Open Letter to Mark Karpeles: Voluntary Reorganization Best Option for Us All

[DanielJKelman]

http://www.reddit.com/r/Bitcoin/comments/1yyrvf/open_letter_to_mark_karpeles_voluntary/

Note: Please Join IRC ##mtgox-statement to join our discussion

Dear Mr. Mark Karpeles,

We are your investors. We are writing you this letter to inform you that we forgive you for the unfortunate demise of Mt Gox and we do not want to see you go to jail. We are also writing you to inform you that we have a proposal to save Mt. Gox and provide the Bitcoin community with what it truly needs: an exchange that has the trust of the entire community. This can be accomplished through a voluntary reorganization of Mt. Gox resulting in your depositors being granted shares in the new exchange.

The ideas behind Bitcoin are bigger than our personal stake and the numbers in our accounts. These ideas are bigger than the 750,000 Bitcoins that may or may not have been stolen from Mt. Gox and are bigger than Mt. Gox itself. The world is watching Bitcoin right now and waiting to see how we handle this. There are those who would love to see us panic and devolve into an angry mob stricken with personal greed and out get every last coin possible. But we are better than that. We know you are, too. This is why we are taking the first step and forgiving you for the mistakes that resulted in the current losses we all face, provided you agree to do what is necessary to make us whole. At present, the first step is to discuss the voluntary reorganization of Mt. Gox taking us on as shareholders. We are putting the idea of Bitcoin ahead of our personal stake because we believe in it, do not want to harm it, and believe that cooperation represents the best method for recouping our losses. We know you agree.

We have a long term vision of Bitcoin, as we believe you do as well. We are open to many suggestions as to how to resolve this, but at this point we believe the following points embody our best options: (1) shareholders should be offered a stake in the new company on a pro rata basis based on their holdings in Mt. Gox (we can come up with a formula for valuing Bitcoin denominated holdings later); (2) those who wish to leave should be offered a haircut. There are many details to be worked out, but this is the essence of the plan. It is a plan that will benefit your depositors, benefit yourself, benefit Bitcoin and benefit other virtual currencies. Most importantly, it will show the world we can regulate ourselves in the face of great adversity. Our ability to self-govern in this time of crisis will serve as a model for other governments and organizations the world over.

We welcome an open discussion about the possibilities for resolving this in a manner that benefits the Bitcoin community and movement as a whole, and balances those interests with our right to compensation while recognizing that you are human. Please restore our faith in yourself and in Mt. Gox by accepting this invitation to discuss our situation.

On Behalf of any Mt. Gox Depositors in Agreement,

Daniel J. Kelman, Esq.

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[Hrumph]

Presumably, many of us want Mark's head and justly so, but this idea is nevertheless our best hope at recovering anything at all of value from mtgox. Lengthy bankruptcy proceedings and liquidation of the assets will take a long time (perhaps years) and leave us with virtually nothing after the parasitic lawyers take their cut.

I personally chafe at the idea of outright forgiving Mark, but, since this is probably our best hope for salvaging anything at all from the wreckage, we must put aside thoughts of vengeance and move forward..

I am not very optimistic about anything now, but this is the best plan that I know of. I do hope that this project succeeds.

[myrond]

I think it will either be a bankruptcy fight or a debt-for-equity and fix gox.

I think more value is in a voluntary debt-for-equity of gox, run a re-branding/management and relaunch with better audits and controls.

Launch the equity as GOX traded colored coins (or other blockchain based overlay for stock ownership), which when/if profit is made BTC will be distributed to shareholders.

[Opsamk]

The best case scenario is that these coins are now "stale" or unusable (but can still exist if they find the keys). The worse case scenario (which is equally probable), is that the coins were really stolen.

[DeathAndTaxes]

Launch the equity as GOX traded colored coins (or other blockchain based overlay for stock ownership), which when/if profit is made BTC will be distributed to shareholders.

and be immediately shutdown and seized by Japanese regulators for securities violations.

[Xtraeme]

You should probably circulate this via reddit and through other social networking services.

This is probably the only option left.

[DanielVG]

I like this letter.  A more rational approach after the emotionally charged week with all the death wishes.
Making fun of Karpeles is a reasonable result after what happened, but people talking about killing him are the worst kind we have in this community.  
anyway,
Respect to this initiative!
Pick up the bricks and start building again.  
You have nothing to loose (anymore)

[myrond]

Launch the equity as GOX traded colored coins (or other blockchain based overlay for stock ownership), which when/if profit is made BTC will be distributed to shareholders.

and be immediately shutdown and seized by Japanese regulators for securities violations.

I don't know the lawful method in Japan.  Another way then?  I do like the idea of a blockchain based ownership system.

[DeathAndTaxes]

Launch the equity as GOX traded colored coins (or other blockchain based overlay for stock ownership), which when/if profit is made BTC will be distributed to shareholders.

and be immediately shutdown and seized by Japanese regulators for securities violations.

I don't know the lawful method in Japan.  Another way then?  I do like the idea of a blockchain based ownership system.

The same reason you like it, is the same reason just about every nation on earth has banned bearer shares a couple decades ago.  Most off shore locations no longer allow bearer shares.   Securities laws are generally speaking insanely complex, but they (almost?) never allow unregistered securities to be sold to the public or publicly traded.

[myrond]

You should probably circulate this via reddit and through other social networking services.

This is probably the only option left.

It is on reddit:
http://www.reddit.com/r/Bitcoin/comments/1yyrvf/open_letter_to_mark_karpeles_voluntary/

[myrond]

Launch the equity as GOX traded colored coins (or other blockchain based overlay for stock ownership), which when/if profit is made BTC will be distributed to shareholders.

and be immediately shutdown and seized by Japanese regulators for securities violations.

I don't know the lawful method in Japan.  Another way then?  I do like the idea of a blockchain based ownership system.

The same reason you like it, is the same reason just about every nation on earth has banned bearer shares a couple decades ago.  Most off shore locations no longer allow bearer shares.   Securities laws are generally speaking insanely complex, but they (almost?) never allow unregistered securities to be sold to the public or publicly traded.

They really are illegal?  According to: http://en.wikipedia.org/wiki/Tax_Equity_and_Fiscal_Responsibility_Act_of_1982 and http://en.wikipedia.org/wiki/Bearer_bond it seems that they made it so the interest can never be tax deductible for the issuer.  Does that mean they are still illegal?  Or just fiscally not desireable for the issuer.

I'm not trying to argue or anything with you.. I truly don't know and would like to understand it better and the history of how this happened.

edit: reading further, these are bearer bonds, not bearer shares... I need to read further

Okay reading further, they are banned in all US states except for wyoming and Nevada... fascinating
source: http://www.quickmba.com/law/corporation/nevada/

edit: is it possible to create a blockchain based registry of ownership and not have them be bearer shares?

[DeathAndTaxes]

Existing bearer bonds and shares are not illegal but it is no longer legal to issue new bearer shares and bonds in virtually all countries.  Maybe somolia allows it but even many offshore locations revised their statutes in the last couple decades.    There are a lot of outstanding US treasury bearer bonds.  They no longer pay interest but they are normally used as a "reallllly" big cash note so they probably will never be redeemed.

BTW: Nevada prohibited the issuance of bearer shares in 2007.
http://law.justia.com/codes/nevada/2010/title7/chapter78/nrs78-235.html

edit: is it possible to create a blockchain based registry of ownership and not have them be bearer shares?

Sure if the blockchain can verify the identity of all shareholders, collect and store required information, ensure shareholders are accredited before issuing shares, enforce restrictions on transfers for private placements as required by securities laws, and file all necessary documents with regulators in a timely manner.

[rikkejohn]

I like this letter.  A more rational approach after the emotionally charged week with all the death wishes.
Making fun of Karpeles is a reasonable result after what happened, but people talking about killing him are the worst kind we have in this community.  
anyway,
Respect to this initiative!
Pick up the bricks and start building again.  
You have nothing to loose (anymore)

Agree, the personal threats are over the top. Of course I'd like him to have a genuine accident, break a toe or something, but people need to be careful about specifically making threats, especially the British given the police there seem to like arresting and charging people for whatever they have tweeted on Twitter.

[myrond]

Existing bearer bonds and shares are not illegal but it is no longer legal to issue new bearer shares and bonds in virtually all countries.  Maybe somolia allows it but even many offshore locations revised their statutes in the last couple decades.    There are a lot of outstanding US treasury bearer bonds.  They no longer pay interest but they are normally used as a "reallllly" big cash note so they probably will never be redeemed.

BTW: Nevada prohibited the issuance of bearer shares in 2007.
http://law.justia.com/codes/nevada/2010/title7/chapter78/nrs78-235.html

edit: is it possible to create a blockchain based registry of ownership and not have them be bearer shares?

Sure if the blockchain can verify the identity of all shareholders, collect and store required information, ensure shareholders are accredited before issuing shares, enforce restrictions on transfers for private placements as required by securities laws, and file all necessary documents with regulators in a timely manner.

What about using the existing AML database from Gox and identity verified?  Issue the shares and have them accredited/assured/restrictions ensured via ethereum?

Certainly up for someone smarter than me!

It says you can use blockchain for a datastore, GOX be the issuer and be the match for allowed public keys.. the ethereum share then is programmed to only be able to be traded between the primary list of registered holders that were certified by box on the blockchain.  If you want to change to a new key you need to register that key with gox and for a fee they will add a new allowed public key to the published allowed list to participate in ownership...  I'm just brainstorming here.

Perhaps it is possible??  It would be a very interesting showcase of blockchain technology

[BitOnyx]

I like this letter.  A more rational approach after the emotionally charged week with all the death wishes.
Making fun of Karpeles is a reasonable result after what happened, but people talking about killing him are the worst kind we have in this community.  
anyway,
Respect to this initiative!
Pick up the bricks and start building again.  
You have nothing to loose (anymore)

Agree, the personal threats are over the top. Of course I'd like him to have a genuine accident, break a toe or something, but people need to be careful about specifically making threats, especially the British given the police there seem to like arresting and charging people for whatever they have tweeted on Twitter.

I wonder at what point people notice death threats are still a crime even on internet. There will be lawsuits any way.

[2weiX]

+1

[BitCoinNutJob]

+1

[thelema93]

I am going to sue Mt. Gox for fraudulently selling me a product which they knew they didn't have.

I will be contacting my Lawyers in Tokyo who speak English tomorrow (Friday 28th)

If anyone want to get in with me and split costs, let me know ASAP.

[joehal]

I am going to sue Mt. Gox for fraudulently selling me a product which they knew they didn't have.

I will be contacting my Lawyers in Tokyo who speak English tomorrow (Friday 28th)

If anyone want to get in with me and split costs, let me know ASAP.

If it turns out they don't have any money, would there still be a point in suing ?
Or if they still have a few million dollar, how will that go ? You were first to sue, so you get the biggest compensation part ?  To the one who sued a little late the judge is gonna say : Sorry mister, but that one pushed the trigger a little faster so he gets the money and you don't.

And to all the other thousand users who lost their money, sorry but your share will go to this user who sued first. Or how ?

[V4Vendettas]

I am going to sue Mt. Gox for fraudulently selling me a product which they knew they didn't have.

I will be contacting my Lawyers in Tokyo who speak English tomorrow (Friday 28th)

If anyone want to get in with me and split costs, let me know ASAP.

If it turns out they don't have any money, would there still be a point in suing ?
Or if they still have a few million dollar, how will that go ? You were first to sue, so you get the biggest compensation part ?  To the one who sued a little late the judge is gonna say : Sorry mister, but that one pushed the trigger a little faster so he gets the money and you don't.

And to all the other thousand users who lost their money, sorry but your share will go to this user who sued first. Or how ?

Its a very good question and because I don't know the answer to that I'm already writing emails.

If that's the case its total bullshit if you ask me.