What you say is correct.  I don't think MtGox was able to query btc balance of every user.
The hot wallet would've been running low.  I don't know if it was topped up and how many times.
I think cold wallet is still somewhere but most likely has been shifted for "security reasons". 
MtGox was unable to do the maths, it would appear. 

I hope it is scrypt jane, to make what i consider to be the ultimate coin. 

A bunch of Chinese investors triggered buys when btcs dropped to $450, hence why we saw them gobbling coins over the last few hours.

Cold storage coins cannot be stolen for it would imply incredible stupidity amounting to gross negligence and outright fraud.  I speculate it has been moved to a "safe place".  

That's right: bitcoin reserves are probably still out in the wild, though likely insufficient to cover 750k in coin liabilities.

Karpeles will have to cough up if he wants to avoid jail time.

I speculate that the next big story will be what happened to MtGox's bitcoin reserves.  They cannot have disappeared into thin air.  I speculate that management went into "damage control" once they realised their outstanding claims to off blockchain btcs amounted to 750k btcs.  MtGox's reserves will have to pop up at some stage.

Crazy Rabbit's theory is that they never had the 700k in coins to start with.  Gox may have been selling non-existent coins all along as the transactions were off blockchain.

Gox thought they were making money but actually due to malleability issue, they were getting continually drained of real bitcoins.

So the liability side to customers kept getting bigger and bigger and bigger.  

I would say that Karpeles is a genius retard... IMHO of course.

Very sad what happened at Gox. Can't believe Karpeles thinks he can continue with rebranding - so out of touch with reality.  

Regardless, as I watch btc prices recover from $430 to $500 and now to $550 - I feel the worse is behind us.  

Gox is bust.  They have no coins to make good as Karpeles has confirmed a deficit of 700k plus coins via IRC.

This feels like a new rocketship to me.  I don't mean to make light of what has happened and to spread unnecessary optimism.  

I'm just stating that the market is forward looking - and right now, the future looks pretty good.

BTW - number one lesson of Gox: stay away from exchanges that do not provide segregated verifiable accounts.  Especially BTC-E - whose creators are ANONYMOUS.  You will have zero recourse if BTC-E collapses.  Keep the bulk of funds in your own wallet.

Exchanges need to be more transparent: allow users to switch between segregated versus pooled wallet.  Re: pooled wallet - exchanges should report total funds held on behalf of customers and reserves to back those liabilities on the blockchain itself.  Weekly or monthly signing of the public address would also be good.

The only question on my mind is: how long before Karpeles is in jail for insolvent trading/fraudulent conduct/gross negligence?

There is a small difference in that FC is able to reallocate to true owner. Whether he does or not is a separate thing.

Karpeles should be going to jail for insolvent trading and defrauding people, IMHO.

If I don't get the promised refund by end of this week I will give bobsag3 aka Matt Carson a negative trust rating on 6 x r17 shares.

Nice chunky buys kicking in... Just waiting on the Gox confirm on withdrawals being ok before confidence rebuilds.

I can feel it starting. Gox about to allow withdrawals soon. The bears capitulating and worriers turn into speculators, more fearful of missing out on the next big ramp.

I thought the delays were initially in fiat. Only after a few months, were Btc withdrawals delayed, which caused gox Btc rates to fall below other exchanges?

We have no evidence that Gox was running a fractional reserve system, unless someone can point us to data proving so? It's unlikely for them to do so precisely because of Btc appreciation versus fiat in the months leading up to November 2013.

I fully understand and respect this decision from the outset. There will be heat for sure, which is why satoshi himself remains anonymous and why bushido has not publicly revealed himself. Whether vertcoin dies or not depends on itself, not government.

I cannot understand why Gox has not issued a statement to the effect that x% of total funds was in their hot wallet versus cold wallet. That would reassure a lot of people. Just a really sad situation really. The management appears extremely inadequate in dealing with the public. They do not realise the impact they are having on bitcoin itself.

This is the same line of reasoning used by the bitcoin devs. As a result bitcoin is missing the important privacy layer (and the internet also fell into the same mistake). Mass adoption of cryptos is an eventuality not a maybe. From that perspective, it would be better to build the ideal coin rather than a conforming coin. Sure, I understand that another coin could do this anonymity thing rather than vertcoin but i think it would be a mistake when we take a look back five years from now and wonder whatever happened to that green coin with a funny French name.

I believe the assertion that "acceptance of government is required" to be false. Bitcoin will fulfil that role. The reality is that vertcoin cannot displace bitcoin in that role. If vertcoin does not take this initiative of privacy then another coin will. The assumption of miner acceptance and government acceptance being required at the same time will be tested sooner or later. I think it would be advantageous for vertcoin to be the first in this space. If not, it will be a missed opportunity in my view.