Warning: How many of you Bears have ever been a victim of a Short Squeeze?

[cypherdoc]

may I comment that questioning somebody weather or not they have been short squeezed is not sufficient warning to prevent such things.

Quite correct.

Covering comes not from the squeeze itself but during the subsequent pain.

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[cypherdoc]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

[Brassguy]

Well in terms of BTC, mtgox, and bankruptcy.... something about blood and turnips comes to mind...

[sgbett]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

*whistles innocently*

[User705]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

That sounds right but tracing XBT can be hard and even if they find it they can't seize it.  Fiat on the other hand would be both easy to trace and seize. 

[MAbtc]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

Assets would be liquidated. Why do you assume BTC would not be? I highly doubt that BTC could be exempted from liquidation for any reason, but I am not well versed in bankruptcy law (in Japan, no less).

After liquidation, creditors are repaid, ordered by priority, then pro rata based on what is left. What is this idea that "they'll be legally bound to return whatever form of property you had" based on?

I suspect that the law deems fiat adequate for repayment of such debts.....

[cypherdoc]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

Assets would be liquidated. Why do you assume BTC would not be? I highly doubt that BTC could be exempted from liquidation for any reason, but I am not well versed in bankruptcy law (in Japan, no less).

After liquidation, creditors are repaid, ordered by priority, then pro rata based on what is left. What is this idea that "they'll be legally bound to return whatever form of property you had" based on?

I suspect that the law deems fiat adequate for repayment of such debts.....

isn't BTC money? 

every gov't on the planet seems to recognize it as such.  why do you think they want their taxes from it and calls close to everyone who does business with it money transmitters?  if i owned BTC on gox and needed it to be repaid after BK, i'd take the BTC, not cash.

[smoothie]

here's a quick way to get your USD's out of Gox:

Buy Bitcoin!

The spread for this is going to tighten up real fast.

[smoothie]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

This would be ideal.

I'm not so sure people will get those coins out in any reasonable amount of time.

[smoothie]

Short-squeeze coming in the next few months (by early June)....

Watch!  

[MAbtc]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

Assets would be liquidated. Why do you assume BTC would not be? I highly doubt that BTC could be exempted from liquidation for any reason, but I am not well versed in bankruptcy law (in Japan, no less).

After liquidation, creditors are repaid, ordered by priority, then pro rata based on what is left. What is this idea that "they'll be legally bound to return whatever form of property you had" based on?

I suspect that the law deems fiat adequate for repayment of such debts.....

isn't BTC money? 

every gov't on the planet seems to recognize it as such.  why do you think they want their taxes from it and calls close to everyone who does business with it money transmitters?  if i owned BTC on gox and needed it to be repaid after BK, i'd take the BTC, not cash.

No precedent for that. No reason to think that choice exists, IMO. The only money that you must legally accept as repayment is fiat money. And I think BTC would be liquidated to fiat years before you could take repayment.

I don't know about "every government on the planet" recognizing it as such -- but that is not relevant here, nor is money transmission. And governments want their taxes on commodity trading as well, don't they? And how about Japan?

Regardless of anything, you have to admit that assuming that bankruptcy trustees will liquidate everything except bitcoin is a giant leap of faith. Do you have a legal basis for that? Regulators, bankruptcy courts and trustees do not necessarily cater to the logic of bitcoiners.

But who knows? I don't. But I wouldn't touch Gox -- I simply think there are better bets to be had.

[HeliKopterBen]

Gox is trading at about 0.2x other exchanges, meaning you only need to recover 20% of your bitcoins(plus legal fees, ect.) to break even in the event of bankruptcy, if you bought now.

[MAbtc]

Gox is trading at about 0.2x other exchanges, meaning you only need to recover 20% of your bitcoins(plus legal fees, ect.) to break even in the event of bankruptcy.

The conundrum for a long term bull: In the event of bankruptcy, Goxcoin holders risk receiving repayment of a % of their holdings years later based on a liquidation price far closer to the present. This means selling near the bottom and getting your fiat back when the price of BTC has risen by      ....

[ElectricMucus]

here's a quick way to get your USD's out of Gox:

Buy Bitcoin!

And that would result in a short squeeze because what? How is that even related to buying Bitcoins?

[ElectricMucus]

Somehow this looks reminiscent of ppl trading their pirate debt, or matthew's 10kUSD bet. I may be exaggerating but oh well

[cypherdoc]

Let's say gox goes belly up.

Does it really make sense that when the adjudicators are dividing up what little, and I mean little, spoils are left over after the years of litigation, that they'll say that these guys over here will get their dollars back but those guys over there with BTC won't?

No, they'll be legally bound to return whatever form of property you had on gox. It would be way better to come out of that with 90% discounted coins.

Assets would be liquidated. Why do you assume BTC would not be? I highly doubt that BTC could be exempted from liquidation for any reason, but I am not well versed in bankruptcy law (in Japan, no less).

After liquidation, creditors are repaid, ordered by priority, then pro rata based on what is left. What is this idea that "they'll be legally bound to return whatever form of property you had" based on?

I suspect that the law deems fiat adequate for repayment of such debts.....

isn't BTC money?  

every gov't on the planet seems to recognize it as such.  why do you think they want their taxes from it and calls close to everyone who does business with it money transmitters?  if i owned BTC on gox and needed it to be repaid after BK, i'd take the BTC, not cash.

No precedent for that. No reason to think that choice exists, IMO. The only money that you must legally accept as repayment is fiat money. And I think BTC would be liquidated to fiat years before you could take repayment.

I don't know about "every government on the planet" recognizing it as such -- but that is not relevant here, nor is money transmission. And governments want their taxes on commodity trading as well, don't they? And how about Japan?

Regardless of anything, you have to admit that assuming that bankruptcy trustees will liquidate everything except bitcoin is a giant leap of faith. Do you have a legal basis for that? Regulators, bankruptcy courts and trustees do not necessarily cater to the logic of bitcoiners.

But who knows? I don't. But I wouldn't touch Gox -- I simply think there are better bets to be had.

we don't know they'd liquidate the BTC since it's digital.  all physical property sure.

even if they did liquidate BTC held into BK to USD to pay you back, it still would be better assuming the USD price continues to go up from here.

[MAbtc]

we don't know they'd liquidate the BTC since it's digital.  all physical property sure.

even if they did liquidate BTC held into BK to USD to pay you back, it still would be better assuming the USD price continues to go up from here.

What we do know is that a) there is no legal basis or precedent to indicate that BTC would be exempt from liquidation, and b) there is no legal requirement to repay debts in any form other than fiat currency.

On the second point, I don't understand. I'm saying:

-Liquidate at current prices (whenever BK proceeds)
-Case moves through the system over a period of years
-Goxcoin holders are repaid based on the liquidation price --> What is the price of BTC against USD after years have gone by?

[cypherdoc]

we don't know they'd liquidate the BTC since it's digital.  all physical property sure.

even if they did liquidate BTC held into BK to USD to pay you back, it still would be better assuming the USD price continues to go up from here.

What we do know is that a) there is no legal basis or precedent to indicate that BTC would be exempt from liquidation, and b) there is no legal requirement to repay debts in any form other than fiat currency.

On the second point, I don't understand. I'm saying:

-Liquidate at current prices (whenever BK proceeds)
-Case moves through the system over a period of years
-Goxcoin holders are repaid based on the liquidation price --> What is the price of BTC against USD after years have gone by?

Its your sequence of events I disagree with.

I see liquidation of those coins late in the bk process if at all. Look how long the DOJ is taking with silk roads coins.  If I had goxusd right now, I'd be buying goxBTC at these 90% discounted prices and just waiting it out. You either get appreciated BTC at the end of the long bk process or more usd if they liquidate late in the process.  

Furthermore, if they open up withdrawals soon you can get your coins out immediately before everyone else.

[Peter R]

In regards to the liquidation of BTC in a MtGox bankruptcy event, I suppose it's possible, but I doubt it would happen.  

The important thing to remember is that the people making these decisions would be required to proceed in a manner that maximizes the assets returned to Gox creditors (i.e., the account holders owed Gox USD and Gox BTC).  Bitcoins would only be liquidated if this seemed like the prudent course of action from the point of view of the Gox creditors.  If liquidation is expected to return $0.25 on the dollar, then obviously the creditors would not be in favour of this.    

[MAbtc]

we don't know they'd liquidate the BTC since it's digital.  all physical property sure.

even if they did liquidate BTC held into BK to USD to pay you back, it still would be better assuming the USD price continues to go up from here.

What we do know is that a) there is no legal basis or precedent to indicate that BTC would be exempt from liquidation, and b) there is no legal requirement to repay debts in any form other than fiat currency.

On the second point, I don't understand. I'm saying:

-Liquidate at current prices (whenever BK proceeds)
-Case moves through the system over a period of years
-Goxcoin holders are repaid based on the liquidation price --> What is the price of BTC against USD after years have gone by?

Its your sequence of events I disagree with.

I see liquidation of those coins late in the bk process if at all. Look how long the DOJ is taking with silk roads coins.  If I had goxusd right now, I'd be buying goxBTC at these 90% discounted prices and just waiting it out. You either get appreciated BTC at the end of the long bk process or more usd if they liquidate late in the process. 

Furthermore, if they open up withdrawals soon you can get your coins out immediately before everyone else.

That's not bankruptcy you are talking about.

But of course, it wouldn't happen immediately. My point earlier was that from a long term bull's perspective, selling BTC at Point A and getting fiat down the line at Point B is a bad decision.

Like I said, if it happens, I highly doubt Goxcoin holders will be paid in BTC. Nothing you've said really challenges that, certainly not from a legal perspective.

In regards to the liquidation of BTC in a MtGox bankruptcy event, I suppose it's possible, but I doubt it would happen. 

The important thing to remember is that the people making these decisions would be required to proceed in a manner that maximizes the assets returned to Gox creditors (i.e., the account holders owed Gox USD and Gox BTC).  Bitcoins would only be liquidated if this seemed like the prudent course of action from the point of view of the Gox creditors.  If liquidation is expected to return $0.25 on the dollar, then obviously the creditors would not be in favour of this.   

That's all well and good. The fact is that the best interest of creditors is decided by the trustee. So while Goxcoin holders obviously prefer payment in BTC, the rest of the world (up to and including trustees in bankruptcy) is highly unlikely to view liquidating everything but the bitcoins as prudent.

I'm a long term bull -- most of the world isn't. If you expect bankruptcy courts to magically change the rules for bitcoin such that trustees in bankruptcy are now entering the role of financial speculators -- I don't think so.

For example, in a Chapter 7, stocks, bonds and other investments are generally considered non-exempt. Do you think trustees in bankruptcy decide which investments are good and which are bad? Do you think they liquidate the "bad investments" and distribute the rest -- perhaps a mish-mash of stocks, bonds and commodities --pro rata among creditors? No, they don't. If you think otherwise, I'd appreciate it if you could provide some examples. A trustee's role is to gather non-exempt property of the debtor, liquidate it and distribute the proceeds.

Like I said, I am not an expert on bankruptcy proceedings. But what you are both suggesting appears to have absolutely no basis in any legal system.

Having said that, this is all hypothetical and unlikely.