That would have to be quite a conspiracy. That would suggest Mark or somebody could do this without someone else in the company finding out or that the whole company is in on it.
I doubt that more than 3 people at MtGOX know how many bitcoins they have in their own wallets and how many dollars/yen they have in their bank.
In the classical collapses, like Enron's and Madoff's, very few people in the company were aware of the real situation, and they were all cooperating with the wrongdoings out of self-interest (or because they were chosen precisely for their "moral qualities").
In any case, that robot could be operated by one person inside MtGOX without anyone else knowing. Or by an external accomplice.
But let's assume that's true. First they drove the price higher presumably to get more fiat and then are now driving it lower to get more coins, right?
I would say the opposite: first they kept the price up 10% above market to lure people into depositing their real bitcoins in exchange for gox dollars (virtual dollars in MtGOX's internal client accounts); while stalling on dollar withdrawals (the conversion of gox dollars into real dollars). The high price also discouraged people from changing their gox dollars into gox bitcoins (virtual bitcoins in MtGOX's internal client accounds) and withdraing them (that is, converting them to real bitcoins).
When GOX clients began to realize that dollar withdrawals weren't working, they tried to use the bitcoin route in spite of the 10% loss. Then at first MtGOX raised the premium to 20%, and also began to stall on bitcoin withdrawals -- thanks to a providential "malelability bug" that stalled 40,000 bitcoins over several month, but which they somehow could not figure out in all that time.
But those measures did not stop the outflow, so they just suspended all withdrawals and promised that by Monday they may provide an estimate of when they may promise something.
What is happening now, it seems, is clients converting their virtual GOX coins to virtual GOX dollars at ~40% loss, presumably because they think that if they keep the virtual coins they may lose more than 40% in the end.
I wonder who is buying those coins. Could be clients who are slightly (only slightly) more optimistic about the chances of future bitcoin withdrawals. Could be MtGOX itself, trying to reduce the amount it owes to its captive victims.
Why not just operate as a fractional reserve? Some technical reason?
For a bank, fractional banking means to loan out or invest more money than its customers have deposited in their accounts. That is a gamble, based on the hope that only a fraction of the customers will ever want to take out their money at the same time. Sometimes a bank bank loses the gamble (and then clients usually lose some of their money).
A simple exchange like MtGOX should not be doing any fractional banking, since it is not in the business of lending or investing, whwther money or bicoins. However, its management would have been strongly tempted to invest most of the real bitcoins that clients had deposited to earn interest on them; trusting that only a few clients would want to withdraw them at any time. If MtGOX did that, perhaps they made a bad investment, or perhaps they sold the bitcoins when the price was 100$, and now that it is 600$ they may not have enough assets to buy all of them back.
This will be an interesting story if we ever find out the truth.
For sure!
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