Unless and until a few weeks go by with zero complaints about delayed withdrawals from Mt. Gox, don't put any money in.

Many readers here don't realize how abnormal Mt. Gox's behavior is. With real-world brokerage accounts, when you order a withdrawal by wire transfer, it's in your bank account within two working days. Usually one. Often the same day.  A brokerage house that fails to deliver on a withdrawal is in trouble. Big trouble. If a firm has major problems servicing withdrawal orders, it's big news in the Wall Street Journal. Other firms refuse to deal with them. In the US, FINRA regulators ask hard questions. Lawyers and auditors descend on the firm. The firm may go under within days. That happened to Lehman Brothers, Drexel Burnham Lambert, MF Global... In each case, within days of default, the firm was out of business.

Mt. Gox is trying to play in the big leagues now. They don't get to act like they're dealing in trading cards.

My guess is that Mt. Gox did what so many crooked brokers have done in the past - they speculated with customer funds. 

Here's a typical story:

Just think, all those millions of dollars in some bank account, where interest rates are zero.  It must have been so tempting to put them into something with more earning potential.  Nobody would every know, right?

Then the investment lost some money. And, like so many crooked brokers in the past, they tried to get out of the hole by a riskier investment. That didn't work either.

So they tried stalling on payouts while encouraging more people to send them funds. That worked for a while, but then the customers got suspicious. Then a few big customers demanded their money, and the whole scheme collapsed, taking the business into bankruptcy.

It's a story that's been repeated many times. MF Global, Madoff, Barings... And now, on a rather smaller scale, probably Mt. Gox.

Yeah, right. The Stanford course syllabus doesn't even mention Bitcoin.

You got it right. On July 4th, Mt. Gox made an announcement that they were "resuming withdrawals." Well, sort of. They say: The new system is just now getting under way, so there is still a back-log of withdrawals that we need to process. Our team is working hard to increase transaction speeds, but there is approximately a two-week back-log we need to overcome. It will take a few weeks to get back to normal, and we thank you for your patience during this time.

They're still delaying withdrawals. Any automated system should be able to process a few hundred, if not a few thousand, transactions per hour. If they were legit, they would be caught up in a day. But they want weeks to catch up.

That's an indication that Mt. Gox is short of cash. They can keep their scheme going if they slow down withdrawals so that more money is coming in than is going out. This is exactly the kind of behavior seen just before Madoff's fund went under.

If you have cash in Mt. Gox, get it out now. If they're legit, it won't hurt Mt. Gox. If they're not...

That's a good thing. Be glad you have no USD in Mt. Gox. People who did will probably never see it again.

There's something to be said for an exchange that charges enough of a fee to make money just running the exchange.  They might be honest. An exchange with very low fees has to make their money some other way. Most of the other ways involve crime.

Well, Tradehill is updating now, but the spread is huge:

Last: $ 75.01
Bid: $ 70.02
Ask: $ 91.97

Monthly Volume: 11,946 BTC (Is that for July, or the last 30 days?)

I've been informed by a Mt. Gox customer (which I am not) that the "Bank Transfer" option on their site now just redirects to their "Withdrawal Center", and there is apparently no longer a "Bank Transfer" option at all. Is this correct?

No, just a vending machine, and not the first. When you can also put Bitcoins in and get cash out, then it's a ATM.

Mt. Gox missed the deadline.

They are now in default.

Time for their creditors to go to court in Delaware.

Right. They bought a large number of Bitcoins. Now they want to unload them. But how? Mt. Gox isn't paying out USD to traders who sell, and nobody with $20 million would trust it to Mt. Gox. Tradehill probably doesn't have the volume to sell that many without crashing the market.  By creating an exchange-traded fund, and funding the initial offering with their Bitcoins, they have a vehicle for dumping 200k BTC.

That slow-pay data indicates they don't have the money to pay their debts.

I've asked the reporter for the Washington Post who covers Bitcoin, Timothy Lee, to get the Post's Tokyo correspondent to visit Mt. Gox. He's looking into it.

Er, this is a bad day to send money to Mt. Gox. They may have only hours to live.

Looks like a straightforward violation of the FTC's Mail Order Rule. They can take the position that orders are "final" only if they ship the item ordered within 30 days. Once they fail to deliver, they have to give refunds. They do not have the option of keeping the money and not delivering product.

In the early days of the dot-com era, many small companies got into trouble for this. Their "online stores" would take every order that came in, without checking inventory first. The FTC clamped down on that. Now, almost everybody who sells online has the order system connected to the inventory system, so the order is rejected if it can't be filled. That fixed the problem.

TOKYO - JAPAN - June 20th, 2013: Mt. Gox announced that it was "temporarily suspending cash withdrawals of USD for the next two weeks."

It's now July 3 in Tokyo. The two weeks are up at the close of business in Tokyo today.

Wednesday is an important day. It's the day Mt. Gox is in default on stopping outbound transfers in US dollars.

That's a reasonable concern at this point.
Excuses, and blaming others for their problems, are part of Mt. Gox's standard operating procedure, so that makes sense.
Maybe not. Bitcoin exchanges have gone bust before. There's no particular reason to think that prices will go up or down if Mt. Gox goes under. There may be a liquidity problem for a while. Already Mt. Gox volume is down. and the other exchanges aren't showing a volume increase of comparable size. Speads will probably widen.

The important thing is not to buy or sell, it's to get assets out of Mt. Gox if you can. If Mt. Gox is honest, they have 100% of the funds deposited, and taking assets out of Mt. Gox won't hurt them. If they're not...

Let's take a look at Mt. Gox's legal status.

Mt. Gox has now registered with FinCen. They have a registered agent in Delaware. So, can they now be sued in Delaware courts? 

Japan regulates payment services under the Payment Services Act. This allows non-banks to engage in payment services, and most of the wireless carriers in Japan now offer payment systems. There's a registration requirement, and various audit and capital requirements. Does Mt. Gox need to register?  Have they?

Mt. Gox, as of June 26, 2013, has registered with FinCen.  Here's their registration data:

The information provided is scant, but here it is:

MSB Registration Number: 31000029348132
Registration Type: Initial Registration
Legal Name: MtGox Inc
Street Address: 615 S Dupont Hwy
City: Dover
State: DELAWARE
Zip: 19901

MSB Activities: Money transmitter, Other

The address given is just a registered agent, "National Corporate Research, Ltd.".  Mt. Gox is now responsible for acting on legal papers sent to that address.

Now that Mt. Gox has a legal presence in the United States, it can be sued in the United States. For small claims, Delaware has a Justice of the Peace Court, with jurisdiction over debt and contract disputes up to $15,000.  The Justice of the Peace Court #7 is in Dover, so they have jurisdiction over Mt. Gox. Hours: 24 hours a day, 7 days a week. Phone 302-739-4554. 

The court has a convenient how-to guide.

In other words, if Mt. Gox owes you money and you're in the US, there's now something you can do about it.