Here's what the Mt. Gox Press Release will say and why

[ericmoulton]

Wow, your density is in the super elite levels.

It's not an argument, it's a different way to look at exactly what is going on with mtgox. People have been waiting over 7 months (or more) for fiat withdrawals, do you really truly think that this restaurant scenario would happen? My goodness.

erm....   eh.... hmm...

  nope... speechless.

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[Hunterbunter]

Cool story, but we'll never know if this is what actually happened. Just as likely is that no one with any cash on gox wants to buy, so the price continues to tumble.

[ericmoulton]

Cool story, but we'll never know if this is what actually happened. Just as likely is that no one with any cash on gox wants to buy, so the price continues to tumble.

good point - i had zero evidence for my speculation that everyone is fully invested in coins, just an assumption based on what I would do (luckily I pulled out of Gox a few weeks ago). this seems like a good subject for a survey. its a small sample of the Gox population (and not at all a random sampling representative of the population). additionally, we don't know the Gox population size (who have assets still in Gox), so we can't calculate a statistical confidence interval, but at least we can know for certain that, across the board,  our confidence goes up (from 0% )

[frowly]

Hi eric,

I liked the post and read it with much interest. But I have some questions.

1) How could MtGox realistically produce "fake" bitcoins? Doesn't the algorithm insist that each transaction be validated independently?

I am a relative BTC noob and may be mistaken, but from what I understand about the block transaction chain, the scenario you describe would be very difficult to pull off. It would indicate that the majority if not all of the Mt Gox transactions are fraudulent to have any chance of success. A pretty wide-ranging conspiracy would be needed, and most of us know that wide-ranging conspiracies tend to fall apart very quickly.

On the other hand, the possibilty that MTGox is over-extended is very real. I don't know at what point MtGox needs to publish accounts, submit to auditing etc. but up until now no one has officially suggested that this needs to take place (other than the Feds who beat him up for 5 M$). If MK has about 250 million USD in bitcoin (that is the last estimate I heard) he can still cover a large amount of any loss caused by potential bad bets. If he really wanted to make people feel better about MtGox Bitcoin, he would start by telling the world how much he has invested in bitcoin and how much is tied up in fiat. Anybody with that much money can afford to pay the people needed to fix any lingering technical issues.

On the other hand, I do agree with many of the posters here, Karpeles has not been using very good PR, and sometimes acts like an emotionally stunted geek when it comes to assuaging his customer bases' deepest fears. He badly needs a PR manager and probably some good accountants.

Let's stay tuned,
 

[spin]

1) How could MtGox realistically produce "fake" bitcoins? Doesn't the algorithm insist that each transaction be validated independently?

You can't validate balances at Mt Gox like regular bitcoin balances because you don't know at what bitcoin address your money is.  This is true for other major exchanges also.   Your balance with them is simply an entry in their books/accounting database.  This should but may not be backed by actual cash/BTC in their bank account/cold storage etc. 

So you can't know if they used your money to pay wages, or pay other users instead of keeping it separate.   

[ericmoulton]

you only get the private keys to coins if you withdraw.. Gox holds all (any) real coins. your cash and coin balances on the website are just numbers on their ledger - you don't actually have either anymore unless you withdraw. for Gox to sell a fake coin is as easy as taking real cash from your acct, transferring it to a Gox acct, and  increasing the number of coins that appear in your "balance" on the website. there don't have to actually be any coins unless you want to withdraw. that balance you see on the site is just a promise, an IOU

[Squeaker]

1) How could MtGox realistically produce "fake" bitcoins? Doesn't the algorithm insist that each transaction be validated independently?

Well, they could just change the BTC balances they use internally, "creating" more BTC than they actually have, and you could consider that fake BTC, but that has nothing to do with the blockchain.

=squeak=

[ericmoulton]

1) How could MtGox realistically produce "fake" bitcoins? Doesn't the algorithm insist that each transaction be validated independently?

You can't validate balances at Mt Gox like regular bitcoin balances because you don't know at what bitcoin address your money is.  This is true for other major exchanges also.   Your balance with them is simply an entry in their books/accounting database.  This should but may not be backed by actual cash/BTC in their bank account/cold storage etc. 

So you can't know if they used your money to pay wages, or pay other users instead of keeping it separate.   

sorry spin, didn't see your post. didn't mean to double post

[dbasql]

Honestly after reading I would not be surprised at all if you are correct on some or all accounts!

[ericmoulton]

well, my speculation as to the announcement was off, but the announcement is still consistent with what I believe to be happening. the announcement was carefully worded and certainly has nothing to do with malleability. "security problems" and "technical challenges" is not mentioned as having anything to do with malleability or hacking, and could easily be referring to financial security and order fulfillment technical challenges.

the office building move due to security problems is worrisome though. certainly no one walked in with a gun and stole the btc. even if they did, moving office buildings is not a solution.

so what is "moving back into the old office" a solution to?

1) not being able to afford the new facility anymore (a move as part of a business plan to get back on track financially). this is a sudden move, and it seems odd that it coincides with the downtime. it seems like they would just move back quietly when no one was looking if financial hard times had been building (which was my speculation). this is more indicative of a sudden, unexpected financial loss... perhaps the malleability issue really is at the core and mt gox had a huge qty of coins stolen at nearly the same time as SR2.0. the idea that they really were hacked lines up with this action, as much as i doubted it to be true. i guess they wouldn't want to announce a huge loss through hacking since it would demolish the exchange immediately.

2) i think, very unfortunately, that this moving offices lines up better with my original speculation - due solely to the cryptic references to the japanese gov't meetings, and "making sure they were doing everything in accordance with local law." this just doesn't fit the hacking and sudden loss of coins theory very well (they may have gone to the authorities over it... but "following all laws"? what could they be doing, putting out a hit on the theives?). what does fit it well?

Bankruptcy.

bankruptcy with a gov't contingency that they can attempt to still operate the exchange in order to attempt pay back whatever portion of (apparently unpayable) debt they can manage. in bankruptcy, existing nonessential assets are seized, often the leadership is replaced (watch for a mention of staff leaving or Mark leaving), and the company is allowed to operate once again. Unfortunately, the bankruptcy plan process can take a while - perhaps longer than they thought?

[Squeaker]

You have to take into account the concept of "saving face" tho... MtGox is based in Japan...

It wouldn't do to have people protesting outside of the building where you are a renter.

It reflects poorly on your landlord, for something that is your own fault. The landlord has done nothing to deserve it, and yet, you are making him look bad.

Moving operations to another location, even if it is just a ruse and nothing has been moved... if it gets the protestors to move, then you are saving face with the landlord, keeping the focus of the controversy away from him.

Here in the US, we barely give a shit about it... tho perhaps we should sometimes... but there, it is important, particularly in business relationships.

=squeak=

[zyk]

didn´t you guys get the memo ?



1) mtgox found out that the bug is a bug that can´t be fixed.
2) core devs/earliest investors found out gox is right about the impossibility to fix it.
3) bitcoin will blow completely
4) core devs/early dudes have their stashes traditionally on gox and asked kindly if the could get out.
5) MK (already rich) felt that he could do those guys (who made him so rich) a last favour: ok, you guys have one week to sell your coins on gox and withdraw the cash secretly, coming thursday i let everything blow. gox was anyway bankrupt, this way MK can blame the core devs...  & they remain silent since they need the cash.



disclaimer:  

Thats it !

No other convoluted theory can explain the huge volume selling from 300 to a 100 bucks !

Don´t you hear maxwell covering his ass ? You won´t see Mark again only laywer statements.

This much money (your money) is still, as we speak, drained to whatever accounts he wishes !

The japanese authorities are apparently bought off and all prooving data magically disappeared in the office change

or due to some other technical bug. ( His laywers are already working at the closing announcement )

And every other exchange is entitelt to do exactly the same------bitcoin is fucked as its headed by thiefs

Cheers

[Wilhelm]

well, my speculation as to the announcement was off, but the announcement is still consistent with what I believe to be happening. the announcement was carefully worded and certainly has nothing to do with malleability. "security problems" and "technical challenges" is not mentioned as having anything to do with malleability or hacking, and could easily be referring to financial security and order fulfillment technical challenges.

the office building move due to security problems is worrisome though. certainly no one walked in with a gun and stole the btc. even if they did, moving office buildings is not a solution.

so what is "moving back into the old office" a solution to?

1) not being able to afford the new facility anymore (a move as part of a business plan to get back on track financially). this is a sudden move, and it seems odd that it coincides with the downtime. it seems like they would just move back quietly when no one was looking if financial hard times had been building (which was my speculation). this is more indicative of a sudden, unexpected financial loss... perhaps the malleability issue really is at the core and mt gox had a huge qty of coins stolen at nearly the same time as SR2.0. the idea that they really were hacked lines up with this action, as much as i doubted it to be true. i guess they wouldn't want to announce a huge loss through hacking since it would demolish the exchange immediately.

2) i think, very unfortunately, that this moving offices lines up better with my original speculation - due solely to the cryptic references to the japanese gov't meetings, and "making sure they were doing everything in accordance with local law." this just doesn't fit the hacking and sudden loss of coins theory very well (they may have gone to the authorities over it... but "following all laws"? what could they be doing, putting out a hit on the theives?). what does fit it well?

Bankruptcy.

bankruptcy with a gov't contingency that they can attempt to still operate the exchange in order to attempt pay back whatever portion of (apparently unpayable) debt they can manage. in bankruptcy, existing nonessential assets are seized, often the leadership is replaced (watch for a mention of staff leaving or Mark leaving), and the company is allowed to operate once again. Unfortunately, the bankruptcy plan process can take a while - perhaps longer than they thought?

About the office building
Read: http://www.reddit.com/r/Bitcoin/comments/1ygedk/mtgoxs_new_office_is_literally_a_virtual_office/

They are backing out of their assets so they can vanish into thin air....
The security problem is the fact that lawsuits could get their money they are taking time to put it into an offshore account

[zyk]

well, my speculation as to the announcement was off, but the announcement is still consistent with what I believe to be happening. the announcement was carefully worded and certainly has nothing to do with malleability. "security problems" and "technical challenges" is not mentioned as having anything to do with malleability or hacking, and could easily be referring to financial security and order fulfillment technical challenges.

the office building move due to security problems is worrisome though. certainly no one walked in with a gun and stole the btc. even if they did, moving office buildings is not a solution.

so what is "moving back into the old office" a solution to?

1) not being able to afford the new facility anymore (a move as part of a business plan to get back on track financially). this is a sudden move, and it seems odd that it coincides with the downtime. it seems like they would just move back quietly when no one was looking if financial hard times had been building (which was my speculation). this is more indicative of a sudden, unexpected financial loss... perhaps the malleability issue really is at the core and mt gox had a huge qty of coins stolen at nearly the same time as SR2.0. the idea that they really were hacked lines up with this action, as much as i doubted it to be true. i guess they wouldn't want to announce a huge loss through hacking since it would demolish the exchange immediately.

2) i think, very unfortunately, that this moving offices lines up better with my original speculation - due solely to the cryptic references to the japanese gov't meetings, and "making sure they were doing everything in accordance with local law." this just doesn't fit the hacking and sudden loss of coins theory very well (they may have gone to the authorities over it... but "following all laws"? what could they be doing, putting out a hit on the theives?). what does fit it well?

Bankruptcy.

bankruptcy with a gov't contingency that they can attempt to still operate the exchange in order to attempt pay back whatever portion of (apparently unpayable) debt they can manage. in bankruptcy, existing nonessential assets are seized, often the leadership is replaced (watch for a mention of staff leaving or Mark leaving), and the company is allowed to operate once again. Unfortunately, the bankruptcy plan process can take a while - perhaps longer than they thought?

About the office building
Read: http://www.reddit.com/r/Bitcoin/comments/1ygedk/mtgoxs_new_office_is_literally_a_virtual_office/

They are backing out of their assets so they can vanish into thin air....
The security problem is the fact that lawsuits could get their money they are taking time to put it into an offshore account

Finally it appears people are coming to their senses !

Its clearly written on the wall....still the Stockholm syndrom unleashes one theory after the other why it can´t be so !

The stunner is that the selling of all remnants at Gox still goes on and the heist gets bigger by the minute - hilarious

those bitcoiners

[zyk]

Quod erat demonstandum 

[ericmoulton]

Quod erat demonstandum 

unfortunately... thank you