Bitcoin Forum

2011: All Gox customer emails released onto the Net.
2011: Gox "Hack and crash" takes BTC all the way down to one penny ($0.01) & the mysterious account with over 500,000 BTC was never really explained.
2013: Mark K is exposed as having lied on Gov forms, and the Gov steals a huge pile of customer funds.
2014: ..on and on and on it goes...

Discuss:
Do you think "Mr Fancy Coffee" could be on the payroll of some dark Gov agencies?
MtGox has made BTC look risky, dangerous, unstable, unusable and Not Ready for Prime Time more than anyone else.*
*With help from a long line of crooks, hustlers, and con-artists.

Do you think Gox is intentionally trying to damage BTC?


 

maybe

I was thinking that from that april joke that happend on gox.

The way they attacked the Bitcoin protocol and the core dev team in their "withdrawal suspension" announcement was absolutely intended to hurt Bitcoin...

They were practically screaming, "run for the hills, Bitcoin is buggy and we're losing all your coins!"

When does a conspiracy theory become believable? After you've lost everything? Do they have to admit it for it to be the reality? There's just too many strange coincidences lining up to reach any other conclusion. Gox is sabotaging Bitcoin for somebodies personal benefit...

Mr. Fancy Coffee lol...  When he was caught on video with that protester, there was no hiding that expensive drink!

What did they do with all them money everyone keeps saying they don't have any.  They would only need to have 1/10 of the cash on hand for all the deposits they owe to do arbitrage. Do this 2 times and you have 12/10 to cover the deposits.

We can go further even and say they only had 5% of the money left do arbitrage.  Do that a few times and your black again. How could they not be buying at their own exchange at these low prices and selling on the other exchanges. Each time you do this you gain 600% or 6 times the money so 5% x 6 = 30%.

Having only 5% money of what is owed to everyone can be used to do arbitrage 3 times and makes more then enough money to cover everyone.  That and all the fees they have been collecting from allowing trading to continue.

I don't understand these conspiracy theories around how Mt.Gox is bankrupt, or Mt.Gox was hack, or Mark Karpeles spent all the coins on coffee, or Mt.Gox is a scam and they ran off with the money. None of them make any since and none of them are rational. I think its a slim chance that their insolvent and even if they are it would not be that hard to make up the difference.

Everyone says all the coins are gone I not only find that offensive to the people who have coins in the exchange but illogical and irrational. All the things I mention above and the fact that they had cold storage just makes it more absurd on how they could get hacked and have all the coins stolen.

Money doesn't just stop at $0... How much debt do you think they have/had?


They were likely selling on the other exchanges for quite some time since the forfeiture of their bank accounts. They have to pay debts to keep operating and the trading fees only go so far. That money they lost wasn't profit... That was their Gross. They lost the top line of their balance sheet.


That's exactly what the "conspiracy" is about... They can't buy Bitcoins back from their own exchange with the proceeds of arbitrage as they sold the real coins on other exchanges; there aren't many Bitcoins left and it's a viscous cycle. The only thing they can do is pay out fiat and buy the "gox coins" which aren't Bitcoins.


Have you ever owned a business? Do you even know how narrow the margins are in real life? We're talking about Net Profit of less than 1% annul for this type of business. Businesses can fail for much less than this and do so every day all around you. Gox is only a few years old; do you honestly think they've been around long enough to grow the type of financial infrastructure that can absorb the scope of these losses? If they did then they must've paid off the initial investment in record time then...


The coins weren't hacked. They were re-appropriated into bailing out a sinking ship. When it became clear that the ship will sink and it's completely outside of their control, they made a plan; do you think they want to go to prison? They will pay their members out in fiat from buying all the "Gox coins" at far less than average value, most at less than $100 each. Nobody will get BTC back from Gox, and even the amount they sold in arbitrage likely won't cover the debts owed by the company. They will probably declare bankruptcy and everybody will have to deal with it and move on.

The best possible outcome that I can see here is that their users are at least reimbursed some fiat before they declare bankruptcy.

You make it sound like they always have to do arbitrage just to run the business and pay for all expenses like employe wages and servers and the backed. They pay for this by the trading fees but then again if they have no money then the trading fees aren't really paying them anything but there own fake coins back.

I see where your getting at. They have little cash left they buy what little real bitcoins there is on their exchange when most of them are not there.  If they where to sell all of the bitcoins that where left on their exchange and move it to bitstamp or another exchange they would then be left with cash. Move the cash back to mtgox and now theres no way to buy the bitcoins back since there arent any really on mtgox.  So there are no bitcoins there to buy anymore since they sold all of them on bitstamp.  Its hard to explain but I think I get it.

They only can do arbitrage so much until there is in imbalance.  Sell some bitcoins on bitstamp get more cash buy the cheaper bitcoins on mtgox rinse and repeat but eventually you sold all the bitcoins with none left to arbitrage back on mtgox. So there would be no way to buy them back.

This must be the cause of not letting any deposit or withdraws go through the exchange it has squashed their cash flow.  There backed in a corner what would you do to get out.

If it is as bad as you say then yes I agree there's no way out for mtgox its a vicious circle.

Can you explain how they got backed in a corner you said they weren't hacked. This would lead to my assumption that they where not generating enough money from fees to pay for their business. So the business was unprofitable why it didn't stop there is the part I don't understand.  They could have shut down right there and pay everyone back in full.  It looks like they decided to continue operating and if they did they would have had to use customer deposits to pay the expenses to run their business.  
Theoretically if they did this since we don't know if they did they would hit the point where they spent so many customer funds that they destroyed their initial capital to the point where they don't have enough money to run anything or even cover customer withdraws or ever be able to pay to run the site any more to generate the fees to pay of the debt.

Now the fees don't actually give mtgox any more coins or fiat. The customer fiat stays the same in their bank account and the bitcoins in their wallet stay the same and don't change.  The only thing that changes is the mtgox exchange ledger for your account.  And the only thing that can happen is customers trade and fees deplete their balance owed to them in their ledger on there account.  Thus mtgox would only owe you less because of the fees but the money in fiat and bitcoin stays unchanged. I see that just the ownership is what is changing and who owes who how much.

All of that can be said in one word insolvent.

Admitting any responsibility on their own part would have opened them up to even more potential legal shit than they're already in.

MtGox has always operated with a dangerous mix of arrogance and incompetence.  That has led them into one situation after another where they've come off second best, losing funds in the process.

Bitcoin can afford for an exchange to fail, even one as big as MtGox.  It's the circumstances of their failure which have the potential to have a wide impact on Bitcoin generally.  If they fail merely because their business decisions have resulted in insolvency, that will have a limited impact on Bitcoin in general.  It might lead to demands for increased transparency on the part of other exchanges, but that would be a good thing.

If MtGox goes down due to regulatory or AML issues, though, then all exchanges are in jeopardy and using an exchange at all would be playing the same kind of Russian roulette which dark market users have been playing ever since SR1 was taken down last year (only to lose funds on one dark net market after another).  

Bitcoin is so speculation driven that it would be severely affected if people started to believe there's no such thing as a safe exchange, but speculators leaving the market could well be the turning point many have been hoping for where Bitcoin is used primarily for transferring funds and purchasing goods and services rather than attracting people because of price volatility.

The point where the fees became inadequate was when the FBI seized their USD bank accounts containing 5 million USD. The accounts weren't filled with Gox profits; they were filled with the total USD trade volume of the entire exchange at that point in time...

When you think of an exchange, think about millions of dollars flying from hand to hand between accounts. Gox only gets a tiny portion in fees and the greater the trade volume the greater the income for Gox. Essentially, each time the ownership of that $5 million total USD in the account is shifted around between users, Gox gets to keep a small amount. The amount that Gox keeps is used to pay employees, security, insurance, electricity, maintenance, taxes, licenses, all sorts of fees, basically every operating expense of Gox comes from this relatively tiny amount of that total. If you've ever owned a business you'll understand that it's absolutely mind blowing how expensive it is to run even a small to medium sized business; especially in the first 5 years as you attempt to pay off your investments...

I can only speculate about how they've lasted this long but I know for certain that a business won't run forever in a deficit.

Either they were selling assets (Bitcoin) to pay for operating expenses, or they were taking on additional investors and selling company ownership rights. It's not the latter so where then do you think they got the money to pay for the insanely high operating expenses that come with business?

The actions they've taken recently speak more truthfully about their actual circumstances than their words ever will.

That being said, Bitcoin should never be reduced in stature to merely the value of it's exchange for fiat. Bitcoin is stronger now than ever with an intensely bright future... So much is right around the corner.

It's almost time to rip off the Band-aid and just move on.

At this point I'll openly say that this is likely the explanation for what is happening. They have caused damage in the past,yes, but it is nowhere as much as what they are doing now.

Satoshi = Ariel Sharon

Absofrickinlutely!

Does the moon orbit the earth?
Does earth orbit the sun?

I'm not so sure.
Anyone can set their own price on their own coins.

Could it be that they are trying to generate fiat as fast as possible in order to pay angry customers?

No one has ever mentioned the fact that coinlab.com are basically trying to sue them for everything they have got...

If i was in marks position.... I would probably do the same, just try to milk the business dry one last time (probably running off with thousands of bitcoins bought at $100) then simply declare the business bankrupt.

So not only is he making sure he is comfortable for the rest of his life with shed loads of bitcoin bought on the cheap, he also gets to put two fingers up to coinlab.com and tell them that they get nothing.

Also, i noticed they have downsized there office (for security reasons apparently)... more like mark is shit scared of meeting some proper angry holders at his entrance, so he has moved back to the tower block that has security at the doors.

I think it is time to tax the Cypriots and use the funds to bail Mark out.

I think they're insolvent, period. Whether through sheer incompetence and a ton of missteps, or some blatant criminal activity, either way it's bad for BTC and they need to step aside / try to make it right.

I think he's took a backhander from a few big boys to crash the price so they can buy as many coins as possible before it skyrockets again this year, KNC are shipping their new units in march and I have no doubts it will increase the price dramatically.

There is no doubt in my mind that Mt. Gox has had a clear track record of negligence. And I wouldn't be all too shocked if Mt. Gox used this "negligence" as a cover for their shady activities (or that negligence was due to their shady activities).

But I can't say that they are intentionally trying to damage BTC at the moment. I think they still have aspirations to become even filthier in riches and damaging BTC doesn't align with that. I'm more inclined to think they are continuously creating an artificial arbitrage that they can take advantage of whenever they need more money.

Regardless, Mt. Gox's activities have affected the BTC landscape for the worse and we'd all be better off without them. Frankly, whether they are doing it intentionally or not doesn't matter to me.

Does anyone know if this bitcoinbuilder.com works for trading your GOX bitcoin for Real bitcoin?

I am only passing the message. I don't use Gox so I don't know if this actually works or not.

well in order to be a standard bubble chart it *HAD* to fall down to $100 at some point.  luckily Mt. Gox did it and spared the other sites the agony

 ::) maybe...

Thanks for the laugh!!!!!!!!!  :D

I think the whole thing is hilarious and I'm really enjoying buying up these cheap coins.

I especially enjoy the jokes about the coffee, what kind of grown-ass man drinks a coffee milkshake in the morning?

Check out the picture coindesk used for this gox article, haha:

http://www.coindesk.com/bitcoin-price-hits-135-mt-gox-office-move-verification-demand/

@DaFockBro

i dont know why u have to insult him over a desert-like coffee. i mean this is 2014, traditional breakfasts and coffees are gone. plus he is pretty fat, pointing this out if u have not noticed and so its not at all out of place to see that beverage.

They're too incompetent to intentionally damage BTC.

Maybe we should collaborate with the miners, and skim 10% from every bitcoin address and bail MtGox out.

Edit: Crap, got beaten to the joke

If there was a big dump of coins or a series of dumps on the run-up to the fiasco, then Gox might have known they could sell high, impact the market and buy-back cheap.

Sorry to say it, but this is what regulators do. If someone intentionally manipulates the market, they go to jail. 

Yeah, yeah, yeah. I know - I'm scum for mentioning regulation.  On the flip side, $3-$5bn USD has been wiped off the price of Bitcoin in the last few months and probably double that in reputational and brand damage.

You can go to jail for stealing $100 from a cash register; losing $3-$5bn gets you hate mail.

Incompetent to do pretty much anything.

interesting points. ok, if mt.gox is intentionally trying to damage btc, then all it means is it's not gonna end yet. it could go on until btc is down on the ground.  or at least they'll try to.

JED SAVE US!

They just seem to take all the events lightly..barely caring about them lol

To the ground? Impossible.

those where the days, when I got up and made a large home made Iced coffee every morning

This post made the news, it was linked here: http://www.pcworld.com/article/2100100/mt-gox-bitcoin-price-falls-below-100.html

SSL error, cool.

"The situation surrounding Mt. Gox has led some investors to believe it is teetering on the edge of bankruptcy and that bitcoins on the exchange may become worthless.

Discussion on Bitcointalk.org, an online forum, touched on the office move, as well as questions about whether Mt. Gox was going to collapse or is a Ponzi scheme, or is intentionally trying to destabilize the digital currency. One participant suggested Mt. Gox is “sabotaging” the currency for someone’s personal benefit."

Made my day.

Your post made me laugh, so I'm not sure if you're also making fun of the coffee now.

In case you were serious, I insulted him over his desert-like coffee because this is the type of drink girls would drink at my middle school and high school.

Do we really want someone who has the same beverage choice as a teenage girl to be representing Bitcoin?

I agree, he should be replaced by that dude who went to jail for posting explosives through the US mail.

Or that one guy who allegedly is a paedophile.

So many choices of figurehead.

Those SR2 coins came up missing/stolen at about the same time, did they not?  Who's to say Mark didn't have something to do laundering those for them?  And using his customer monies to do so would not be legal or ethical, as he's not paying interest.  But maybe $0.10 on the dollar was too tempting for ole fatboy.

Furthermore, the malleability issue is known for like 3 years and had been on the Wiki for 1 year.  So suddenly when the SR2 coins are known to be on the move, it suddenly becomes an issue?  Give me a break!  He may well have laundered those coins from SR2 and used transaction malleability as a cloak for the laundering.  The whole thing stinks to high heaven. But it's a familiar stench coming from GOX, given their previous escapades.  These guys are dishonest players.

Remember -- Mark Karpeles isn't in Japan because he's Japanese.  He's there for regulatory arbitrage.  Never forget that.  He KNEW the price was going to fall because of his announcement.  And he no-doubt took advantage of his ability to move markets with his announcements -- regardless of the fact that it was a 3 year old known issue of limited significance to any exchange who tracked internally properly.

TL:DR

He may well have shorted BTC using his customers' coins/money,  AND/OR laundered SR2 coins.

I'd bet $100 Mark knows EXACTLY what happened here:
https://blockchain.info/charts/bitcoin-days-destroyed-min-year?timespan=7days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

They are far from insolvent. What is happening is quite simple, they are taking full advantage of rock bottom prices and idiots selling and profiting from it. This same thing they've done dozen of times and many lost money and a lot of people made a lot of money. They are riding they wave, although quite illegal one but since for now there is no regulation why not make shitload of money from this little panic sell off. Few weeks from now, all prices will be back to normal and just as usual everyone will look back at this and laugh. This is only going to go on for short while longer until enough people complain and regulators step in then all this easy money business will be done and done.

I think they are insolvent.

Mark spent everyone's BTC on a golden swimming pool filled with coffee milkshake.

I don't know how profitable you guys think the trading fees are; they can't just simply "cover" $5 million USD seized by the FBI and continue to pay their normal operating expenses...

I don't know their level of actual expenses but I do know that in business your expense is a sliding scale; the more you make, the more it costs to stay in business... Financial exchanges operate on less than 1% Net Profit per year after all is said and done...

Let's just run a little financial simulation for speculation purposes. These are the conditions:

- Assume you need to pay off $5 million USD and still have enough for regular operating expenses.
- Assume you can operate at a 90% Gross Profit after operating expenses. (On average, for Every $111 of Gross Income you spend $11 on regular Operating Expenses leaving $100 left over.)
- Trade commission is 1.2% total for each transaction.
- All debts rely on new incoming USD as the older pre-existing accounts were forfeited.


To become solvent:

$5,000,000.00 (Gross Profit) = [$504,583,333.33 (Volume of Trade) * 1.2% (Trade Commission)] - $1,055,000.00 (Normal Operating Expenses @ 90% Gross Profit Ratio)

Net Profit @ 1% of Gross Income (not Gross Profit) = $60,550.00 per year.

It would take 82.5 years to cover the loss at that pace. If the volume of trade would bump up to say, $5 Billion it would be 8 years, and at $50 Billion would take 0.8 years...


Most financial exchanges deal with Hundreds of Billions of Dollars per year in volume... 1% start's to look pretty good there.


On top of all this; enough new USD will need to be transferred in monthly just to cover the expenses in order to stay in operation until they have enough time to recover. Even if old accounts are traded back and forth so rapidly that the volume of trade was a trillion Gox Bux they still wouldn't have any USD to spend unless it's transferred in from outside of the exchange.

Regardless of how they choose to apportion the minimal amount of USD transferred into Gox's account daily they are probably insolvent and operating on borrowed time and money... They wouldn't likely be able to pay their obligations right now anymore than they could squeeze blood from a turnip.

It's not an insurmountable problem given enough time, very careful spending, and solid growth of Bitcoin... Unless the incoming USD deposits slow down...

Basically, they've been skating on very thin ice and when people stopped sending in USD and just sent Bitcoin it put them under tremendous financial pressure. They likely cover expenses by selling coins on other exchanges to compensate for the decrease in USD deposits...

Looks like mtgox deleted there support site with zendesk.  Not sure what this means but support.mtgox.com is no longer there you get the following message displayed.

No help desk at support.mtgox.com
There is no help desk configured at this address. This means that the address is available and that you can claim it at http://www.zendesk.com/signup/

At least we know what the plan was now, God I wouldn't want to be in the boots of somebody holding a bunch of zeros from Gox