MtGox withdrawal delays [Gathering]

[PhoneBloks]

Hey Man,

Just wanting to say that this has OBVIOUS SCAM Written all over it. Don't believe your "friend", bro.

I'm under the impression PhoneBloks will later tell us "Wow, my friend indeed receive the money!, here is the proof bla bla bla". So the fools can send btc to that scammer.
To PhoneBloks : Unless you remove that gmail address, one should presume you are the one behind that gmail address, as you are advertising it!

Omg .. ...ok will remove that email

[sturle]

This is interesting. I agree it is most consistent with Gox not having enough USD. It costs about 3% to convert to USD at retail in Japan.

The fee is 5% plus some, so it appears there is also an international wire transfer involved, with the various fees along the way.

After their USD losses perhaps they are running a fractional reserve in USD. The real solution here would be for them to actually explain what is going on.

I think it is public knowledge that $5 million was confiscated from Mt.Gox customer funds. Considering that it is a Japanese company that does not likely have such a sum of their own, excess funds, in foreign currency, this resulted in a deficit and fractional reserve in customers' accounts. It is almost certainly the root cause of this bank run.

Could you explain where MtGox's 10 million USD profit so far this year has gone, or are you only looking at one side of the equation?  Not to mention there are > 12 million USD worth of bids in the order book.  5 million doesn't explain anything.  You need at least 20 million USD to explain this as a lack of funds.

[Rampion]

This is interesting. I agree it is most consistent with Gox not having enough USD. It costs about 3% to convert to USD at retail in Japan.

The fee is 5% plus some, so it appears there is also an international wire transfer involved, with the various fees along the way.

After their USD losses perhaps they are running a fractional reserve in USD. The real solution here would be for them to actually explain what is going on.

I think it is public knowledge that $5 million was confiscated from Mt.Gox customer funds. Considering that it is a Japanese company that does not likely have such a sum of their own, excess funds, in foreign currency, this resulted in a deficit and fractional reserve in customers' accounts. It is almost certainly the root cause of this bank run.

Could you explain where MtGox's 10 million USD profit so far this year has gone, or are you only looking at one side of the equation?  Not to mention there are > 12 million USD worth of bids in the order book.  5 million doesn't explain anything.  You need at least 20 million USD to explain this as a lack of funds.

I strongly believe Gox is an honest company run by an honest manager (Karpeles). They have proved it for the last years. But the hard cold fact is they are short of $10M, which is quite a sum, and they are very probably running fractional reserve in customers accounts. That's the only reasonable explanation to the absurd delays with withdrawals. We know:

- Gox handled a very big volume BEFORE the Dwolla and Coinlab issues, and they handled that volume FINE
- Bitstamp is now handling a volume that is increasing day by day, and they are doing it FINE
- Stating that Gox is "overwhelming" the biggest bank is Japan is laughable at best. That's BS.
- Gox needed to increase their operational costs during the bubble, precisely to be able to handle the customers and volume growth. We do not know how rationally that growth was managed.
- Gox invested in new servers, trading engine, etc. shortly before the Dwolla and Coinlab issues
- Being scrutinized by US regulators is quite a stress, which certainly leads to more expenses: expensive lawyers, licenses, etc. We can safely assume they are spending a lot to pull their shit together.
- Gox is offering an "emergency" withdrawal option that goes with a 5% fee. Surprise! There is no "overwhelming" if you choose that option.

Finally, the hard cold fact is Gox is having tremendous issues with withdrawals (delays and more delays), and as per Occam's Razor, the easiest answer is they have liquidity problems. Saying stupid things like "the old financial system is having problems to follow the thriving BTC economy" and such is an insult to the intelligence of their customers. They probably offer the "5% emergency withdrawal" so they can make as much money as possible with such a leonine fee, to eventually cover the holes left by the US DHS and Coinlab.

TL;DR: the hard cold facts seems to indicate that: a) Gox is an honest company, but they are withholding information regarding why they are having these problems, and in fact they are probably lying; b) they are heavily delaying outcoming wires, while incoming wires work just fine (ohhh... No "overwhelming" with incoming money?). Everything strongly indicates they are having liquidity problems, and that they have been forced by circumstances (seizures, Coinlab misappropriation) to run a fractional reserve.

[CompNsci]

the hard cold facts seems to indicate that: a) Gox is an honest company, but they are withholding information regarding why they are having these problems, and in fact they are probably lying; b) they are heavily delaying outcoming wires, while incoming wires work just fine (ohhh... No "overwhelming" with incoming money?). Everything strongly indicates they are having liquidity problems, and that they have been forced by circumstances (seizures, Coinlab misappropriation) to run a fractional reserve.

Nice summary.

Meanwhile, bitstamp volume continues to exceed Mt. Gox volume of actual trades by at least 50% each day.

I think there is a message for Mt. Gox management here to become more transparent about what is going, or the business is going to end up failing. There is nothing inherently wrong with charging a larger fee for withdrawing funds. Deliberately mis-representing the facts and not making clear those fees on the website is a different matter, which will ultimately destroy trust in Mt. Gox and lead people to use other exchanges.

[N12]

This is what greets anyone looking to withdraw:

International Wire Transfers: 
At the moment we are manually processing wire transfers and have a slight backlog as we create a new withdrawal system with our banking partners. Your withdrawal may take two weeks or more depending on the amount.

"Two weeks" as a minimum is absolutely misleading considering the delay must be at least 3 1/2 months now. There are still people with unprocessed withdrawals since then.

If a withdrawal option like Dwolla doesn't work, you disable it. If SWIFT withdrawals do not work, it would be far more honest to disable them entirely instead of deceiving your customers.

[dudel42]

SEPA withdrawals are definitely slowing down again. My previous (and first) SEPA withdrawal was processed on 2013/08/19. I initiated another withdrawal on 2013/08/31 and it is still on status: confirmed today.

oh well.

[sturle]

- Gox handled a very big volume BEFORE the Dwolla and Coinlab issues, and they handled that volume FINE

This is not true.  The intenational wire delays started one or two weeks before the Dwolla problems.  After the discontinuation of all other possible withdrawal methods in just two months.

- Stating that Gox is "overwhelming" the biggest bank is Japan is laughable at best. That's BS.

At least it is the most plausible explanation so far, and the only I can think of which explains their problems from the beginning of June.  The number of customers and trade volume grew tremendously during this time.  Last number I heard was 600k verified customers.  In the beginning of this year there were much less than 100k.

- Gox needed to increase their operational costs during the bubble, precisely to be able to handle the customers and volume growth. We do not know how rationally that growth was managed.

We know that.  More staff on AML verification and support.  I think they are 14 now. 

- Gox invested in new servers, trading engine, etc. shortly before the Dwolla and Coinlab issues

A new server cost thousands at most.  Not millions.  Mark already run a large business renting out servers (Tibanne).

- Being scrutinized by US regulators is quite a stress, which certainly leads to more expenses: expensive lawyers, licenses, etc. We can safely assume they are spending a lot to pull their shit together.

Still doesn't explain the problems starting in the beginning of June.  The licence they applied for costs 200k USD.  The already spoke to the US regulators (the reason for discontinuation of redeemable codes, one of the popular withdrawal methods), and were preparing for further licensing when DHS struck out of the blue.  We are not talking millions here either.

- Gox is offering an "emergency" withdrawal option that goes with a 5% fee. Surprise! There is no "overwhelming" if you choose that option.

Note that the 5% is a bank fee.

Finally, the hard cold fact is Gox is having tremendous issues with withdrawals (delays and more delays), and as per Occam's Razor, the easiest answer is they have liquidity problems.

Yes, and easy conclusions are often wrong.  The math and timing just don't add up.  Bank problems is a much more plausible explanation.

Saying stupid things like "the old financial system is having problems to follow the thriving BTC economy" and such is an insult to the intelligence of their customers. They probably offer the "5% emergency withdrawal" so they can make as much money as possible with such a leonine fee, to eventually cover the holes left by the US DHS and Coinlab.

So you think MtGox is 5% in minus, and the bank doesn't take any fee at all?  No, this does not sound anything near a plausible explanation to me.  Why is the 5% option very limited then, and not offered by default to everyone?  And why only for international wire?  A nice collection of speculations, but few are plausible and they certainly don't fit your conclusion.  You have to start looking earlier than the Dwolla seizures.  It is very obvious they were limited by their bank since June 5th, at least.

[User705]

This is what greets anyone looking to withdraw:

International Wire Transfers: 
At the moment we are manually processing wire transfers and have a slight backlog as we create a new withdrawal system with our banking partners. Your withdrawal may take two weeks or more depending on the amount.

"Two weeks" as a minimum is absolutely misleading considering the delay must be at least 3 1/2 months now. There are still people with unprocessed withdrawals since then.

If a withdrawal option like Dwolla doesn't work, you disable it. If SWIFT withdrawals do not work, it would be far more honest to disable them entirely instead of deceiving your customers.

Someone has been reading BFL manual on how to deal with bitcoin customers.

[sturle]

Meanwhile, bitstamp volume continues to exceed Mt. Gox volume of actual trades by at least 50% each day.

Not true.

Bitstamp publish their total volume only.  MtGox don't publish a total volume, but splits it into individual currencies.  If I deposit EUR on Bitstamp and withdraw EUR from Bitstamp, it is still counted as USD volume.  On MtGox it would be counted as EUR volume.  To compare the two you need to add all currencies on MtGox.  Many people don't know this.

[gunzeon]

Alas, the truth is so obvious ...

I am a simple global professional, and I need to move $AUD 10,000 to EUR, or vice versa, without paying the 7% bank exchange rate spread.

It's a no-brainer:

1. Join MtGox and xfer the doh there, $30 fee
2, do a few token bitcoin trades
3. Do a SEPA transfer to my bank in EU - cost maybe 12 eur

So, I have spent $50 maximum getting what I used to pay a bank $700 for - excellent ! Oh - the bank did not get my $650 dollar  "xfer fee" pity.
(  and I am just an old computer nerd, far from a professional money launderer )

Does not the whole world see this ? Why would banks cooperate with the bitcoin trade ? Since bitcoin is their death knell ?

All this talk about MtGox going down the tube is plain fanciful - see what is really happening; all MtGox withdrawal transactions are being stifled because it is business that directly replaces one of the banks's cash-cows/golden-geese ...

*** stealing from customers in the name of Foreign Exchange ***
*** Governments need to castrate these Fu6k&rs like have done with the thieving in the name of mobile phone roaming ! ***

 - They are all united/cartelled against bitcoin because of the forex profits they will lose
 - this is a worldwide clique - no exceptions allowed - not even in Poland or Japan !
 - this bleating about AML compliance is a smokescreen for ignorant journalists and politicians

And open thine eyes; any bitcoin exchange that sticks to one currency is not a threat and so there is no need to emasculate their withdrawal flow; Can anyone show me another bitcoin exchange that deals in more than one currency ?

Unfortunately there is no government on earth with balls enough to step up to this; the banks would crush them too.

[gizmoh]

This is interesting. I agree it is most consistent with Gox not having enough USD. It costs about 3% to convert to USD at retail in Japan.

The fee is 5% plus some, so it appears there is also an international wire transfer involved, with the various fees along the way.

After their USD losses perhaps they are running a fractional reserve in USD. The real solution here would be for them to actually explain what is going on.

I think it is public knowledge that $5 million was confiscated from Mt.Gox customer funds. Considering that it is a Japanese company that does not likely have such a sum of their own, excess funds, in foreign currency, this resulted in a deficit and fractional reserve in customers' accounts. It is almost certainly the root cause of this bank run.

Could you explain where MtGox's 10 million USD profit so far this year has gone, or are you only looking at one side of the equation?  Not to mention there are > 12 million USD worth of bids in the order book.  5 million doesn't explain anything.  You need at least 20 million USD to explain this as a lack of funds.

Since Gox takes fees on both sides, 5 millions USD of fees are in btc, it doesn't really help them in their cash flow issues.
I've read somewhere Gox owns thousands of bitcoins through fees and re-investments, they cant sell their coins on their platform and hold worthless Gox USD. can they?

[Rampion]

- Gox handled a very big volume BEFORE the Dwolla and Coinlab issues, and they handled that volume FINE

This is not true.  The intenational wire delays started one or two weeks before the Dwolla problems.  After the discontinuation of all other possible withdrawal methods in just two months.

- Stating that Gox is "overwhelming" the biggest bank is Japan is laughable at best. That's BS.

At least it is the most plausible explanation so far, and the only I can think of which explains their problems from the beginning of June.  The number of customers and trade volume grew tremendously during this time.  Last number I heard was 600k verified customers.  In the beginning of this year there were much less than 100k.

- Gox needed to increase their operational costs during the bubble, precisely to be able to handle the customers and volume growth. We do not know how rationally that growth was managed.

We know that.  More staff on AML verification and support.  I think they are 14 now.  

- Gox invested in new servers, trading engine, etc. shortly before the Dwolla and Coinlab issues

A new server cost thousands at most.  Not millions.  Mark already run a large business renting out servers (Tibanne).

- Being scrutinized by US regulators is quite a stress, which certainly leads to more expenses: expensive lawyers, licenses, etc. We can safely assume they are spending a lot to pull their shit together.

Still doesn't explain the problems starting in the beginning of June.  The licence they applied for costs 200k USD.  The already spoke to the US regulators (the reason for discontinuation of redeemable codes, one of the popular withdrawal methods), and were preparing for further licensing when DHS struck out of the blue.  We are not talking millions here either.

- Gox is offering an "emergency" withdrawal option that goes with a 5% fee. Surprise! There is no "overwhelming" if you choose that option.

Note that the 5% is a bank fee.

Finally, the hard cold fact is Gox is having tremendous issues with withdrawals (delays and more delays), and as per Occam's Razor, the easiest answer is they have liquidity problems.

Yes, and easy conclusions are often wrong.  The math and timing just don't add up.  Bank problems is a much more plausible explanation.

Saying stupid things like "the old financial system is having problems to follow the thriving BTC economy" and such is an insult to the intelligence of their customers. They probably offer the "5% emergency withdrawal" so they can make as much money as possible with such a leonine fee, to eventually cover the holes left by the US DHS and Coinlab.

So you think MtGox is 5% in minus, and the bank doesn't take any fee at all?  No, this does not sound anything near a plausible explanation to me.  Why is the 5% option very limited then, and not offered by default to everyone?  And why only for international wire?  A nice collection of speculations, but few are plausible and they certainly don't fit your conclusion.  You have to start looking earlier than the Dwolla seizures.  It is very obvious they were limited by their bank since June 5th, at least.

2+2 = 4

Gox is short of $10M and they are heavily delaying withdrawals. They make up stupid excuses such as "the old financial system cannot follow the thriving BTC economy" and "our huge volume is overwhelming the biggest bank is Japan". Still, there's no problem with the money coming in, only with the money going out.

At the same time, Bitstamp is actually handling a higher volume, and processing withdrawals quickly and smoothly.

The most plausible scenario is simply that Gox is having liquidity problems.

Some of you repeat that Gox made aprox. $8M in trading fees since April this year, like that means $10M is nothing for them. That's absurd. The fact is their income before expenses during the period of higher usd volume EVER is significantly smaller that the hole created by Coinlab and DHS. $10M is not precisely peanuts for Gox, saying the contrary is ludicrous. Note that the two days of all time high volume happened precisely in August. If you have any experience managing a business you know this kind of hole means - at best - a huge headache for Gox.

I for one hope their financials were managed very good in the past, and thus the company is extremely liquid and healthy despite the $10M hole, it's just that being so opaque and outright lying doesn't help confidence at all. In their situation (slow but steady "bank run", media writing about possible insolvency), a healthy company would just disclose its balances to show the world (meaning their customers) how healthy and strong they are. But no, their CEO makes up vague excuses on IRC...

[sturle]

Since Gox takes fees on both sides, 5 millions USD of fees are in btc, it doesn't really help them in their cash flow issues.
I've read somewhere Gox owns thousands of bitcoins through fees and re-investments, they cant sell their coins on their platform and hold worthless Gox USD. can they?

The default for new accounts is to take all fees from the fiat side, and has been so for a year or so.  Many old cusumers (e.g. me) have switched on this option as well.  Which means most of their profit from this year will be in fiat.  The 2.5% currency conversion fee for mixed currency trades are in fiat as well.  MtGox can not sell BTC on their own platform.  I don't know if they are allowed to trade BTC on other exchanges.  Their strategy so far has been to use BTC as BTC, e.g. when buying other companies (two so far).

[flound1129]

And open thine eyes; any bitcoin exchange that sticks to one currency is not a threat and so there is no need to emasculate their withdrawal flow; Can anyone show me another bitcoin exchange that deals in more than one currency ?

BTC-e

[sturle]

2+2 = 4

Gox is short of $10M and they are heavily delaying withdrawals. They make up stupid excuses such as "the old financial system cannot follow the thriving BTC economy" and "our huge volume is overwhelming the biggest bank is Japan". Still, there's no problem with the money coming in, only with the money going out.

How do you explain the timing?  The withdrawal problems started around the 5th of June.  The first Dwolla seizure happened on June 14th.  You have nine days to explain.

At the same time, Bitstamp is actually handling a higher volume, and processing withdrawals quickly and smoothly.

Smaller volume, actually.  And much fewer customers.

The most plausible scenario is simply that Gox is having liquidity problems.

What was the cause of their liquidity problems during the second week of June?

Some of you repeat that Gox made aprox. $8M in trading fees since April this year, like that means $10M is nothing for them. That's absurd. The fact is their income before expenses during the period of higher usd volume EVER is significantly smaller that the hole created by Coinlab and DHS. $10M is not precisely peanuts for Gox, saying the contrary is ludicrous. Note that the two days of all time high volume happened precisely in August. If you have any experience managing a business you know this kind of hole means - at best - a huge headache for Gox.

Nothing of this, as far as it makes any sense at all, can explain the problems.  The order book is 12 million USD deep in bids.   Even if they didn't make any profit at all (8 million USD is from April to August 20th), they would have at least 2 million USD left of customer deposits to pay out of.  Only a fraction of their deposits are visible in the order book.

[Rampion]

2+2 = 4

Gox is short of $10M and they are heavily delaying withdrawals. They make up stupid excuses such as "the old financial system cannot follow the thriving BTC economy" and "our huge volume is overwhelming the biggest bank is Japan". Still, there's no problem with the money coming in, only with the money going out.

How do you explain the timing?  The withdrawal problems started around the 5th of June.  The first Dwolla seizure happened on June 14th.  You have nine days to explain.

Gox admits in their answer to Coinlab that money sent to Coinlab's bank accounts was credited to the balances of Gox customers, but the money was actually held by Coinlab. It seems pretty obvious to me that Gox has been facing financial challenges for a while, and when the two major holes caused by DHL and Dwolla converged with a declining volume at the beginning of June, the shit hit the fan.

Finally, 5th to 14th June seems pretty close to me. Maybe the DHL action started a few days before it actually hits the news. Anyhow, it looks obvious to me there are diverse factors that are putting Gox under financial stress.

Nothing of this, as far as it makes any sense at all, can explain the problems.  The order book is 12 million USD deep in bids.   Even if they didn't make any profit at all (8 million USD is from April to August 20th), they would have at least 2 million USD left of customer deposits to pay out of.  Only a fraction of their deposits are visible

So you suggest they would go full ponzi if they were having liquidity problems? Wow. That would be really retarded.

[prophetx]

Don't worry in 2 more weeks all problems will be addressed 

[CompNsci]

Not true.

Bitstamp publish their total volume only.  MtGox don't publish a total volume, but splits it into individual currencies.  If I deposit EUR on Bitstamp and withdraw EUR from Bitstamp, it is still counted as USD volume.  On MtGox it would be counted as EUR volume.  To compare the two you need to add all currencies on MtGox.  Many people don't know this.

Well this seems to be mostly a discussion about USD and I believe the USD volume on bitstamp is now larger. In any case, the ratio of quoted USD volume has been tilting strongly away from Gox, likely due to a loss of faith in their business practices caused by their opacity, and probable falsehoods.

[CompNsci]

Note that the 5% is a bank fee.

...

Bank problems is a much more plausible explanation.

Firstly, we don't really know who collects the 5%, just that it is charged.

This may well be a combination of both problems. There is no evidence of any USD withdrawals being processed after 12 June, so the "10 withdrawals a day"  is likely false or actually applies to the 5% manual option. I suspect they have no working banking relationship right now for the old style ABA wire transfers, but are hoping one will materialize.

[User705]

Alas, the truth is so obvious ...

I am a simple global professional, and I need to move $AUD 10,000 to EUR, or vice versa, without paying the 7% bank exchange rate spread.

It's a no-brainer:

1. Join MtGox and xfer the doh there, $30 fee
2, do a few token bitcoin trades
3. Do a SEPA transfer to my bank in EU - cost maybe 12 eur

So, I have spent $50 maximum getting what I used to pay a bank $700 for - excellent ! Oh - the bank did not get my $650 dollar  "xfer fee" pity.
(  and I am just an old computer nerd, far from a professional money launderer )

Does not the whole world see this ? Why would banks cooperate with the bitcoin trade ? Since bitcoin is their death knell ?

All this talk about MtGox going down the tube is plain fanciful - see what is really happening; all MtGox withdrawal transactions are being stifled because it is business that directly replaces one of the banks's cash-cows/golden-geese ...

*** stealing from customers in the name of Foreign Exchange ***
*** Governments need to castrate these Fu6k&rs like have done with the thieving in the name of mobile phone roaming ! ***

 - They are all united/cartelled against bitcoin because of the forex profits they will lose
 - this is a worldwide clique - no exceptions allowed - not even in Poland or Japan !
 - this bleating about AML compliance is a smokescreen for ignorant journalists and politicians

And open thine eyes; any bitcoin exchange that sticks to one currency is not a threat and so there is no need to emasculate their withdrawal flow; Can anyone show me another bitcoin exchange that deals in more than one currency ?

Unfortunately there is no government on earth with balls enough to step up to this; the banks would crush them too.

I think you are exaggerating a bit.  Most private currency exchanges use hedging and charge a few % and I'm haven't looked at P&L of big banks recently but I'm pretty sure the forex profits if there were even profits and not losses aren't their main money makers.