Could this be the true (and legal) scam Mt.Gox is performing?

[Massimo80]

As probably everyone in the Bitcon world knows by now, the very popular exchange Mt.Gox has been blocking Bitcoin withdrawals for some time, under the claim of various technical problems; as a result, their Bitcoin prices dropped, while their customers are desperately trying to sell them and get their money out of there.

But, as also most people know, getting money out of Mt.Gox has always been notoriously difficult; again, they claim this is due to bank-imposed limits on outgoing money transfers, but nobody knows for sure; the only sure thing is, getting money from them usually requires at least a month.

Now, lots of people fear Mt.Gox is actually bankrupt and/or its owners are just going to disappear with their money; but this would be very risky, both from a legal and a not-so-legal standpoint (large Bitcoin usage has been notoriously tied to the kind of people one just don't want to mess with).

Myself, I just can't stop asking "if Mt.Gox customers are panic selling, who is buying?". Of course, someone could just be buying in the hope to sell low-priced Bitcoins elsewhere, but most people just don't trust Mt.Gox anymore and are just in a hurry to get the f**k out of there ASAP.

My guess: Mt.Gox owners are the ones actually buying at very low prices and selling elsewhere, making so much cash they'll be able to (sooner or later) satisfy all those pending money withraw requests. Then they'll happily close business (while of course crying out about their tragic fate) and keep the rest of the money.

Clean, risk-free... and perfectly legal in a totally unregolated market.

[DeathAndTaxes]

No way to know without an outside audit.  As far as "perfectly legal", MtGox isn't totally unregulated.  They are registered as a "financial services company" (or whatever the designation is) in Japan.  I am not going to try and pour over the regs in Japanese but I am pretty sure there is so law on the books which prohibits a financial services company from trading against its own customers to profit from their loss and rigging the trade by creating precipitating the event which led to the trading losses.

So could they be doing that?  Who knows?  It is just as likely that the buyers are simply discounting the odds.  If you think your chances of redeeming GoxCoin IOUs are "only" 400% worse than redeeming GoxBuck IOUs then the price is a good one.  Some may be speculating that MtGox likely handed attackers a small fortune in coins but it probably wasn't every single coin.  Say MtGox owes depositors 300,000 BTC and they foolishly lost 100,000 BTC to "hackers" (if you can call someone asking you to pay them again a "hacker").  That means even in a bankruptcy situation depositors are only looking at a 33% haircut.  If you buy a GoxCoin IOU for 20 cents on the dollar and get 67 cents on the dollar well you will make a profit.

[yumei]

@ Massimo80 absolutly ACK. I think MTGox will come back, paying all traders their FIAT / bitcoins and laughing about the extreme profits they did with this kind of insider trading through market manipulation.

Though we need criminal complaint and legal investigations to prove it.

[AndreyE]

a few months ago I wrote, that MtGox is a scam. They did VERY long payments to russian major exchange metabank, in the end metabank had to switch to btc-e. I did warn you, you didn't listen. Yes, all they do is a scam always.

[yumei]

Insert Quote
a few months ago I wrote, that MtGox is a scam. They did VERY long payments to russian major exchange metabank, in the end metabank had to switch to btc-e. I did warn you, you didn't listen. Yes, all they do is a scam always

Its not about warning us. I even never worked with them. But they are destroying the entire reputation, bitcoins worth everyday less since they are messing around. How can such a guy still being member of the bitcoin foundation, he should be on the "bitcoin enemy" list.

[rikkejohn]

My guess: Mt.Gox owners are the ones actually buying at very low prices and selling elsewhere, making so much cash they'll be able to (sooner or later) satisfy all those pending money withraw requests. Then they'll happily close business (while of course crying out about their tragic fate) and keep the rest of the money.

Clean, risk-free... and perfectly legal in a totally unregolated market.

My guess is that it has gone beyond that stage. Gox looks like it is going down for good.

Also, the market might not be formally regulated but it is still subject to law. If it can be proved that Gox is trading in the manner you describe, I'm sure there would be prosecutions.

The problem is finding proof of what is going on.

[RodeoX]

So many people here want no regulation of bitcoin at all. Well, that means no protection either. You will have to vote with your money in a free market. It looks like that is happening now.
I'm not going to defend Gox, I don't know them. But this is likely a lot more complex than a scam. I have done many transactions there and never had a delay or problem. My theory is that Gox is just in over their head and struggling to keep up.

Theory is the key word here. I never trade on suspicion or rumor, even my own. That is a sure ticket to unprofitable panic selling.    

[roy7]

"hackers" (if you can call someone asking you to pay them again a "hacker").

The word would be thieves. People who tried to double withdrawal the same coins taking advantage of the technical problems are crooks, plain and simple.

[Massimo80]

I'm not going to defend Gox, I don't know them. But this is likely a lot more complex than a scam. I have done many transactions there and never had a delay or problem. My theory is that Gox is just in over their head and struggling to keep up.

Agreed. I used it too, and never had a problem with it, apart from the astonishingly long time to get money back and very bad support.

But now they could just have thought "hey, let's make some quick money and go away instead of bothering to keep running this show"...

Theory is the key word here. I never trade on suspicion or rumor, even my own. That is a sure ticket to unprofitable panic selling.

Nobody really knows, and their quite-less-than-stellar communication skills surely don't help. Ensuing panic-selling was to be expected. And my guess is just that: they not only were expecting it, they probably created it exactly for this purpose.

[jeffg]

Agreed. I used it too, and never had a problem with it, apart from the astonishingly long time to get money back and very bad support.

But now they could just have thought "hey, let's make some quick money and go away instead of bothering to keep running this show"...

Yes. I've been a long time gox user, but at the moment I think even BTC-e is more trustworthy than Mtgox which is kind of alarming.

Nobody really knows, and their quite-less-than-stellar communication skills surely don't help. Ensuing panic-selling was to be expected. And my guess is just that: they not only were expecting it, they probably created it exactly for this purpose.

Agree. Otherwise they would stop trading on their platform right now under these circumstances.

[Aditya]

a few months ago I wrote, that MtGox is a scam. They did VERY long payments to russian major exchange metabank, in the end metabank had to switch to btc-e. I did warn you, you didn't listen. Yes, all they do is a scam always

Its not about warning us. I even never worked with them. But they are destroying the entire reputation, bitcoins worth everyday less since they are messing around. How can such a guy still being member of the bitcoin foundation, he should be on the "bitcoin enemy" list.

+1

Agree with yumei. It's not about Mt Gox customer only.

This guy poisoning Bitcoin Economy & community.

[leopard2]

best solution for btc world would be a takeover; can some serious investor please buy the Mtgox brand at 20% of its face value and turn it into something real? 

Goxxers get a 30% haircut and BTC goes up 30%, problem solved 

[designbuyers]

As probably everyone in the Bitcon world knows by now, the very popular exchange Mt.Gox has been blocking Bitcoin withdrawals for some time, under the claim of various technical problems; as a result, their Bitcoin prices dropped, while their customers are desperately trying to sell them and get their money out of there.

But, as also most people know, getting money out of Mt.Gox has always been notoriously difficult; again, they claim this is due to bank-imposed limits on outgoing money transfers, but nobody knows for sure; the only sure thing is, getting money from them usually requires at least a month.

Now, lots of people fear Mt.Gox is actually bankrupt and/or its owners are just going to disappear with their money; but this would be very risky, both from a legal and a not-so-legal standpoint (large Bitcoin usage has been notoriously tied to the kind of people one just don't want to mess with).

Myself, I just can't stop asking "if Mt.Gox customers are panic selling, who is buying?". Of course, someone could just be buying in the hope to sell low-priced Bitcoins elsewhere, but most people just don't trust Mt.Gox anymore and are just in a hurry to get the f**k out of there ASAP.

My guess: Mt.Gox owners are the ones actually buying at very low prices and selling elsewhere, making so much cash they'll be able to (sooner or later) satisfy all those pending money withraw requests. Then they'll happily close business (while of course crying out about their tragic fate) and keep the rest of the money.

Clean, risk-free... and perfectly legal in a totally unregolated market.

Totally Agreed, I think this one way possible.. but still too many possibilities ..

[StarfishPrime]

However this current (mostly manufactured) 'crisis' plays out, it's clear that mtgox's potential to profit from it has been huge. It's highly unlikely that they have not leveraged the situation to their financial advantage somehow.

What's almost certain however is that any funds they have left, even after this latest in a string of ongoing fiascos, will never cover the existing and upcoming lawsuits to be filed against them.

MtGox is dead, whether they know it or not. They can never rebuild the confidence they lost at this point.

[SamBrannan49]

What about the legal term of "delayed filing of insolvency"?

I guess this is deemed a criminal offense in most jurisdictions and Japan is certainly no exception.

As the management of Mt. Gox is well-known (they can't just hide somewhere easily), is it realistic that they tap customer funds to delay filing of insolvency? They risk going to jail for that - so why would they? (They should be rich enough by now anyway.)