) but they wouldn't spike. Or Mt Gox could keep a floating reserve, I could pay a free to lock in the price and move the money around internally to Mt Gox, and they replenish that reserve a few BTC at a time (taking on price risk if their reserve is depleted when prices are high, but making profits if they wait to refill that reserve until prices are in a trough).
Note that I have no evidence this is the case, I'm just trying to explain what he claimed was the cause.
Source for the debunking? As far as I know nothing official has been released regarding these allegations and most likely nothing will be confirmed until after the Japanese bankruptcy proceedings.
Those bots were just the dark pool bots that larger players paid Mt Gox to buy large amounts of Bitcoin on a drip feed system over time so as not to spook the markets.