Overview of the Japanese insolvency process, to help manage creditor expectations (it varies in some respects from the typical Western process, especially in terms of transparency and creditor input).

http://www.bingham.com/Publications/Files/2012/02/A-Practical-Guide-to-Japanese-Insolvency-Procedures

It's likely that the 27 page Business Plan was put together a long time ago and reflects plans which might have been viable under the circumstances which existed at the time (thus the absence of any reference to MtGox's financial woes).  Trying to take elements of it and turn it into a "Crisis Strategy" which will work under totally changed circumstances is an exercise in futility. 

In fact, MtGox should have paid proper consultants to come up with a proper crisis strategy if they believed there was any hope of the company being salavaged.

He'll get a job at BFL.  He'll fit right in there.

You could check the legal sub-forum.  It's been under discussion there for days.

Many big names who previously supported MtGox have very publicly distanced themselves from Mark today.  They probably know him far better than any ordinary users.

MtGox refused to even comment when asked by Wired about the allegations.  They're doing absolutely nothing to convey the actual truth to the public, so at this point it's their own damned fault if people believe the rumours.  They've had every opportunity to deny the various rumours which have sprung up over the last few day and consistently refused to state that they are solvent. 

The onus is pretty much on them to prove their solvency now.  Once you stop paying people what you owe them without any agreement in place about when they will be paid, the presumption of insolvency applies by default.  It's the lack of information from MtGox itself which is destroying MtGox.

MtGox is up to its neck in legal dramas.  Why would anyone buy a company which regulators or law enforcement might shut down any day?

People are already furious about MtGox being unable to process withdrawals in a timely manner.  Any new owners who tried to limit withdrawals would quickly find themselves facing lawsuits.

Charlie Shrem was sticking up for them earlier today and hours later claiming he'd been "lied to".

People can't distance themselves from MtGox fast enough today.

http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-implodes/

The shit has truly hit the fan.

A rather interesting question is whether the failure of MtGox to maintain proper accounting measures rises to the level of negligence.  I sure as hell wouldn't like to be the person explaining to whoever investigates corporate failures in Japan exactly why their accounting systems were so woefully inadequate.

Half of that document isn't even in comprehensible English.

If you notice, it also says that cold storage got wiped out due to a leak in the hot wallet.  That can't be explained by transaction malleability alone. Something had to be very, very wrong with MtGox's accounting procedures for them not to realise that they had paid out more than they should have over such a long period of time.  

In fact the document explicitly says that "regardless of malleability and regulatory issues, MtGox's main problems are massive robbery and poor bitcoin accounting".

The short-fall should have shown up when they reconciled their accounts because the funds left their wallets twice even though it only showed up once in their accounts.  The discrepancy would have shown up when the hot wallet balance was lower than what it should have been according to "the books" - just the same as if the bank double processed every bill payment you made, you'd notice when you checked your bank balance because it would be lower than it should be.

A business that size should be reconciling their accounts at least daily.  There should have been procedures in place to ensure that the amount of funds shown as going out of the hot-wallet was the same as the amount which actually left the hot-wallet and it shouldn't have been possible to refill the hot wallet unless those two amounts reconciled.  If they weren't reconciling the hot wallet balance against the books then they had no mechanism in place to protect against embezzlement, either.

The malleability issue may have uncovered something deeper, but it's definitely not the whole story.  Just their book-keeping procedures should have revealed this.  If it's a long-standing problem, then a short-fall should have shown up when their financial statements were prepared last year (remember the Japanese financial year ends 31 March).

I'm not usually inclined to repeat unsubstantiated rumours but there were reports last week that MtGox staff had been required to surrender their passports (I've got no way to confirm it but it wouldn't have been an unusual step given multiple government investigations going on in relation to MtGox).

While I understand that the authorities have said that they can't regulate Bitcoin exchanges, I presume that normal corporation law applies.  The "leaked document" appears to provide evidence that MtGox is knowingly trading while insolvent so it's definitely worth reporting that to whoever is responsible for enforcing corporations law in Japan.  The mainstream media has picked up the story now, so it shouldn't be too difficult to get that particular option in motion.

It's possible that there are insufficient grounds for criminal complaints as yet, but it's worth a try I guess.

Another avenue to try is Japanese trade organisations in your own country.  They may be more familiar with the appropriate legal options than the rest of us.

NY Times is now covering the story.

http://www.nytimes.com/2014/02/25/business/apparent-theft-at-mt-gox-shakes-bitcoin-world.html?_r=1

You're forgetting Mark's arrogance/ego.  He would have absolutely assumed that someone would want to buy MtGox out (as if, given that they're knee-deep in legal shit for the foreseeable future) or that the heavyweights of the community would put together a rescue package. 

It's likely inconceivable to Mark that nobody regards the "mighty MtGox" as worth rescuing and that "community heavyweights" are distancing themselves from him and MtGox as fast as possible.  That MtGox is not going to be given "one more chance" is probably inconceivable to him.

How many times have you seen this before in business - an owner hanging on and hoping for miracles long past the point where it's become apparent to others that it's past the point of redemption?  Such behaviour almost inevitably makes things worse for creditors, but it's far from uncommon.

If the doc is true, it means they've lost 750,000 BTC - no way they'll be coming back.

Even Charlie Shrem, who was defending them only hours ago, is now saying on reddit he was "lied to".

A rescue package or buyout was never a realistic option - MtGox is way too deep in legal shit on so many different legal fronts to be an attractive acquisition for anyone.

It's probably moot now.

It's worked for them so far and it works for the dark markets.  You can't really blame them for believing that greed will over-ride common-sense when that's been their experience of Bitcoin users so far (people have continued depositing funds to MtGox even after withdrawals were halted, FFS).

Nobody said that they lost 750k BTC to transaction malleability.  gmaxwell pointed out a few days back that it was possible that they'd lost more than they claimed to that issue but it was far from their only problem.

We have no idea when MtGox was last independently audited.  It's entirely possible that it's only in trying to determine their losses due to the transaction malleability issue that they've looked far enough into their accounts to uncover other losses of which they were previously unaware.  Small companies, in particular, have a bad habit of not looking below the surface often enough.  

Huge financial institutions have constant checks and balances in place, spend billions on infrastructure,  and still incur losses.  It's all too easy to believe that MtGox had infrastructure totally insufficient for keeping track of their true financial situation.


MtGox hasn't even acknowledged the latest accusations yet.  They'd be foolish to issue any public statement without expert legal advice at this point, so I wouldn't expect anything definitive any time soon unless it's a public statement saying that they're filing for insolvency protection.

Site isn't down.  It's just totally empty now.

Given that some of those are people you would have expected to be involved in putting together a rescue package if one was going to be forthcoming, Gox has pretty much been thrown to the wolves (and deservedly so).