Bitcoin Forum

Why Mt. Gox May Be Headed for Bankruptcy


http://www.coindesk.com/mt-gox-may-headed-bankruptcy/

I doubt it can operate for much longer. They'll be fucked if a big lawsuit comes along or the police seize any more funds.

I don´t think MTGox is bankrupt. Its not the first time they are simulating the market. This time Mark Karpales just waited for the perfect situation "bitcoin malleability issue" to earn enormous amounts of commission and doing insider trades on his own bitcoin exchange. Just read my thread:
https://bitcointalk.org/index.php?topic=470685.0

May be heading for Bankruptcy.

I wouldn't take it too seriously, a venture capitalists interests interfere with ours.

Not sure if they're heading for bankruptcy but one thing is for sure that they will have a very difficult time reclaiming the top spot again... if not impossible... they screwed up big time and now they have to "man-up"

Hopefully MtGox will die and BTC can move forward.

I think they're headed for a private island, after they file for bankruptcy >_<

Excuse me for my ignorance.

But, I have a question about "Transaction malleability" issue.
Is that issue confirmed and reproducible?

I mean, if the issue exists, It can be reproduced on a testing environment?
Is that issue deterministic or probabilistic?

I say, if the attacker modifies the transaction data and can do it so fast to mess things up.
What is the probability of a successful "mangled transaction entry" given a known computational power to do that?

I think, the real problem with Gox, isn't transaction malleability.
Maybe they sold more bitcoins than they really have, and now, they cannot afford withdrawals because, they doesn't have enough coins to process them all.

I read also, that if the bug happens, there are a workaround to solve that.
If you have a wallet, simply do a ./bitcoind -rescan, and the problem solved.

I can't figure out why they cannot do that on their systems, to help its customers with theirs withdrawals.
Despite custom implementations of the protocol.
A company with enough resources can do that. I'm not kidding, seriously.

But if the hypothesis of "out of coins" scenario is true. Suspending withdrawals force people to sell "promised coins", at much lower value than they paid when they purchase.
That led to a huge profit for Gox.

I think Gox, becomes to another scam site.

 

I am hopeful, along with the wider Bitcoin community, that Mt. Gox can overcome its difficulties and rebuild consumer confidence.

As Mt. Gox has struggled with both bitcoin and fiat withdrawals, it should be noted that, in a public ledger cryptocurrency, it is possible to certify the solvency of reserves with digital signatures showing the location of all deposits – although no exchange currently utilizes this feature of bitcoin.

While that would solve questions surrounding bitcoin solvency, it would leave fiat concerns unresolved. That said, my experience over the past decade has shown that insolvency tends to follow a pattern, that Mt. Gox clearly fits, and I feel the company is likely to fail unless outside capital comes to the rescue.

Everything is possible,
Now its the time to wait and watch.
In market untill Gox pick up its price and solve all the withdrawal and deposits problem Gox is dead for other exchanges but could come back.

If we must.

People need to realize that MtGox is one of the few exchanges that actually have a known office. They are operated in a country with a rather traditional banking system and they have been in the public eye the longest. They also charge by far the highest transaction fees and profit from currency conversion.

It may just be that they got burned and are now overly cautious. Just because everyone is yelling bankruptcy does not make it true. Then again, it also does not make it false.

I think the take away from this whole situation is, this company should no longer be operating (bankruptcy or not). If they do fix their problems, it's not going to make things ok. The wonderful thing about bitcoin is choosing who gets the "power" and the BTC community needs to pull their funds out (hopefully this will all go smoothly this week) and step away from mtgox. They deserve nothing from the way they have handled this fiasco.

I understand that this is the first time we have ran into such a unique problem and of course, it is part of the growing pains. This will be a great and unfortunate example of how to improve for the future.

In the end, I hope this whole chapter can be closed as clean as possible.

Great article, OP.  Lots of good information and yeah, guess we'll see where it goes.

I hope they do not recover back to no.1. exchange again. Let them have 5% of the market for laggards and historical value, other 95% should go elsewhere. We had enough pain caused by the one and only dr. Gox.

thats also my hope.

really bad article in the way that all it does is compare to poker sites as their frame of reference for making predictions.

MtGox is doing huge volumes of sales right now.  It more than makes up for the lower trading price in my estimation.  Whether it's enough to make up for their other problems, only time can tell.  I guess we'll know more on Thursday.

If MtGox wanted to remain an on-going concern, high on their priority list is maintaining their brand name. Resuming withdrawals would be high on the ToDo list.

Yes, transaction malleability is real, but it is an accounting problem (transaction hash changes), not a problem in the transfer itself (btc did not transfer).

#1 - sort out who got double paid, and what is the loss. It should not take more than a few days to run a query through the transaction database.

#2 - Resume withdrawals, manually process "did not receive" complaints.

It would not take much to resume withdrawals and maintain their brand name. Since they have not (especially since other exchanges have), it appears their actions speak louder than their words. They are short a huge amount of BTC (and probably $ USD too, since they have been having $ USD problems for a while too). Initially when $ USD was frozen and BTC was not, the price of BTC was high since people wanted to get out. Now, the value of BTC on MtGox has plunged. People are hoping that they will recover more in bankruptcy with a $ USD claim than a BTC claim.

Exactly.
Once upon a time they also a huge amount of volume which damaged the decentralized nature of bitcoin. Hopefully bitstamp, kraken, btc-e and other good exchanges will take their marketshare.

You make it sound so easy.

If BTC-E and Bitstamp can figure it out ...

Where there is a will, there is a way. Obviously there is no will.

One explanation for no will is: They have lost, spent, embezzled, etc. a huge amount of customers BTC, and there is no way they can resume withdrawals.

Occam's razor: The simplest answer is likely to be the correct one.

I just understand software development.  When you have been around the longest, you have the most legacy code to maintain.  It's a difficult job being the biggest kid on the block, adapting old technologies to problems you didn't plan for.  People need to stop freaking out and be patient enough to see what happens.

But people make money by making others freak out ...

True indeed.

Some lose it too.

A one-time query of the transaction database does not need to go through a development process.

Disabling a feature (automatic "did not receive" complaints) should not be that difficult.

Now, implementing an automated work around, that could take time. But, that would be Step 2. Step 1 is getting the system working again for most customers. They don't seem to care, which raises a lot of red flags.

Its not the first time MTGox are simulating the market. I don´t think they have big problems

There are a lot of people who tell that "MtGox is out of business and is going bankrupt". I have a hope that they won't go bankrupt and a few months later they will again lead the market.

It's just incompetency.

Nah, they'll never recover to the position they once held.