Gox/Bitstamp spread breaches 20%. The bank run on Gox has started! 8/19

[Herp]

I think, however, the big jump in price is due to very bullish signs for Bitcoin. Recent attention it got from Washington made some hedge fund managers pay more close attention, some even recommending their customers including Bitcoin in their portofolio and thing is MtGox is still the go to exchange for big players, not the Slovenia Eastern Europe based Bitstamp.

Bullish signs, so investors buying BTC. Ok. Why then not buy BTC at bitstamp for example, where price is lower? The difference between Gox and others is still rising.

Because those are not as trustworthy and can't handle that much volume and big players like volume.

Hhahah trustworthy like Gox?  Well if you are looking at doing significant volume, one would traditionally do an off exchange transaction because even Gox's volume is ridiculously low for a currency market.  Oh and one other thing, if you want to sell, when can you expect to see your funds?  Hmm ya i'll just trust a shady Bitcoin exchange that tells me it will take 3 months to withdraw my cash.  

Answer the question: why not buy BTC at bitstamp?

To get back to your question though, MtGox receives most of the media attention and it's the go to place for most people, especially investors who want a safe bet in a very shaky and shady Bitcoin environment. Gox may be sluggish, cumbersome' n such but it is safe you can't argue with that and they've made steps to get regulated.

Calling Gox safe... I just can't imagine you saying that with a straight face.  Hm lying to your customers for over 3 months, not letting them withdraw USD, not rolling out Litecoin, not registering with FinCEN until your funds get seized, getting sued by Coinlab for $75 MM for completely disregarding their agreement (which they will lose)... I can continue if you'd like.  I'd just prefer that you not insult everyone's intelligence by calling Mt.Gox a "safe exchange."

This whole Bitcoin experience has been a trial'n error for most Bitcoin businesses, especially large ones. MtGox was under most scrutiny due to being largest player and thus attacked more. Smaller exchanges were relatively safe due to having less exposure. As things stand at the moment, Gox is in better regulatory compliance than Bitstamp or other exchanges. I'm not defending them by any means, just calling it as I see it.

The Coinbase lawsuit was an interesting twist. Coinbase was sure sorry for losing Gox US customer base and would be interesting to see how it will play out. It will most likely stretch out over 2-3 years or so and lots can happen in that interval. Coinbase did manage to raise some money recently but Gox is flushed with cash also so I wouldn't bet on them losing any trial. There will most likely be a settlement of some sort.

You mean Coinlab?  No, Gox does not have money to fight this.  And they are absolutely in breach of contract.  They will lose the court case, it is just a matter of determining how much they will settle for, which even at 10% of the suit amount ($7.5 MM) would be more than Gox has made in revenue the last 2 years combined. 

Right, was Coinlab. I wouldn't worry about them winning any lawsuit against MtGox. Coinbase was the one who got big round of funding recently. Coinlab is insignificant small player by comparison.

And as I was saying it's a question of when. Lawsuit can be dragged for years and I'm pretty sure you and me are not privy to what actually went on. Gox might have had their reasons for backing down and perhaps their agreement offered them a way out.

[1713973444]

1713973444

[zeroblock]

If you want to get some perspective on how large of a discrepancy 20% is, just take a look at the variance chart. I plotted the average daily value of Gox vs Bitstamp.  But for the price movement within the last 12 hrs, I picked a time period early in the morning where the discrepancy was highest.  Not only did the variance hit a record high of 14.68% Sunday (full day weighted average price), but it exploded through that to 20%.  

[joesmoe2012]

Why are you cross posting everything like 5 times zeroblock? Not sure what your motivations are here, but it's getting kind of annoying when i check 10 of my watchlist threads and you've posted the same thing in all of them....

[zeroblock]

What I've found is that many people don't read the service discussion forum.  I want to make sure everyone knows about the Gox problem and then can decide how he/she deals with it.  Here is a funny example of someone who posted on the other threads:

https://bitcointalk.org/index.php?topic=274363.0

[joesmoe2012]

What I've found is that many people don't read the service discussion forum.  I want to make sure everyone knows about the Gox problem and then can decide how he/she deals with it.  Here is a funny example of someone who posted on the other threads:

https://bitcointalk.org/index.php?topic=274363.0

Valid Point...

Anybody who pays any attention to the forums should know whats going on with gox its all ove rthe place.

[UPENtXF]

I am taking everything I have from Bitstamp also. It won't be long that the same kind of bank and government screws are applied to them next.

It's long overdue to disperse to as many exchanges as possible, as far from the US, Thailand and other states of big brotherhood as possible.

[zeroblock]

I am taking everything I have from Bitstamp also. It won't be long that the same kind of bank and government screws are applied to them next.

It's long overdue to disperse to as many exchanges as possible, as far from the US, Thailand and other states of big brotherhood as possible.

See that is really what I am going for.  Bitcoiners love decentralization, yet support a very centralized system with Gox.  I simply want enough good exchanges to provide a stable base for Bitcoin transactions.  And my comments are trying to get people to look in that direction. 

[zeroblock]

What I've found is that many people don't read the service discussion forum.  I want to make sure everyone knows about the Gox problem and then can decide how he/she deals with it.  Here is a funny example of someone who posted on the other threads:

https://bitcointalk.org/index.php?topic=274363.0

Valid Point...

Anybody who pays any attention to the forums should know whats going on with gox its all ove rthe place.

I thought so too, but evidently it isn't as well known outside of the Service Discussion thread?

[OhShei8e]

Right, was Coinlab. I wouldn't worry about them winning any lawsuit against MtGox. Coinbase was the one who got big round of funding recently. Coinlab is insignificant small player by comparison.

They had depended to 100% on the Gox orderbook. It was only a Gox-Proxy. But now they have stopped there service. They do on their side only advertisement now. I can not see any more business activity there: http://coinlab.com/

Their last activity was to file a Breach-Of-Contract suit against Mt. Gox.

That reminds me of SCO against Linux, SCO had no business purpose too, except lawsuits. There will be always idiots who invest in something like that.

[zeroblock]

Right, was Coinlab. I wouldn't worry about them winning any lawsuit against MtGox. Coinbase was the one who got big round of funding recently. Coinlab is insignificant small player by comparison.

They had depended to 100% on the Gox orderbook. It was only a Gox-Proxy. But now they have stopped there service. They do on their side only advertisement now. I can not see any more business activity there: http://coinlab.com/

Their last activity was to file a Breach-Of-Contract suit against Mt. Gox.

That reminds me of SCO against Linux, SCO had no business purpose too, except lawsuits. There will be always idiots who invest in something like that.

No, Gox explicitly violated the contract they had with Coinlab. 

[OhShei8e]

No, Gox explicitly violated the contract they had with Coinlab. 

Let the courts decide.

[zeroblock]

No, Gox explicitly violated the contract they had with Coinlab. 

Let the courts decide.

Oh the courts will, and I can guarantee it will most definitely be in CoinLab's favor. My main job is doing due diligence on large acquisitions, which usually has me reading hundreds of pages of legal contracts and documentation.  It is quite evident Gox completely ignored the agreement.

"What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse;"

IV. COUNT I- BREACH OF CONTRACT

B. directly servicing customers in the United States and Canada in violation of the agreement’s exclusivity provisions;

C.failing to cooperate in facilitating the timely and seamless transfer of CoinLab customers to CoinLab;

D.failing to provide the necessary technology, software, and know-how to CoinLab and refusing to establish promised network connections;

E.failing to deliver all passwords, Yubikeys, administrative logins and other required security information;

F.failing to make available to CoinLab on-demand and read-only access to Mt.Gox’s databases and other related records and data pertaining to accounts for customers in the United States and Canada;

G.failing to timely comply with the Agreement’s revenue share requirements;

H.failing to timely deposit Liquidity Funds in the manner instructed by CoinLab;and

I.failing to timely reconcile revenue and customer trade imbalances.

49.As a result of Defendants’ breaches, Plaintiff has suffered actual damages in an amount equal to or exceeding $75,000,000

http://www.scribd.com/doc/139160091/Coinlab-v-Mt-Gox

[OhShei8e]

B. directly servicing customers in the United States and Canada in violation of the agreement’s exclusivity provisions;

C.failing to cooperate in facilitating the timely and seamless transfer of CoinLab customers to CoinLab;

D.failing to provide the necessary technology, software, and know-how to CoinLab and refusing to establish promised network connections;

E.failing to deliver all passwords, Yubikeys, administrative logins and other required security information;

F.failing to make available to CoinLab on-demand and read-only access to Mt.Gox’s databases and other related records and data pertaining to accounts for customers in the United States and Canada;

G.failing to timely comply with the Agreement’s revenue share requirements;

H.failing to timely deposit Liquidity Funds in the manner instructed by CoinLab;and

I.failing to timely reconcile revenue and customer trade imbalances.

49.As a result of Defendants’ breaches, Plaintiff has suffered actual damages in an amount equal to or exceeding $75,000,000

http://www.scribd.com/doc/139160091/Coinlab-v-Mt-Gox

Yes, the contract provides that Gox is donated to CoinLab. It's a joke! Most conditions are unsatisfiable. The contract is worth nothing. Ignore it is still the best thing you can do with it. It is simply fraud. Gox has perhaps also committed to buy a couple of old washing machines from CoinLab?

Gox has simply been deceived by CoinLab. I do not know how the signature came on the contract. The contract unilaterally damnify Gox. The agreement is contra bonos mores.

[zeroblock]

B. directly servicing customers in the United States and Canada in violation of the agreement’s exclusivity provisions;

C.failing to cooperate in facilitating the timely and seamless transfer of CoinLab customers to CoinLab;

D.failing to provide the necessary technology, software, and know-how to CoinLab and refusing to establish promised network connections;

E.failing to deliver all passwords, Yubikeys, administrative logins and other required security information;

F.failing to make available to CoinLab on-demand and read-only access to Mt.Gox’s databases and other related records and data pertaining to accounts for customers in the United States and Canada;

G.failing to timely comply with the Agreement’s revenue share requirements;

H.failing to timely deposit Liquidity Funds in the manner instructed by CoinLab;and

I.failing to timely reconcile revenue and customer trade imbalances.

49.As a result of Defendants’ breaches, Plaintiff has suffered actual damages in an amount equal to or exceeding $75,000,000

http://www.scribd.com/doc/139160091/Coinlab-v-Mt-Gox

Yes, the contract provides that Gox is donated to CoinLab. It's a joke! Most conditions are unsatisfiable. The contract is worth nothing. Ignore it is still the best thing you can do with it. It is simply fraud. Gox has perhaps also committed to buy a couple of old washing machines from CoinLab?

Gox has simply been deceived by CoinLab. I do not know how the signature came on the contract. The contract unilaterally damnify Gox. The agreement is contra bonos mores.

This is a fully executed, legally binding document that was approved by both Gox's lawyers and CoinLab's.  This contract is perfectly legal and would most definitely be in CoinLab's favor if they decide to go to court. 

[tclo]

To be fair, part of the reason that the Gox/Bitstamp spread got up to 20% is because when Gox took off to 120, there was a big sell wall at 99.99 on Bitstamp...it was about 2000 BTC and took over an hour to get eaten through.  Then Bitsamp moved up from there and current % is about 13.7.  That is still high but not 20%.

[smoothie]

And as I was saying it's a question of when. Lawsuit can be dragged for years and I'm pretty sure you and me are not privy to what actually went on. Gox might have had their reasons for backing down and perhaps their agreement offered them a way out.

It didn't.  And they openly violated the agreement.  They fully owe $75 MM, and they have no chance in court.

You have valid points on this but what exactly was coinlab going to give GOX in return for their customer base in the U.S.?

Any agreement has to have reasonable consideration on both sides. It can't be a one sided agreement which is what it looks like.

Don't get me wrong, I absolutely despise how GOX is run and the management in power for doing so. I just think their agreement with coinlab wasn't a fair one (well in the courts eyes), it will look one sided on the part of CONSIDERATION.

[smoothie]

To be fair, part of the reason that the Gox/Bitstamp spread got up to 20% is because when Gox took off to 120, there was a big sell wall at 99.99 on Bitstamp...it was about 2000 BTC and took over an hour to get eaten through.  Then Bitsamp moved up from there and current % is about 13.7.  That is still high but not 20%.

Ignoring all of that, the mere indication that there is anything sustained over 10% difference is due to loss of trust on the part of Gox's customers.

[joesmoe2012]

No, Gox explicitly violated the contract they had with Coinlab. 

Let the courts decide.

Oh the courts will, and I can guarantee it will most definitely be in CoinLab's favor. My main job is doing due diligence on large acquisitions, which usually has me reading hundreds of pages of legal contracts and documentation.  It is quite evident Gox completely ignored the agreement.

"What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse;"

IV. COUNT I- BREACH OF CONTRACT

B. directly servicing customers in the United States and Canada in violation of the agreement’s exclusivity provisions;

C.failing to cooperate in facilitating the timely and seamless transfer of CoinLab customers to CoinLab;

D.failing to provide the necessary technology, software, and know-how to CoinLab and refusing to establish promised network connections;

E.failing to deliver all passwords, Yubikeys, administrative logins and other required security information;

F.failing to make available to CoinLab on-demand and read-only access to Mt.Gox’s databases and other related records and data pertaining to accounts for customers in the United States and Canada;

G.failing to timely comply with the Agreement’s revenue share requirements;

H.failing to timely deposit Liquidity Funds in the manner instructed by CoinLab;and

I.failing to timely reconcile revenue and customer trade imbalances.

49.As a result of Defendants’ breaches, Plaintiff has suffered actual damages in an amount equal to or exceeding $75,000,000

http://www.scribd.com/doc/139160091/Coinlab-v-Mt-Gox

Lets' talk about enforceability though. These international contracts are difficult if possible at all to enforce. Gox doesn't seem to scared.

Not to mention a lawsuit of this scale could take years to get settled...