Gox Exit/Entrance Speculation

[Manticore]

What if this draft is some type of ploy that Karpeles released to make it look like a third party is involved for a potential purchase. This explains why it was knowledgeable yet poorly written. Maybe he is actually planning to sell the functional Mt Gox assets to a company that he owns in a different jurisdiction for pennies (so he can back out of the liability and start fresh) then install a figurehead or partner to run the new 'Gox' while he silently owns shares in the background through a nominee shareholder. He can then train the new CEO, etc.

Maybe that's their plan.....and they released the 'leak' draft on purpose. Conspiratorial but very possible.

Please give me a little street cred and humor me before you start dismissing this outright. I've been correct up until this point (see below).

https://bitcointalk.org/index.php?topic=476340.msg5353565#msg5353565
https://bitcointalk.org/index.php?topic=484430.msg5353489#msg5353489

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

[MAbtc]

Probably not ideal to leak a draft that indicates that you are engaging in blatantly illegal business practices, and planning to continue to do so.

[JCviggen]

I just wonder who wrote the draft. It's written as an outside opinion of Mt.Gox.

Mark wouldn't write:

The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company

It all seems like a comment on Gox, with some suggestions of what to do next, but it is not obvious how the author would know how many coins (if any) were stolen or lost.

[humanitee]

Probably not ideal to leak a draft that indicates that you are engaging in blatantly illegal business practices, and planning to continue to do so.

Pretty sure Mark has a dartboard with cool computer phrases on it like "take down site", "lose coins", "make announcements soonish", "purchase similar domain", etc., that he throws darts at. Competency/knowledge isn't the Goxxian strong suit.

[Manticore]

I don't know Japanese law. From what I understand, Bitcoin is completely unregulated and they have a 'hands off' approach. I'm not sure it would be illegal. In the U.S, sure. Please correct me on this.

And even if the leak itself was truly an accident, this might still be his best last gasp attempt. Perhaps the document was real, accidentally leaked, but he is trying to partner up with someone somehow. He will find no takers in the reputable BTC community.

It looks to be a third-party consulting/private equity preliminary evaluation using insider information and written with them, obviously. Stating it "certainly deserves to [go bankrupt] as a company" is the kind of contrition that people want to hear, of course.

[MAbtc]

I don't know Japanese law. From what I understand, Bitcoin is completely unregulated and they have a 'hands off' approach. I'm not sure it would be illegal. In the U.S, sure. Please correct me on this.

There seems to be a common misconception about what it means to be "unregulated". It doesn't mean that businesses engaged in the exchange of bitcoins are not subject to any laws.

I am confident that operating an insolvent corporation and engaging in securities fraud (front running, insider trading) are illegal under Japanese law.

[Peter R]

I think it all depends on whether the 750,000 BTC loss is true or false.  As far as I know, the only source for this number was that leaked "Restructuring" document of dubious intent.  

The way I'm leaning now is that the 750,000 BTC loss is pure FUD, leaked so that Gox depositors are more likely to settle for less than the par value of the Gox IOUs.

I think that Gox has lost customer funds and Gox is insolvent, but not nearly to the degree that a 750,000 BTC loss would imply.  GoxBTC's sold as low as 0.07 BTC = 1 GoxBTC on BitcoinBuilder, and right now the price is 0.14.  If a company looking to takeover Gox knows that the solvency situation is not that bad, they could buy up a great deal of GoxBTCs at less than 20% of face value.  In fact, maybe that is what is happening now.  Perhaps this is all it takes to regain solvency, or perhaps they cut a deal with remaining depositors for 500 mBTC on the coin.  With the current FUD in the air, I bet a lot of depositors would jump at a chance to get 50% of their funds back.  

If the 750,000 BTC loss is true, I think it is game over for Gox.  If the 750,000 BTC loss is true, I also think this was an insider job.

[ElectricMucus]

I think the most obvious motive for a conspiracy would be just to fake insolvency (can it be proven?) and run with the Bitcoins. In that regard it would make perfect sense to 'leak' said document with the information it contains.

[Manticore]

There seems to be a common misconception about what it means to be "unregulated". It doesn't mean that businesses engaged in the exchange of bitcoins are not subject to any laws.

I am confident that operating an insolvent corporation and engaging in securities fraud (front running, insider trading) are illegal.

I am not. Front-running is illegal if one is regulated by the SEC. Is it illegal if one is unregulated? It is illegal to trade stocks using insider information, but not Bitcoin. There are no regulations other than MSB requirements that provide any legal avenues for this......I suppose it would be a Civil Court issue. Bitcoin is not a security.

[Manticore]

I think the most obvious motive for a conspiracy would be just to fake insolvency (can it be proven?) and run with the Bitcoins. In that regard it would make perfect sense to 'leak' said document with the information it contains.

This too! Yep. And simpler. He starts over with a massive cache of coins.....

Perhaps it began unraveling with a few lost coins and then he decided to take what he could while he could.

All speculation, of course.

[Manticore]

Pretty sure Mark has a dartboard with cool computer phrases on it like "take down site", "lose coins", "make announcements soonish", "purchase similar domain", etc., that he throws darts at. Competency/knowledge isn't the Goxxian strong suit.

Agreed.

[MAbtc]

There seems to be a common misconception about what it means to be "unregulated". It doesn't mean that businesses engaged in the exchange of bitcoins are not subject to any laws.

I am confident that operating an insolvent corporation and engaging in securities fraud (front running, insider trading) are illegal.

I am not. Front-running is illegal if one is regulated by the SEC. Is it illegal if one is unregulated? It is illegal to trade stocks using insider information, but not Bitcoin. There are no regulations other than MSB requirements that provide any legal avenues for this......I suppose it would be a Civil Court issue. Bitcoin is not a security.

I'd say good luck to anyone pushing that argument. Again, that the FSA has not chosen to regulate bitcoin as yet, and the fact that there are no regulations specific to bitcoin do not mean that these businesses are not subject to applicable laws. It's a matter of which regulations bitcoin falls under, and when the FSA or other appropriate agency decides to pursue that matter.

[Manticore]

I'd say good luck to anyone pushing that argument. Again, that the FSA has not chosen to regulate bitcoin as yet, and the fact that there are no regulations specific to bitcoin do not mean that these businesses are not subject to applicable laws. It's a matter of which regulations bitcoin falls under, and when the FSA or other appropriate agency decides to pursue that matter.

I get what you're saying -- fraud is still illegal. But securities laws are very specific. Insider trading laws are much more limited in the commodities markets (I was regulated by the CFTC, so I know a little about this). Insider trading laws don't exist with Bitcoin.

Outright theft is illegal, of course. Front-running? I don't see how that would be considered illegal but could certainly be grounds for a Civil case.

[MAbtc]

I'd say good luck to anyone pushing that argument. Again, that the FSA has not chosen to regulate bitcoin as yet, and the fact that there are no regulations specific to bitcoin do not mean that these businesses are not subject to applicable laws. It's a matter of which regulations bitcoin falls under, and when the FSA or other appropriate agency decides to pursue that matter.

I get what you're saying -- fraud is still illegal. But securities laws are very specific. Insider trading laws are much more limited in the commodities markets (I was regulated by the CFTC, so I know a little about this). Insider trading laws don't exist with Bitcoin.

Outright theft is illegal, of course. Front-running? I don't see how that would be considered illegal but could certainly be grounds for a Civil case.

See what the FSA has to say about it. And then ponder how the law could conceivably be interpreted. I can't be bothered, personally.

[Manticore]

See what the FSA has to say about it. And then ponder how the law could conceivably be interpreted. I can't be bothered, personally.

http://online.wsj.com/news/articles/SB10001424052702304834704579402751676012112?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304834704579402751676012112.html

"Bitcoin isn't a currency; it works as an alternative to currencies, like gold," an FSA spokesman said Monday. "The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight."

[pungopete468]

See what the FSA has to say about it. And then ponder how the law could conceivably be interpreted. I can't be bothered, personally.

http://online.wsj.com/news/articles/SB10001424052702304834704579402751676012112?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304834704579402751676012112.html

"Bitcoin isn't a currency; it works as an alternative to currencies, like gold," an FSA spokesman said Monday. "The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight."

Does an exchange record earnings in Bitcoin or in fiat currency? That makes absolutely no sense; exchanges profit in cash, pay taxes on cash, and operate in cash.

[thelema93]

There are many powerful people who hate bitcoin and therefore hate Gox. They faked the document to try and bring a total collapse of one or both. Gox reacted by stopping all trading to save bitcoin price. They will announce something soon about the phoney document and that they are merging with another company - that will restore confidence before they then re-start trading.

[MAbtc]

See what the FSA has to say about it. And then ponder how the law could conceivably be interpreted. I can't be bothered, personally.

http://online.wsj.com/news/articles/SB10001424052702304834704579402751676012112?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304834704579402751676012112.html

"Bitcoin isn't a currency; it works as an alternative to currencies, like gold," an FSA spokesman said Monday. "The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight."

That's what I meant by "other appropriate agency." Bitcoin must fall under the purview of a regulatory agency. I meant actual laws -- not a stated position which can be reversed.

[Manticore]

That's what I meant by "other appropriate agency." Bitcoin must fall under the purview of a regulatory agency. I meant actual laws -- not a stated position which can be reversed.

But if that 'other agency' does not have laws on the books that pertain to front-running, etc etc, then it is not illegal. And only FSA would have those laws. Does that make sense?

In the U.S., Bitcoin is regulated under FINCEN (MSB). They have no avenue to regulate front-running or insider trading. Insider trading in Bitcoin is 100% legal. If it were regulated by the SEC it would be illegal.

I'm not an attorney; this is not legal advice.

[ibrahim11]