Bitcoin Forum

Is really nobody considering this scenario?  Josh Jones as bitcoinbuilder.com thinks MtGox is OK.  I'm with Josh!

You?

Is this the bargaining stage?

BFL customers also believed 'Josh' when he said two weeks...

IMO MtGox is obviously insolvent, and those arbing GOXBTC are just asking for trouble.

I think we are talking abt a dif Josh.

I my self purchase some goxBTC at Josh's site.  I don't mind if I loose them if the site doesn't come back.

ANY INVESTMENT FOR  GOXBTC SHOULD ALWAYS BE CONSIDER  VERY HIGH RISK. - I don't want you tell me, I follow your lead and lost my life savings or something.

yup   ;)

I should have listened...Josh also changed his tune tdy; I'm out of bitcoinbuilder after losing abt 5 BTC.  Moving on...

What's this about, can you elaborate?

It would be very easy for Gox to prove that they are solvent. Just put a reasonable amount of coins in some addresses and sign a message with the corresponding keys.

The fact alone that they aren't doing so at this stage of the drama tells everything.

It's abt playing gox/BTC on bitcoinbuilder.com.  Yesterday, bitcoinbuilder's Josh Jones's employee wrote me in an email that they still think that MtGox is OK.  Today, it's a different story on their site.  That made me quit arbing.

i guess you only have 49,995 bitcoin now? still not bad...

sorry guys.  Gox is done. 

http://www.bloomberg.com/news/2014-02-26/bitcoin-exchange-mt-gox-shutdown-said-to-be-probed-by-u-s-.html

https://twitter.com/twobitidiot/status/438858500601831426



the full story is now circulating.  ppl are lawyering up.  the btc foundation went to the Feds to ask for a mtgox probe.  they would only do this for CRIMINAL matters.


wow!  (speculation) mtgox was a ponzi running a fractional reserve for years.

What would they gain from being a fractional reserve  ???

I wish!  My screen name is simply wishful thinking for 1 BTC being worth $50,000.  We got a ways to go.  I own 4 BTC right now.

WARNING: PURE SPECULATION

I'm changing my tune.  Yesterday I thought the 750,000 BTC figure was FUD to get certain Gox creditors to voluntarily accept 10 cents on the dollar for their GoxBTC.  The theory I'm leaning towards now is that the 750,000 BTC figure is true and Gox has indeed been operating as a fractional reserve.    

The theory is that sometime in 2011--probably after the crash from $30 to $10--MtGox was lax with security and a group of thieves or hackers was able to steal about 500,000 to 1,000,000 BTC.  At the time, this only represented $10 million dollars.  

To avoid discrediting bitcoin and embarrassing himself, Mark pretended that nothing happened.  He knew that BTC withdrawals were roughly balanced by BTC deposits (typical fractional reserve banking) and he hoped to slowly earn back the bitcoins through trading fees.  

Meanwhile, the thieves worked to mix their coins with non-stolen coins and slowly sold them off, thereby driving the bitcoin price eventually to $2 later in the fall of 2011.  It was this extra selling pressure that continued through the remainder of 2011 and 2012 that kept the price of bitcoin artificially depressed.

Meanwhile MtGox was buying coins whenever it had spare cash.  But as the price of bitcoin exploded in the spring of 2013 they saw their liabilities in $ terms increase tremendously.  But at this point they had to keep going, even using customer deposit money to buy coins from other exchanges or individuals.

The problems at MtGox (probably due to extreme stress of MK) got worse, and MtGox lost market share, slowly dwindling down MtGox's small supply of coins.  

MtGox purposely mixed immature coins into withdrawal transactions, and later used the malleability excuses, all to buy time to somehow get more coins and make good on withdrawals.  

But eventually all hope was lost.  Their supply of coins dwindled down to 2,000 BTC while their bitcoin liability were a huge 750,000 BTC.  

And here we are today.  If this theory is correct, there are 750,000 less bitcoins in existence than what everyone thought.  

Who's theory is this?  It makes no sense, with due respect!  R U saying that the price of BTC should bounce because 750 k are gone?...

I dont.. see where he said that?
 
Sounds more reasonable than anything else I've read, but its still hard to believe they could hang on this long with that kind of debt though.

I agree (in "speculating mode") with most of your post, but I fail to understand the 750KBTC LOST COINS theory (you're not the first to come up with it). If they were stolen, what makes you think they are destroyed? I would believe the thieves have secured and/or resold them already, so they are still in circulation, not destroyed.

I have no idea whether this is correct.  That's why I wrote "WARNING: PURE SPECULATION."

The bottom line is that there's no way MtGox didn't notice a slow theft of 750,000 BTC.  My three contending theories in current order of preference are:

#1.  What I posted above.
#2.  The 750,000 BTC figure is FUD designed to buy-out GoxBTC for cheap and close the (smaller) solvency gap.  
#3.  The "Mark messed-up the private key to deep cold storage" theory.


If there are 750k BTC less than what everyone thought, I'd say that was very bullish, at least over the medium and long term.  

I think hes just saying "750k less coins than were thought to exist, exist"

As in, the 750k are gone to wherever and exist normally. However the 750k in Gox users' accounts? Well, it doesnt exist (But, they were actively traded on the exchange, so they "half existed" for awhile)

In the theory I just posted, the 750,000 coins aren't destroyed.  It's just that the market has been behaving as though there were 750,000 more coins than there actually were since 2011.  The "effective" monetary base of bitcoin would have just shrunken by 750,000 BTC.

I apologize, I'm lost! Where the f#$% do these 750k BTC go?

Lets say 750k coins were sent to gox over the years.

750k were hacked, so the exchange really had a 0 balance.

However, those who had coins on the site still showed balances in their accounts, because when trading you arent actually transacting BTC every time, just numbers in your account. So, the 750k coins that existed still show up in everyones accounts.

Now imagine the hackers coins make it back to gox, all 750k of them. Now there are 1.5m coins on the site, even though only 750k exist. Simple enough?

Already did, really. We're only talking about 6% or so.

It makes perfect sense, and is one of the more compelling theories I have read.

Perhaps he should have used more words of one letter? ;)

OK, now I got your point. Yes.

These guys were trying til the end LOL

Was just checking my emails from them and though this was funny..
https://i.imgur.com/ZWujEUa.png

This.

It would be child's play for Gox to prove they have a large # of coins.  I don't agree with what you think it would prove (that they are solvent), but it would definitely prove something.

Timelines here don't agree.  Feds went after gox early in the month. maybe the foundation helped later

Also your statement gox is done is more FUD.

Theory #2 is wrong because if that was the case they would not have stopped the trading engine. You can't get your bitcoins to the bitbuilder gox address without the trading engine so that would have severely limited things.

I thought they might have had a few thousand coins stolen but this magnitude of a situation surprised me.

Maybe they will make good, and are not such bad guys after all... at least in their intent.

There is an alternative theory that MtGox may have recently realized it cannot access their cold storage due to key mismanagement, technical glitch, or whatever.  In this scenario, they are probably frantically trying to guess passwords or otherwise fix the glitch.


more here:
http://letstalkbitcoin.com/somethings-not-right-at-gox/


To my mind, this theory matches up well with the known facts and statements.

I don't understand why your theory would equate to there being less Bitcoins than we thought.

Neither did I, but he clarified this (https://bitcointalk.org/index.php?topic=488058.msg5398080#msg5398080).

There's also the possibility of the private keys to those coins being lost forever  ;)

Latest rumors say that the potential investors who were contacted by Karpeles were frightened by
the size of the mess at MtGox and they notified the authorities. I would expect Karpeles to be arrested on fraud charges.

If they were lost that long ago, they should have been close to made up by trading feed by now.

750k / 0.6% = 125,000,000

Whats gox's total trade volume over the past couple years?

It actually makes a lot of sense. It also explains why a lot of the problems with MTGox happened shortly after major increases in the BTC/USD rate as the "short squeeze" started to bite. The seizure of funds by the US Government, also provided the perfect cover by making the US Government the scapegoat for what was a BTC fractional reserve that was at the time blowing up due to an increase in the BTC/USD rate. 

Very good theory,  But if that's the case that will defiantly be consider a Ponzi Scheme, in which Mark, will be setting in prison for 15-25 Yrs, if process here in the US.

Yeah, if it's the case then it was a Ponzi scheme.

Oh shit, prepare for the headlines: "Jury to Determine if Bitcoin is a Ponzi Scheme". This is just the misinformation that the enemies of Bitcoin need.

one thing i do not unterstand. I read at many sources that there are only 2000 BTC left.
But i have tracked the path of one deposit adress of gox in which i have deposited btc in dezember 2013. And the path is ending for example in this adress
https://blockchain.info/de/address/1FfdcppWbJ7FeQFznsjdLYNXdwMdoiTGSA
And there are over 10k btc...and this is only one adress.

This implies MtGOX has 10K btc and still lost 700K ?

Maybe you tracked the path wrong (i.e. one of those transfers in the path is a withdrawal)?

no,

i said, if i know it right, gox had many cold storages...and this could be only one of those.... i think that the amount of only 2000 left btc is not true



ehm...who is sending manually 100BTC or 200BTC packages ?...

I don't know, but apparently you think you do. (What makes you think the transfers were manual, and how is that relevant anyway?)

Do you think Gox made this transaction yesterday? They're still depositing BTC into cold storage? https://blockchain.info/tx/9ee728587d374b6e240ba0078a16eb2c2f932ba51635016c3fd52b466d261fd6

http://www.reddit.com/r/Bitcoin/comments/1z30q9/gox_has_at_least_50000_btc/

Its becoming more and more clear that they wasn't robbed but have somehow lost control of the private keys.

"they tried to consolidate 10 50k coins into one 500k coin, and ended up with 50k in change" https://github.com/bitcoin/bitcoin/blob/d3d753578c1043ce3755f097ce96cc2388a08738/src/test/wallet_tests.cpp#L208

This is the 50K change? Is it real? Is it spendable? Or is it a bug?

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EDIT: Some more:

"That was MtGox trying to consolidate 10 50k coins into a single large 500k coin. The extra 50k was added by some code in the official client that is a little too careful to avoid sub-cent change."

https://bitcoin.stackexchange.com/questions/3287/what-is-the-largest-transaction-by-value-to-date-for-bitcoin-currency

I'm still not sure exactly what that means, though.

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EDIT 1.5:

I think what it means is that they had a wallet with at least eleven 50K coins in it (maybe some other coins, maybe not), and they tried to pay themselves 500K BTC. Instead of using ten 50K coins and converting it into one 500K coin, it took eleven 50K coins and converted it into one 500K coin and one 50K coin.

In other words, the transaction is valid, and the change is valid. The bug was that the software used more coins than was necessary.

See https://gitorious.org/bitcoin/luke-jr-bitcoin/commit/e7199041ed68440d85bafd24155b3f9b98b7b94d

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EDIT 2:

I bet they lost the private key on that 50K (BTC) coin - either permanently or it's sitting around somewhere waiting to be found.

Thanks for the very interesting link!

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EDIT 3:

Very interesting implications if they claim to a bankruptcy court that they lost that 50K BTC coin. It'd be plausible (especially given that the coin in question was caused by a bug and nothing from that address has ever been spent), but unprovable. And what can you do if 2, 5, 10 years later suddenly the coin gets spent? Nothing, really.

I guess it'd be the same thing with cash, but it's significantly harder to embezzle $30,000,000 in hundred dollar bills. Even hiding cash is somewhat harder.

'What if MtGox makes good?'

Stop torturing yourselves.

Doesn't matter if the bitcoins are lost or not - we could still get our money back and enrich all the exchanges and bitcoin in the process :

https://bitcointalk.org/index.php?topic=489949.0  (Voluntary Reorganization Best Option for Us All)

https://www.facebook.com/pages/MtGox-Recovery-Initiative/1394428424158424

I agree this is the most plausible explanation.

There is another piece of evidence pointing in the same direction Im trying to dig up. A few weeks ago, well before Gox went down, someone posted that Mark K once said there was a "secret" that needed protecting, and if unveiled, would cause tremendous damage to bitcoin. It was not a direct quote, I cant find a direct quote, I dont recall who attributed it to Mark. Anyone remember reading anything along those lines?