Can Gox buy their way out of this mess?

[Manticore]

I find it interesting that the resignation happened immediately after this hypothetical phone call.

One way it could have gone --

Matonis 'Hey, everyone's worried about your solvency. What's the status?
Karpeles 'We're solvent.'
Matonis 'Oh good. Then perhaps issue a PR stating this or otherwise prove that you are to the public.....this will really help and perhaps the calls for your resignation will cease.'
Karpeles 'Great. Will do.'


Instead, he resigns immediately and does not issue a more definitive PR or attempt to alleviate his clients worries. Rather than simply show the world he is solvent (if he is), he would rather move to a virtual office, erase his Tweets, and remove himself from the Board? Interesting approach.....

[1715496597]

1715496597

[Manticore]

I'm not trying to get off-topic. To me, this is simply one more sign that they are unable to buy themselves out of this mess........It seems highly unlikely that they are this bad at PR. Who could be THIS bad at EVERY step along the way.

[bassclef]

I'm not trying to get off-topic. To me, this is simply one more sign that they are unable to buy themselves out of this mess........It seems highly unlikely that they are this bad at PR. Who could be THIS bad at EVERY step along the way.

Bitcoin sets that bar exceedingly low

[Wilhelm]

I find it interesting that the resignation happened immediately after this hypothetical phone call.

One way it could have gone --

Matonis 'Hey, everyone's worried about your solvency. What's the status?
Karpeles 'We're solvent.'
Matonis 'Oh good. Then perhaps issue a PR stating this or otherwise prove that you are to the public.....this will really help and perhaps the calls for your resignation will cease.'
Karpeles 'Great. Will do.'


Instead, he resigns immediately and does not issue a more definitive PR or attempt to alleviate his clients worries. Rather than simply show the world he is solvent (if he is), he would rather move to a virtual office, erase his Tweets, and remove himself from the Board? Interesting approach.....

Isn't this just a classic move?
Moving to a virtual office, resigning and removing tweets is probably his way to cover his own ass when the lawsuits hit.
People will sue MtGOX and not Mark directly thus he can say it was all solvent when he left.
Especially if you do this within the company itself you will no that there is nothing to tie you to the claims.
You can also say you left due to the mismanagement (or different management styles)

[Money Raccoon]

Someone sent me this

Lets take an impartial look at this for a second.
http://www.reddit.com/r/Bitcoin/comments/1yscsq/mtgox_lets_take_an_impartial_look_at_this_for_a/

Not sure if it's been posted on here somewhere else (sorry, I wasn't bothered looking).

[RoadTrain]

Still they made a bit less than 1000 BTC in fees in the last 24h.
That's very good business if ran properly.
They can buy their way out but the question is more like "will they?"
Do they want to keep the business they created?

I'd want if it was mine, heh.

how do you know 90% of those transactions aren't just Mt Gox coins creating liquidity back and forth to itself?

and who's to say there aren't some special VIP whales that are allowed really cheap if zero price on doing the same?

I don't but there are always speculators who want to take the risk. And there are people with funds locked at MtGox who have no choice.
Otherwise how would something like BitcoinBuilder have 30k BTC trading volume in the past day?

[thelema93]

Now I'm not talking about peoples money, I mean profit. Money that Mark can reinvest into the company to buy coins and become solvent.

I believe the bug is long fixed but extra work is being done to improve standards. I also believe that Gox lost a lot of coins that need to be replaced in order to survive, a challenge that Gox is/should be working on. I also think this so called lawsuit will be dropped once withdraws are opened and I don't believe that Mark will disappear as that would pi$$ off a lot of ruthless individuals. So my only concern is that Gox has enough funds to buy their way out of this mess but how much funds are needed? At what price? does Gox have enough? Essentially, can they buy their way out of this?

Your thoughts.

Please no fud or trolling and no trolling or fud please.

So far I have seen no evidence that Mt.Gox is in a 'Mess' and needs extra money to 'buy their way out'.
Can somebody actually provide some kind of reference for this allegation? It seems that many people on this forum believe in the hype that everything that's happened at Gox is because they have no money - that has no basis in fact that I can see.
If anyone can prove me wrong, please be my guest.

[pungopete468]

Now I'm not talking about peoples money, I mean profit. Money that Mark can reinvest into the company to buy coins and become solvent.

I believe the bug is long fixed but extra work is being done to improve standards. I also believe that Gox lost a lot of coins that need to be replaced in order to survive, a challenge that Gox is/should be working on. I also think this so called lawsuit will be dropped once withdraws are opened and I don't believe that Mark will disappear as that would pi$$ off a lot of ruthless individuals. So my only concern is that Gox has enough funds to buy their way out of this mess but how much funds are needed? At what price? does Gox have enough? Essentially, can they buy their way out of this?

Your thoughts.

Please no fud or trolling and no trolling or fud please.

So far I have seen no evidence that Mt.Gox is in a 'Mess' and needs extra money to 'buy their way out'.
Can somebody actually provide some kind of reference for this allegation? It seems that many people on this forum believe in the hype that everything that's happened at Gox is because they have no money - that has no basis in fact that I can see.
If anyone can prove me wrong, please be my guest.

- http://www.theverge.com/2013/8/23/4651926/us-government-seized-5-million-from-bitcoin-behemoth-mt-gox

- https://bitcointalk.org/index.php?topic=280365.0

I don't know how profitable you guys think the trading fees are; they can't just simply "cover" $5 million USD seized by the FBI and continue to pay their normal operating expenses...

I don't know their level of actual expenses but I do know that in business your expense is a sliding scale; the more you make, the more it costs to stay in business... Financial exchanges typically operate on less than 1% Net Profit per year after all is said and done...

Let's just run a little financial simulation for speculation purposes. These are the conditions:

- Assume you need to pay off $5 million USD and still have enough for regular operating expenses.
- Assume you can operate at a 90% Gross Profit after operating expenses. (On average, for Every $111 of Gross Income you spend $11 on regular Operating Expenses leaving $100 left over.)
- Trade commission is 1.2% total for each transaction.
- All debts rely on new incoming USD as the older pre-existing accounts were forfeited.


To become solvent:

$5,000,000.00 (Gross Profit) = [$504,583,333.33 (Volume of Trade) * 1.2% (Trade Commission)] - $1,055,000.00 (Normal Operating Expenses @ 90% Gross Profit Ratio)

Net Profit @ 1% of Gross Income (not Gross Profit) = $60,550.00 per year.

It would take 82.5 years to cover the loss at that pace. If the volume of trade would bump up to say, $5 Billion it would be 8 years, and at $50 Billion would take 0.8 years...


Most financial exchanges deal with Hundreds of Billions of Dollars per year in volume... 1% start's to look pretty good there.


On top of all this; enough new USD will need to be transferred in monthly just to cover the expenses in order to stay in operation until they have enough time to recover. Even if old accounts are traded back and forth so rapidly that the volume of trade was a trillion Gox Bux they still wouldn't have any USD to spend unless it's transferred in from outside of the exchange.

Regardless of how they choose to apportion the minimal amount of USD transferred into Gox's account daily they are probably insolvent and operating on borrowed time and money... They wouldn't likely be able to pay their obligations right now anymore than they could squeeze blood from a turnip.

It's not an insurmountable problem given enough time, very careful spending, and solid growth of Bitcoin... Unless the incoming USD deposits slow down...

Basically, they've been skating on very thin ice and when people stopped sending in USD and just sent Bitcoin it put them under tremendous financial pressure. They likely cover expenses by selling coins on other exchanges to compensate for the decrease in USD deposits...

They aren't in a position to make profits right now; they've suffered too many losses and it's eaten away the ability to remain solvent and profitable.

Those bank accounts that were closed contained the entire accumulated USD of MtGox. That wasn't profit; it was the top line of their balance sheet...

[RoadTrain]

@pungopete468
I don't know how you got that 1% per year thing.

Also I can't imagine how high their expenses should be to absorb so much of the fees income.
Also I'd like to know how does increase in trading volume proportionally increase their expenses.
Just theoretically, please.

[pungopete468]

@pungopete468
I don't know how you got that 1% per year thing.

Also I can't imagine how high their expenses should be to absorb so much of the fees income.
Also I'd like to know how does increase in trading volume increase their expenses.
Just theoretically, please.

Simple.

If you've ever owned a business you will know that the more money you make the more money you are forced to spend. It never stops snowballing...

I got the 1% by looking at reported yearly incomes for other trading platforms (e-trade has the best info). The "total customer assets" is the Trade Volume and the "income" is Net Income. E-trade in 2013 profited 0.03%, ran a deficit in 2012, and profited 0.09% in 2011. 1% would be a very strong goal and would be relatively easier to achieve with an exchange like Gox.

That's 3 hundredths of one percent Net Profit in 2013...  

They are a much larger company with a very large volume... Over $250 Billion per year. They only profited $86 Million in 2013, lost $113 million in 2012, and profited $157 million in 2011.

There are two types of expenses; those expenses incurred as a byproduct of your business in operation, and those incurred for the privilege to be able to operate a business at all. The expenses related to merely owning your business are the ones that scale harshly with your Gross Revenue.

- e-trade can be found here. https://about.etrade.com/results.cfm

[pungopete468]

How about this? Evidence enough?

[Manticore]

It's interesting that for the first time yesterday, Jon Matonis read the ongoing forum debate regarding the resignation petition (below, according to him) and within 24 hours Karpeles resigns. Jon Matonis released the resignation statement this morning.

https://bitcoinfoundation.org/forum/index.php?/topic/740-petition-to-remove-mark-karpeles-from-the-bitcoin-foundation-board/page__st__20

I think we can safely assume that Jon called Mark. We can only speculate as to how that call transpired, but one would have to believe that solvency was an important focus of the conversation. It seems like a very fast resolution (less than 24 hours), which makes one wonder

• Did Karpeles throw his hands up and say 'to hell with it, I'm sick of dealing with the public' then resigned or
• Did he reveal that things were so dire at Mt. Gox that Matonis basically told him that he must resign immediately?
• Or did Mark resign for the sake of the Foundation, as he knows that the tarnish will be impossible to remove regardless of the outcome

One would think that if things were going to improve (vis–à–vis buying their way out, etc.) at Mt. Gox, Karpeles would have at least thought about the resignation for a day or two before resigning.....

I guess it was the second choice...