Gox Gone, Insolvent

[DeathAndTaxes]

If you read their documents, you will see that Mt Gox STILL does not understand that customer deposits are NOT "assets of Mt. Gox".   It is a complete shit show and I cannot wait for the perp walks because maybe that will wake some idiots up that this is not a game.

That is the crazy thing.  Customer deposits should never be listed on a company balance sheet unless that company is a bank.  Customer deposits should be segregated, independent of the company's accounts.  The revenue (in the form of fees) deducted from the customer deposits are transferred to the company's books as they occur (or daily in batches).

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[usabitcoinbuyer]

Like if I needed protection

Thanks Gox, very helpful.

They're getting magnanimous - it's to protect us from them!

[Rampion]

If you read their documents, you will see that Mt Gox STILL does not understand that customer deposits are NOT "assets of Mt. Gox".   It is a complete shit show and I cannot wait for the perp walks because maybe that will wake some idiots up that this is not a game.

That is the crazy thing.  Customer deposits should never be listed on a company balance sheet unless that company is a bank.  Customer deposits should be segregated, independent of the company's accounts.  The revenue (in the form of fees) deducted from the customer deposits are transferred to the company's books as they occur (or daily in batches).

Well, that is so crazy that is almost unbelievable IMO. If those leaked documents are even half true (which I cannot believe), then the people at Gox are just a bunch of criminals. Customer funds are just that, customer funds: and they should be kept completely segregated and should be 100% independent of the company's accounts. If they are considering customer funds "assets" they probably deserve to rot a long time in jail.

[richmke]

If you read their documents, you will see that Mt Gox STILL does not understand that customer deposits are NOT "assets of Mt. Gox".   It is a complete shit show and I cannot wait for the perp walks because maybe that will wake some idiots up that this is not a game.

Depends upon who holds the deposits. Some brokerage firms have a third party Trustee hold the Customer Deposits. In that instance, the customer deposit is never an asset of the Company, and will not show up on the Company's financial statements.

However, there are some companies, like utilities, apartment complexes, etc., that hold customer deposits in their accounts. Even if the accounts are physically separate, they are under the control of the Company. As such, they are company assets with an offsetting liability. Thus, they show up on the Company's financial statements.

[ex-trader]

However, there are some companies, like utilities, apartment complexes, etc., that hold customer deposits in their accounts. Even if the accounts are physically separate, they are under the control of the Company. As such, they are company assets with an offsetting liability. Thus, they show up on the Company's financial statements.

That's because they are an advance payment for services, thus are correctly held on financial statements as prepayments.

No one who sends cash or coins to an exchange is doing anything other than asking them to be held on their behalf as client funds, which should be segregated. The only time Gox or any exchange can claim a piece is when a transaction fee is charged.

[richmke]

That's because they are an advance payment for services, thus are correctly held on financial statements as prepayments.

Security deposits at Apartments are not pre-payments.

The only time Gox or any exchange can claim a piece is when a transaction fee is charged.

And for purchases/sales, profit/loss on trades, etc.

If you are going to commit to selling 1 BTC for $600, they need to know that you have the 1 BTC, and then to withdraw the BTC when the trade is executed. Like it or not, they have to have control of your BTC if you want to transact business. The question is whether they control the BTC on their books (and thus shows up on their balance sheet), or whether a 3rd party holds them and does the transactions at their direction.