Gox Gone, Insolvent

[erik777]

Honestly,

If they don't make people whole, this WILL be the end of Bitcoin.  It could be the fatal flaw of bitcoin, its too hard to secure. 

Yes, it's virtually impossible to store your coins on a paper wallet away from disreputable exchanges.

hahaha

[bitfreak!]

A lot of people are having a good time laughing at us, but they don't appreciate that several weeks ago Gox started disallowing BTC withdrawals.

I'm not laughing at you, like I said I feel sorry for people who lost money due to Mt. Gox. I understand that it wasn't entirely their fault because their funds were being held hostage by Mt. Gox. I even had some BTC on Mt. Gox at one point, but luckily I was able to withdraw them before this whole thing started. But I was smart enough to never have more than 1 or 2 BTC in MT. Gox at a time and hopefully most other people were smart enough to do that also.

[keithers]

with Gox gone, and the news of Gox being gone, the volume at Stamp and BTC-E is going off the Richter.  This is a great time to buy, if you are in the red from the last coins that you bought.   I just scooped up some more.  It may not be the bottom for the day, but it isn't going to be the bottom for long...

[dewdeded]

But I was smart enough to never have more than 1 or 2 BTC in MT. Gox at a time and hopefully most other people were smart enough to do that also.

You hope is all good, man. But customers got 624000 BTC on Gox. So unlikely most other people were.

[redhawk979]

I love how on one hand people are blaming the government for giving Gox a huge fine and saying its their regulations that killed Gox, while simultaneously blaming Karpeles and wishing death upon him.

[Slab Squathrust]

I love how on one hand people are blaming the government for giving Gox a huge fine and saying its their regulations that killed Gox, while simultaneously blaming Karpeles and wishing death upon him.

Well when the US government siezed Mt. Gox's account that was customer's money that was siezed, not Karpeles.  Ever since that date, it has been damn near impossible to remove USD from gox.  The more recent troubles probably arose because of that fat fu*ck's dependance on frappuccinos, causing him to burn through the cold storage to support his habit. 

[marcus_of_augustus]

Gox has been proved incompetent since June 2011.

Anybody who lost money there has had long and fair warning. Not to mention you just lost control over all those identity documentations and all records of your bitcoin transactions into govt. surveillance dragnets at least, probably criminal hands also (if there is any distinction these days).

... bitcoin and fiat exchanges will never mix, they are like oil and water.

[makoto1337]

So for those of us that still had a little BTC in gox,    we are left holding the bag huh?  744K BTC is insane to 'vanish'   Its hard to comprehend.

So the long term plan is that they plan to pay us back?   With fees/commissions?  over years?!

Wouldn't that many bitcoins moving around have been seen on the blockchain?

[ddink7]

Gox has been proved incompetent since June 2011.

Anybody who lost money there has had long and fair warning. Not to mention you just lost control over all those identity documentations and all records of your bitcoin transactions into govt. surveillance dragnets at least, probably criminal hands also (if there is any distinction these days).

... bitcoin and fiat exchanges will never mix, they are like oil and water.

Concur. When I was starting to get interested in bitcoin back two months ago, one of the very FIRST things I learned was not to do business with Gox.

[Slab Squathrust]

Gox has been proved incompetent since June 2011.

Anybody who lost money there has had long and fair warning. Not to mention you just lost control over all those identity documentations and all records of your bitcoin transactions into govt. surveillance dragnets at least, probably criminal hands also (if there is any distinction these days).

... bitcoin and fiat exchanges will never mix, they are like oil and water.

Concur. When I was starting to get interested in bitcoin back two months ago, one of the very FIRST things I learned was not to do business with Gox.

They were fine when they were under the old ownership.

[marcus_of_augustus]

So for those of us that still had a little BTC in gox,    we are left holding the bag huh?  744K BTC is insane to 'vanish'   Its hard to comprehend.

So the long term plan is that they plan to pay us back?   With fees/commissions?  over years?!

Wouldn't that many bitcoins moving around have been seen on the blockchain?

.. i think they mean vanish as in lost the private keys, deleted the back-ups or sent to black-hole addresses. Like 744k btc gone poof!

Like the 17,000 at that euro exchange BitcoMat that was in the cloud ... and then vanished into the aether apparently. http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/

[chufchuf]

I highly doubt malleability transactions caused all of this...

It's likely that Mark Karpeles and/or other insiders embezzled most if not all of it and that transaction malleability is being used as a smoke screen to cover up half a billion dollars of fraud.

At current prices they're saying they're short 350k btc, 170 million, but for most of bitcoin history btc price was well under 100 bucks and that's when most of the fraud would have occurred, so what is it 20 million dollars? Ofc it's absolutely ridiculous to go so many years without discovering the issue.

[bananas]

What about that london guy? I guess he is hunting Mark right now with knife .

[dewdeded]

At current prices they're saying they're short 350k btc, 170 million, but for most of bitcoin history btc price was well under 100 bucks and that's when most of the fraud would have occurred, so what is it 20 million dollars? Ofc it's absolutely ridiculous to go so many years without discovering the issue.

They are short of 624 K BTC.

[mc_lovin]

At current prices they're saying they're short 350k btc, 170 million, but for most of bitcoin history btc price was well under 100 bucks and that's when most of the fraud would have occurred, so what is it 20 million dollars? Ofc it's absolutely ridiculous to go so many years without discovering the issue.

They are short of 624 K BTC.

Is that accurate? I saw a document posted with numbers, but is it real?

[bitfreak!]

At current prices they're saying they're short 350k btc, 170 million, but for most of bitcoin history btc price was well under 100 bucks and that's when most of the fraud would have occurred, so what is it 20 million dollars? Ofc it's absolutely ridiculous to go so many years without discovering the issue.

They are short of 624 K BTC.

On page 4 of the document it says:

Part 1: Assets/Liabilities and
cover the 624 408 BTC:

Arbitrage, coins donation, coins for
equity, cash for buying coins at MtGox
price!

Target: 50% covered

Which means they are still short 312K BTC.

[barwizi]

NO BTC-E representative, lol. i'm withdrawing mine from there ryt now.

[2Kool4Skewl]

I highly doubt malleability transactions caused all of this...

It's likely that Mark Karpeles and/or other insiders embezzled most if not all of it and that transaction malleability is being used as a smoke screen to cover up half a billion dollars of fraud.

Exactly.  What a total joke.  I can't believe they expect people to believe this transaction malleability crap.

How does a cold wallet leak anyway?  lol  By definition, a cold wallet is supposed to be completely segregated.

I feel sorry for everyone that got robbed.  That's what happened too.  They robbed all their customers blind.

Pathetic.

[samsonn25]

http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft


CRISIS STRATEGY PLAN"


 
Financial Assets and Liabilities
AssetsLiabilitiesBitcoins
2,000 BTC in the Hot Wallet624,408 BTC(Customers) +120 000 ( MtGox) -
 80 208 BTC From banned or suspicious accounts
Fiat
22,430,000 USD In the bank account (averaged across currencies)55,000,000 USD (but still unclear at this point)5,000,000 USD held by CoinLab5,500,000 USD held by DHS
Total
 
32,430,000 USD + 2,000 BTC ( MtGox av price 160 USD= 320,000 USD ) 55,000,000 USD + 744,408 BTC (MtGox av price 160 USD= 119,105,280 USD)

 
Other Assets
- 1.1 million of account and 550,000 verified customers - High volume of trading - Trained AML team and process - High publicity (broken but customers are still buying coins and depositing) - Valuable domain names: bitcoins.com, etc - New trading engine (Midas) - New brand and services ready to be launched (Bitcoin Cafe, Japanese wallet "Bitpocket")

 
Part 1: To reduce liabilities
The stakeholders of MtGox are not the owners, but everyone in Bitcoin. This is sad but the reality. The current situation will negatively affect everyone who owns or operates in Bitcoin. We will need to inject fresh coins inside the system in order to establish a basis to eventually clear the books by running the exchange (perhaps 200,000 coins). The costs of not doing so are incalculable at this stage.
Support from Bitcoin big players and core community - long term, high leverage:
Coins for equity, coin donations, and cash injections to buy coins at the cheap MtGox price are some options among many.
Bet on future profit to refill the lost coins - Long term, low leverage:
Regardless of malleability and regulatory issues, MtGox's main problems are massive robbery and poor bitcoin accounting. However, the business as an exchange is highly profitable and healthy when run properly.
(Please refer to the business plan draft attached)
 

 
MtGox business is healthy and profitable
 
Projection Draft
Income Statement
* April 1
st
, 2012 - March 31
st,
 2013** April 1
st
, 2013 - March 31
st,
 2014*** April 1
st
, 2014 - March 31
st,
 2015*** April 1
st
, 2015 - March 31
st,
 2016
(Amounts in thousands of USD
Net Sales1,35110,75031,50071,950
Cost of Goods Sold40100150200Gross Profit1,31110,65031,35071,750
Selling, General and Administrative Expenses 1)1,0997,63511,35015,900
Operating Income2123,01520,00055,850Interest Income671440Foreign Exchange Gains76--- Non Operating Result8271440Ordinary Income2943,02220,01455,890Corporate Taxes81,0226,16416,890
Net Income2862,00013,85039,0001) Breakdown of Selling, General and Administrative Expenses
* April 1
st
, 2012 - March 31
st,
 2013** April 1
st
, 2013 - March 31
st,
 2014*** April 1
st
, 2014 - March 31
st,
 2015*** April 1
st
, 2015 - March 31
st,
 2016
(Amounts in thousands of USD
Subcontracting Expenses 2)8143,6506,20010,000Accountant, Consultant and Lawyer Fees1673,3004,0004,000Commission Fees513404151,000Depreciation0125360400Advertising Expenses475160200Salary60105130150Other34085150
1,0997,63511,35015,900


 
Part 2: Shut down MtGox.com, launch new branding Big focus on the future
Letter from the CEO Admitting his errors and expressing desire to fix the situation by stepping back as a CEO. Blaming the technology implementation which was not sized and designed to deal with such level of transactions or to deal with malleability.
 
It’s time to step up and face reality by bringing a transition of respected advisors who will run things properly. In Japan, a CEO cannot resign until a new CEO is nominated. In that case customers knows that MtGox is still around and working, but under new management. Try to reduce the impact and raise stakeholder confidence, and eventually get Mark out. New branding, means that there are future-forward plans already in the works, and customers will see that MtGox actually has a plan in motion

 
Part 3: 1 month transition while updating the industry
In order for stakeholders to follow up on MtGox progress, we will use SNS platforms with constant positive communications. - Every new milestone reached will be announced: Team members, new marketing, progress on the technology implementation etc...
- The Customer support will stay operationa
l to deal with people who want to have access to their account/history
- During this period, the advisory board will be created,
 hopefully a new CEO can be chosen and try to reset and secure the trading engine platform. Expertise to find: Analysts, top class developers (crypto), IT security expert, marketing, Bitcoin experts, economists, execs (CFO, COO, CMO, etc)

[keithers]

NO BTC-E representative, lol. i'm withdrawing mine from there ryt now.

"John Doe" - BTC-E CEO