Get your money out now. You can always put it back later.

Looks like they redirected the site back from the outsourced help desk page at Zendesk to their own site. But
under "Trade Data", it just says "Data will be back shortly".

I don't have any money trapped in Mt. Gox. Many of the people who do have a good reason to file a complaint. Especially since Mt. Gox just missed their re-opening deadline yet again.

Something is very, very wrong at Mt. Gox. Millions of dollars may be lost if action isn't taken.

It may be time to report Mt. Gox to the Japan Financial Services Agency, which regulates money transfer firms in Japan.

Japan's Financial Services Agency regulates money transfer firms which operate in Japan.  For example, SBI Remit is a registered money transfer firm. They transfer to and from various currencies and can move money around the world. They even support mobile phones.  Mt. Gox comes squarely under the same regulations they do.

Here's are some excerpts from the regulations:

"Only banks licensed under the Banking Act of Japan (Act No. 59 of 1981, as amended) and certain other financial institutions handling deposits licensed under other applicable laws (collectively, the Banks) are permitted to engage in ‘money remittance transactions’....

"However due to the innovation of information-communication technology, persons/entities other than Banks can easily conduct services that are similar to the traditional fund transfer business conducted by Banks. This, therefore, means that the line between permitted and prohibited services is blurred and it has been argued that, by considering customer protection, it is necessary to sort this issue out and set new regulations on fund transfer services by permitting certain entities other than the Banks to engage in the business of such services.

"The PSA will allow companies that are not licensed Banks to engage in the business of ‘money remittance transactions’ in Japan provided that: (i) they are registered as ‘fund transfer business operators’ (operators); and (ii) they are able to engage in services to the extent that such transactions fall under the category of a ‘certain small amount of transactions’. Details of the ‘certain small amount’ mentioned in (ii) above will be provided for in the cabinet order. However, in light of discussions at the National Diet of Japan, such amount is expected to be between JPY500,000 and JPY1,000,000 or less."

"An entity which intends to be an operator will be subject to a registration requirement and certain regulations including the security of its assets and other customer protection measures, supervision and measures against money laundering."

"In order to be registered as an operator under the PSA, an applicant must satisfy certain requirements, such as the applicant must be a stock company (kabushiki kaisha) or a foreign entity which has the equivalent registration in its home country and has an office(s) and representative in Japan; the applicant must have sufficient financial standing to conduct business appropriately and properly; the applicant must have a satisfactory organisational structure to conduct business appropriately and properly; and the applicant must have a compliance system to ensure observance with the relevant laws and regulations. "

"The PSA will impose an obligation on an operator to secure the assets in amounts equal to or more than the total amount of: (i) funds which an operator is transmitting; and (ii) procedural costs in relation to reimbursement of such funds as set out in (i), so that the transferred funds can reach the recipient even in the event of an operator’s insolvency."

"In the event of an operator’s insolvency, users have rights to recover their assets from the above secured assets in priority to an operator's general creditors, pursuant to the procedures provided in the PSA."

There's more, but you get the general idea.

The Japan Financial Services Agency enforces these regulations.

    Financial Services Agency
    The Central Common Government Offices No. 7,
    3-2-1 Kasumigaseki, Chiyoda-ku, Tokyo, 100-8967 Japan
 

From the site,

The question is not when trading will resume. It's when withdrawals will resume.

You're thinking of Bitcoin as the modern equivalent of "the free and unlimited coinage of silver". (Read up on the Free Silver movement.) That was a different problem, though. That period had a growing economy with a fixed money supply tied to gold. The result was severe deflation. That's not the problem in the current US economy.

Agreed.  But that wasn't the situation with the housing crash. There was this weird mind-set that housing price increases created wealth, while in reality they were just a form of inflation. What we saw was that historically, the median house sells for 2 to 2.5x the median income. When that number hit 4 across the US, and 10 in some areas, it was blindingly obvious that something had to give. Nobody could make those payments.

The housing crash was delayed two years by Greenspan, who had the Fed cut interest rates when it should have been raising them. ("It is the job of the Fed to take away the punch bowl just as the party gets going" - William McChesney Martin, early Fed chairman.) When the crash came, it was much worse.

The dot-com crash was straight cash flow. There were people saying "revenue doesn't matter." What mattered was "clicks".  When the initial funding ran out, so did the company. It was a very strange time. I'm in Silicon Valley, and watched it all happen.

The current real-world economic situation is so driven by public policy that we've given up making predictions.
 

Agreed.

Look at the dates on Downside.com's "deathwatch".  Deathwatch ran from 2000-2001, starting at the peak of the dot-com boom. We predicted the crash when others were hyping the boom.
Digicash came close. They had an anonymous digital currency. The technology was good enough. but David Chaum, who owned the technology, botched several potential big deals, including ones with Microsoft and Visa.

How issuance of a digital currency should work isn't clear. Digicash and Beenz were centralized.  Bitcoin is based on compute work, with a heavy bias towards early adopters. That doesn't seem to be leading to wide adoption as a transactional medium.  Beenz got much further in adoption, and it tanked. If coins were somehow generated by doing useful work, that would be better.
Ah, the Big Four. Huntington (hardware), Stanford (railroads), Hopkins (hardware), and Crocker (iron). The real remnant of the Gold Rush is the Southern Pacific Railroad.

There's something to be said for that.  

The experience of PayPal is significant.  PayPal is all infrastructure.  PayPal is really a security company. They started by building authentication tokens. Money transfer came later. Most of what PayPal does is deal with security problems. Processing a successful transaction is very cheap. Dealing with trouble requires call centers, investigators, and substantial automated systems looking for fraud. PayPal originally offered peer to peer transfers, but the security problems associated with that were too great.

The Mt. Gox debacle indicates the same may be true for Bitcoin.


August 16, 2001: "If you've earned any Beenz on your travels around the Web, you'd better hurry up and spend them." "Internet surfers have only 10 days to use up their Beenz after the company announced Thursday that its online operations will cease Aug. 26. Any outstanding Beenz will be worthless after that date. A short message on the Beenz Web site announced the close and said any Beenz in a member's account after Aug. 26 "will be invalidated by Beenz.com, and the member will not be entitled to any compensation of any kind for such invalidated Beenz."

Although Bitcoin is distributed as to generation and transfer, it's centralized as to exchanges.  A sizable level of activity is required for an exchange to have market depth. So there's a network effect which tends to keep the number of exchanges down. (Yes, potentially there could be a combined ticker and a consolidated limit order book. Those only work when there's a separation between brokers and exchanges.) So, if Bitcoin winds down, it will be because it becomes illiquid.

The "rabid fanboys" certainly do exist, as can be seen from the replies in this thread. To prop up Bitcoin, they have to back their rabid fanaticism with substantial amounts of hard cash.

I'm John Nagle, the person behind Downside. Over the last decade, we predicted, well in advance, the dot-com crash (company by company), the oil spike, and the mortgage crisis. We've also explored some financial scams - Enron, Madoff, and their ilk. Downside was written up in Business Week, CNN, Fortune, etc. Our track record speaks for itself.

I've been looking at the Bitcoin world. It's amusing watching the classic forms of financial trouble happen in miniature. I have no financial position in Bitcoins, so I'm looking at this neutrally.

So what's wrong in the Bitcoin world?

First, it looks like a bubble. Here's Bitcoin before the Mt. Gox debacle:



That just screams "bubble" to anyone who's seen one. Bear in mind that the Bitcoin system generates no revenue. All funds must come from new investors. This is not like a startup company. This is a zero-sum game. If you've been in the game for half an hour and you don't know who the patsy is, you're the patsy.

Second, Bitcoin is supposed to be a currency, but it's actually a speculative vehicle. If Bitcoin were a successful currency, there would be many merchants using it for small transactions, with perhaps some speculation on the side. In practice, the speculation dominates.  This is the real problem with Bitcoin. If it had been launched as the payment system for something like music tracks or smartphone apps, it might have worked out better.  Or not; "Digicash" and "Beenz", the two previous rounds of this idea, also tanked.

Third, the organizations in Bitcoin's ecology are very flaky. Mt. Gox is two guys in Tokyo who are in way over their heads. We don't know much about Tradehill, which is somewhere in Chile. Neither of these "exchanges" has a published business address, a Dun and Bradstreet rating, published audits, or regulation as a bank or money transfer firm. Yet they're acting as depository institutions for sizable funds belonging to others.

It's amusing watching the Bitcoin community flail around. Most of the classic financial disasters are being re-enacted in miniature. We have pyramid schemes, tulipomania, bucket shops, pump and dump... This would be fun if it were an MMORPG.

Yes.

Bitcoin needs to flatline to be useful.

The Bitcoin ecosystem is currently backwards. Merchants using Bitcoins for micropayments should be most of the transaction volume, and speculation should be a side business.  Right now, nobody is selling real merchandise in Bitcoins. They can't. There's far too much volatility.

If the price changed less than 1% in a week, merchandise could be priced in Bitcoins. The less volatility, the better.

"The Bitcoin Show" has the worst production I've ever seen. It's worse than the typical amateur YouTube video. The audio is usually too soft or too loud. The hosts look stupid and clueless, and they just sit there looking at their laptops. The video is boring. When they interview someone over Skype, they have trouble keeping the link up. Even when everything works, they ask lame softball questions. They had the head of Mt. Gox on, and botched that.

Those guys are in New York City. There are people in New York who can do video. There are people who look good on camera. There are people who know something about finance.  Many of them will work just to get publicity.

This thing is just lame.

Agreed.  But if it routinely stays within, say, 5% over a week, a merchant could price something in Bitcoins and reprice daily or weekly.  When we were getting 50% variation in a week, that was hopeless.

If Bitcoins are to be a useful medium of exchange over the Internet, it has to be possible for a merchant to collect them over the course of a day, and at the end of the day, convert them into a real currency and deposit the value in that currency into a real bank. For that to happen:

• the conversion rate has to be stable over the course of a day
• the market depth has to be great enough that a merchant can sell their day's receipts without moving the market.
• the market has to deliver the real currency that day, every day, with no excuses

On a small scale, we're sort of there. Daily variation is now a few percent. Tradehill has enough market depth to absorb a few hundred Bitcoins (but not a few thousand). Tradehill seems to be paying out promptly via Dwolla, or at least we're not hearing people screaming about problems getting their money out. That's good enough for a small-sized business.  You could sell T-shirts, LED lightbulbs, or web hosting for Bitcoins right now.

However, a hundred businesses doing that, or one business that did $25K in business a day, would crash the market.  A business that operates on a thin margin, and can't tolerate 5% daily volatility, let alone the nonsense from the Mt. Gox era, could not afford to use Bitcoins. For that, we need a much more stable and deeper market, and exchanges with real financial solidity.

That's what's supposed to happen with a currency.

Meanwhile, over at Tradehill, another nice boring day. Price still around $15, volume increasing, market depth and spread decreasing. That's the way a currency is supposed to work. 

When Mt. Gox finally does come up, thousands of people will have their cursor poised over the "withdraw" button.

You cannot run a depository institution like this.  In the US, when a real bank can't handle withdrawals, the Federal Deposit Insurance Corporation moves in. Just before closing time, an small army of FDIC examiners, auditors, and guards, armed with court orders, moves in on the bank. Everything is frozen. All cash is counted. All records are backed up.  The CEO and most of the executives are fired. When they do this on a Friday, by Monday, the bank is handling withdrawals, with FDIC staff running things.

The Mt. Gox clowns are saying "Trust us. We can't be reached by phone or mail. We aren't saying where we are. We aren't saying how much money we really have.  We aren't saying if any money is missing. We aren't saying when we'll really be paying out customer funds. We aren't saying whether we've been trading on our own exchange. Trust us."

Early on, it looked like Mt. Gox was merely a victim of their own incompetence. As time goes on, the situation looks more suspicious.

It's probably time to bring in the Japanese legal authorities. Whether they like it or not, Mt. Gox is subject to the "Financial Instruments and Exchange Law". This regulates all "financial instruments with strong investment characteristics" in Japan. It also regulates money transfer services.  Japan uses broader definitions in this area than the US does.

That makes sense.  If they get two reclaim requests from different people for the same account, there's clearly trouble. By waiting, they can check for that.
At least everyone who's been on line through this debacle and got their reclaim request in should be protected.

Dormant accounts, not so much.

Again, it would be a good idea from now on not to keep balances in an "exchange". Sweep the Bitcoins out to your wallet and the cash to your bank account every day.  Dwolla is cheap enough to allow that.

Right. The volatility is still too high.
The risk premium a merchant pays for accepting Bitcoins is approximately equal to the daily volatility plus the cost of conversion to another currency. Most merchants would sweep their Bitcoins into dollars or euros once a day. 

For Bitcoins to work as a medium of exchange, the volatility has to get below 1%/day. 

That's why Bitcoin probably isn't going to work. It has to deflate way too much to be usable on a large scale.

The launch was botched. About a quarter of the Bitcoins that can ever be generated are already generated. That fraction should be much, much smaller at this early point.