Lawlessness and decentralisation aren't the same thing. We could have a structure that allows for a decentralised decision to freeze these coins. Call it a "democracy". Miners vote, majority wins.

There's a real legal issue here, in that stolen goods remain the property of the victim. Imagine these coins enter general circulation and a credible law enforcement agency goes after them. (Edit: With half a BILLION dollars in play that's not such a far fetched scenario). Every satoshi you buy or receive as payment has a 7% chance of being a stolen one, and is recoverable by your national law enforcement in the US/EU/Asia. Bitcoin is super traceable. So the criminals will launder the coins and you and I will end up with them in our wallets and then comes a knock at the door with a legal order to reposes them. Unless you live in Nigeria.

Yes it sets a precedent. A really healthy one. Where do you draw the line? I don't know, but somewhere lower than 7% of the entire economy. Let the miners vote.

Not changing the way we do things after a disaster is really stupid thinking. You think after the Turkish earthquake they didn't upgrade the building code? After the Indonesian Tsunami they didn't create an emergency evacuation plan? Bitcoin is in it's infancy. It's not in it's final state. It's allowed to evolve. Regardless of how you were effected by Gox, or what you think of the victims decision making, this incident is a massive crisis for Bitcoin adoption. I think its sets the currency back years in the eyes of the next wave of adopters.

Creating a system that's perceived as fairer, and self policing would reverse that set back. For the future of bitcoins I say yes. Freeze them and return them.

Edit: punctuation

I don't understand why everyone would be so against it. It's not bailing out Gox. It's bailing out the people (that's real people some of whom are committing suicide) that invested in Gox. And it's about creating a unique reputation for Bitcoin compared with fiat that will drive adoption, and reverse this PR.

In a regulated exchange you have to keep reserves, and you have to ensure them, and you have to take industry dictated security precautions with it. But if it goes missing it's never seen again. Bitcoin has the opportunity to be better.

Citibank just lost $400m, which is never coming back. Imagine if Bitcoin could show the world that it could fix those problems. If you're worried about setting a precedent, set some rules. 5% or more of total coins in circulation. Forensically traceable to the owner. The evidence presented to the miners that will vote. The new keys passed into the control of an administrator who's job it is to return the coins, bypassing Gox completely.

At the moment the public perception of bitcoin has been retarded by 2-5 years. Forking the chain could advance it by as much.

If the FBI want's to confiscate money they won't do it through control of the blockchain, they'll use the courts. If some authority tries to unjustly confiscate users coins, they won't get the anonymous votes.

I've heard this "bitcoin would die" but I don't understand why? Why would rescuing 7% of the coins be such sacrilege? Given that there are 127000 users that have lost coins.

This is a newby question:

If Gox have lost the keys to their cold storage, would it be technically possible to fork the blockchain to move those coins to a new wallet with a known key?

Is it technically possible? Can it be done in a way that's secure?
What would bet the issues for the reputation and ethos of the bitcoin movement? Especially in the context that this is for 7% of the BTC economy, and not just Joe who lost 20bucks worth.

Thanks for explaining this to me.

Can we pay in GOXBTC?

Yeah, that's a good point. Maybe a corporate account, rather than an individual? It's a problem that would be worth solving if you were facing the trouble (insolvency, prison, mafia death threats...) that he would face if he'd spent everyone's money.

But it's not like Gox is regulated, so there's no legal barrier to trading to make up lost stock. The only barrier is that you might lose the investors money, and even I couldn't fail to make money if I could buy at 100 and sell at 600.

In truth I think we are only seeing a tiny part of the stuff he's dealing with. I think Gox are juggling so many balls in the air adding another won't break his stride. He sounds like someone who's hands are so tied he can't say anything. Or then again maybe he's just a total idiot?

[/quote]
You said you believe they are solvent, and you said you have btc there, you also indicated that you know you can take fiat out, so my question is have you allowed your fiat to remain there or have you removed your fiat?
[/quote]

I converted the fiat I had into BTC at a very discounted price. If they are insolvent after the tx malleability hack they are more likely to be BTC insolvent than cash insolvent. But this is straying off the point, which is that I think a law suit is like punching the person who is saving you from drowning, even though they are the one that pushed you into the water. Let them drag you to the edge before you give them a good kicking.

There's an embarrassing irony, watching libertarian bitcoiners, passionate about a currency that doesn't depend on the government, screaming for the protection of the SEC.

If Mt Gox has a small team working on solving this, and they are as incompetent as everyone says, holding them up in a law suit isn't going to make them fix the problem any faster. If they were insolvent then I would hope they would have had the good sense to tap into this ongoing arbitrage opportunity which they have exclusive access to, in order to balance their books by now, and there's plenty of cash for everyone.

As far as I can tell, Bitcoin's fiat withdrawal hasn't ever been halted. Didn't I read that in a MT Gox press release? One of the tiny bits of information they have given out. It's still as painfully slow (over a month) as it's always been. All you have to do is ask for your cash. Has anyone read through the terms and conditions we signed up for when we opened our MT Gox accounts? Does it say anything about timely access to fiat and BTC?

These guys (at mt gox) are clearly not the sharpest tools in the box, under resourced, badly managed, indifferent to the balling of their customers, but right now, letting them get on with their IT fix is the best we can do.

Disclosure: I have a good few BTC in MT Gox and would very much like to get it out to Bitstamp asap. I have no doubts that MTGox has enough cash and BTC to cover my investment. My only doubt is if they have the wherewithal to develop their software solution this side of March.

Is Mt Gox unable to withdraw BTC from Mt Gox?

Have they been watching this arbitrage opportunity without taking advantage?

Would they have been able to buy enough BTC with phantom fiat and sell it on open markets, then transfer the fiat back to their accounts in time for their re-opening?

The BTC price on open markets before the shut down was a pretty steady ~900usd. Now it's a steady ~600. Could it be depressed, in part, because the open markets are being flooded with BTC being sold by Mt Gox?

I notice it's taken MT Gox much longer to implement a solution compared with Bitstamp or BTC-E.