Biggest(?) Bitcoin service in death throes!

[rpietila]

MPEx claims to have a valuation of BTC700,000, which would make it the most valuable bitcoin business of early 2013. Their main business is to issue options on USD/BTC exchange rate. As they claim the position is in excess of BTC100,000, it is obviously impossible to hedge in other exchanges. The risk is instead borne by "bondholders", auctioned out monthly, who will either win a fixed percentage on their bond amount, or lose a prorated amount of MPEx trading loss. In March they lost over BTC27,000.

I suspect the exchange has blown its risk management and will likely default in April/May if the USD/BTC rate keeps increasing as it has done.

The idea that bondholders take the hit if the month turns negative, is a clever one. But if you personally guarantee the black swan of bitcoin's disproportionate rise in excess and/or absence of enough bondholders, you play a dangerous game. The owner has clearly grown desperate as he sees his end coming.

The owner has something against me, and is likely to respond with hatestorm once again, skipping his chance to clarify my suspicions with actual facts, (which would be easy if everything is in order). Do your own due diligence.

I hold absolutely no long or short positions in S.MPOE or anything listed there.

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[smoothie]

MPEx claims to have a valuation of BTC700,000, which would make it the most valuable bitcoin business of early 2013. Their main business is to issue options on USD/BTC exchange rate. As they claim the position is in excess of BTC100,000, it is obviously impossible to hedge in other exchanges. The risk is instead borne by "bondholders", auctioned out monthly, who will either win a fixed percentage on their bond amount, or lose a prorated amount of MPEx trading loss. In March they lost over BTC27,000.

I suspect the exchange has blown its risk management and will likely default in April/May if the USD/BTC rate keeps increasing as it has done.

The idea that bondholders take the hit if the month turns negative, is a clever one. But if you personally guarantee the black swan of bitcoin's disproportionate rise in excess and/or absence of enough bondholders, you play a dangerous game. The owner has clearly grown desperate as he sees his end coming.

The owner has something against me, and is likely to respond with hatestorm once again, skipping his chance to clarify my suspicions with actual facts, (which would be easy if everything is in order). Do your own due diligence.

I hold absolutely no long or short positions in S.MPOE or anything listed there.

Wow Trimela is butt hurt huh? I wonder what he is so mad about lol

[lebing]

its a sign of how young we are that people actually use this service for anything at all.

[byronbb]

Definitely an odd blog posting full of childish vitriol. Stayed away from SDICE because of this guy's weird un-professional style.

[piramida]

Oh, I thought for all his elitist schizoid-punk behavior he's at least doing well financially. This is sad. Poor folks who did invest into this mess.

Waiting for his imaginary PR woman to show up with some nonsense as usual

Why I'd never do any business with "it" - he claims absolute strength of his servers and that nothing could possibly ever happen to the service, conveniently ignoring a possibility of him, the sole owner and operator, running with all the money and data when shit will hit the fan. There's little to none provable information about his identity, and it definitely does look like a constructed identity to me. So many red signs flashing "AVOID" that someone should be desperate to lose money to invest in any bonds there.

[rpietila]

Thank you piramida,

I have many of the same suspicions as you do. I tried for example contact Mircea Popescu via Facebook. There was 20 dozen people with that name so good luck finding the one that disappeared with your money!

But in the OP, there are no accusations. It is just public knowledge, based on MPEx own data:

- March they lost money because of high call/put ratio and no hedging
- MP is the guarantor of last resort
- They have already sold longs for the coming months, these contracts are deeply in the money (loss for them)
- Based on the above, not many want to buy the bonds that will surely lose
- MP cannot/won't cover all the losses this month
- Toast 

[b!z]

MP is a joke, all he does is bs about how he is more superior compared to everyone else.

[Piper67]

MPEx claims to have a valuation of BTC700,000, which would make it the most valuable bitcoin business of early 2013. Their main business is to issue options on USD/BTC exchange rate. As they claim the position is in excess of BTC100,000, it is obviously impossible to hedge in other exchanges. The risk is instead borne by "bondholders", auctioned out monthly, who will either win a fixed percentage on their bond amount, or lose a prorated amount of MPEx trading loss. In March they lost over BTC27,000.

I suspect the exchange has blown its risk management and will likely default in April/May if the USD/BTC rate keeps increasing as it has done.

The idea that bondholders take the hit if the month turns negative, is a clever one. But if you personally guarantee the black swan of bitcoin's disproportionate rise in excess and/or absence of enough bondholders, you play a dangerous game. The owner has clearly grown desperate as he sees his end coming.

The owner has something against me, and is likely to respond with hatestorm once again, skipping his chance to clarify my suspicions with actual facts, (which would be easy if everything is in order). Do your own due diligence.

I hold absolutely no long or short positions in S.MPOE or anything listed there.

You know how much sympathy they get from me? Yeah, about that much.

[Cablez]

He always did come across as a pompous a**.  Maybe he should stay on the sidelines for 4 years and watch some more like he advises.

[randrace]

Waiting to see if this plays out as indicated in his snarky FAQ.

22. Even so, how would the investors be affected in the event MPEx can no longer be continued ?

In the unlikely case that the continuation of MPEx becomes impossible, all issuers will be provided with lists of their shareholders. A successor system would have to be constructed (either centralized or maintained independently by the respective issuers), but no information is lost : since people can still sign with their keys, it is trivial for anyone who is in fact a shareholder to identify himself as shareholder. Just to be on the safe side, a dump of all users' final STATs, encrypted with their keys and clearsigned by the exchange will be released before closing, in whatever manner will be deemed at that time efficient, as for instance on a p2p file sharing system.

Also worth mentioning, you can create your very own copy of the MPEx database, containing sufficient information to reconstruct ownership of coins and shares even if all our back-ups are compromised.

[ElectricMucus]

Oh man OP is such an Insufferable Asshole. He probably is highly leveraged using fiat money and projects his shortcomings onto other people.
This thread stinks of manipulative bullshit.

Post in the scam accusation thread if you have anything substantial, please.

[EuroTrash]

In full fairness I'm worried with MP's rants about bitcoin code being immature, protocol being weak and its developers wasting time in inept political discussions instead of fixing stuff.

I'm kinda worried that, somehow, he is right about it.
The guy's not a saint at all and he has his own manipulative reasons to say what he says.... but the points he made are quite convincing to me.

[humanitee]

In full fairness I'm worried with MP's rants about bitcoin code being immature, protocol being weak and its developers wasting time in inept political discussions instead of fixing stuff.

I'm kinda worried that, somehow, he is right about it.
The guy's not a saint at all and he has his own manipulative reasons to say what he says.... but the points he made are quite convincing to me.

So what are his points?

The protocol looks fine to me, minus the block limit.
Of course it's immature, it's not even out of beta.

[humanitee]

MPEx claims to have a valuation of BTC700,000, which would make it the most valuable bitcoin business of early 2013. Their main business is to issue options on USD/BTC exchange rate. As they claim the position is in excess of BTC100,000, it is obviously impossible to hedge in other exchanges. The risk is instead borne by "bondholders", auctioned out monthly, who will either win a fixed percentage on their bond amount, or lose a prorated amount of MPEx trading loss. In March they lost over BTC27,000.

I suspect the exchange has blown its risk management and will likely default in April/May if the USD/BTC rate keeps increasing as it has done.

The idea that bondholders take the hit if the month turns negative, is a clever one. But if you personally guarantee the black swan of bitcoin's disproportionate rise in excess and/or absence of enough bondholders, you play a dangerous game. The owner has clearly grown desperate as he sees his end coming.

The owner has something against me, and is likely to respond with hatestorm once again, skipping his chance to clarify my suspicions with actual facts, (which would be easy if everything is in order). Do your own due diligence.

I hold absolutely no long or short positions in S.MPOE or anything listed there.

Haha, what a douche bag! God, everything he writes is just so pompous and arrogant.

"I'm no miner, I'm no coder" yet I will complain about the code and say it sucks! It's open source douche, contribute when you see a problem that you can fix. Fuck this guy.

[rpietila]

Post in the scam accusation thread if you have anything substantial, please.

I am not accusing anyone of scam. All I was saying, which holds true until now, is:

"In my opinion, MPEx is heading into such huge losses from net short position in USD/BTC rate in April and/or May, that the guarantor of last resort, Mircea Popescu, cannot pay."

First, this is my opinion, albeit solidly grounded on MPEx's own published data.

Second, I am more happy to be wrong than right on the issue, since I don't want to see people lose money when they are right (i.e. if they have bought calls, in the event that MPEx defaults).

[ManBearPig]

Dodgy as hell and quite, quite mad.

Just my opinion!

[Uglux]

This...



...will more likely be in its death throes in April/May if the USD/BTC rate keeps increasing as it has done.

[ElectricMucus]

LOL

Post in the scam accusation thread if you have anything substantial, please.

I am not accusing anyone of scam. All I was saying, which holds true until now, is:

"In my opinion, MPEx is heading into such huge losses from net short position in USD/BTC rate in April and/or May, that the guarantor of last resort, Mircea Popescu, cannot pay."

First, this is my opinion, albeit solidly grounded on MPEx's own published data.

Second, I am more happy to be wrong than right on the issue, since I don't want to see people lose money when they are right (i.e. if they have bought calls, in the event that MPEx defaults).

Even if that is true, Popescu might face a scammer tag and the bitcoin police.

You on the other hand liquidators in the real, dirty world of fiat money.

[sunnankar]

The idea that bondholders take the hit if the month turns negative, is a clever one. But if you personally guarantee the black swan of bitcoin's disproportionate rise in excess and/or absence of enough bondholders, you play a dangerous game.

Is not MPEx and MPOE separate when it comes to the collateral of contracts? Hence the MPEx profit and MPOE loss in March. In other words, MPEx can continue functioning even if the bondholders have no collateral. It will just be a matter of finding new bondholders, if MP bankrupts himself making bad financial decisions, who are willing to take short positions.

Just because it is hard to find a well capitalized bear does not mean the MPEx service is going to fail; just volumes will greatly decrease until volatility premiums on the options rise, a lot, to compensate the bears.

MP has simply been selling call options too cheaply. He will either learn his lesson and charge higher premiums or run out of bitcoins and no longer be able to collateralize anymore options.

I am not sure why anyone in their right financial mind would be short bitcoin and particularly not at the extremely cheap premiums of the call options on MPEx. But that is what markets are for and the correct prognosticator profits.

[rpietila]

This...



...will more likely be in its death throes in April/May if the USD/BTC rate keeps increasing as it has done.

Umm.. Yes, that is why I withdrew it from the bank on the said day two weeks ago, and bought bitcoin at EUR 72, clever me