Questions to potential MtGox investors: are you sure you want to bail it out?

[jl2012]

Here I assume the "Crisis Strategy Draft" is authentic, as suggested here: https://twitter.com/paulbuitink/status/438428157948219392 . That means it requires 742408 BTC to cover Mark's ass.

Question 1: How do you acquire 742408 BTC? It's nearly 6% of all the existing bitcoin. Satoshi is probably the only person who holds such amount but I can't imagine he would bail out gox, nor sell a single satoshi to you. You may buy such amount from multiple early adoptors but you need to spend at least $0.22 billion for the deal even at a rate of $300/BTC

Question 2: Whether you buy the coins from Satoshi, from other early adopters, or your good self is Satoshi, you are releasing 6% of all bitcoin from dead cold wallet. That equals to 200 days of mining revenue and 5 times of FBI's holding. Do you think releasing such an amount in no time will cause a big chaos and crash in the market? How could you prevent this?

Question 3: If you have 742,408 BTC (whether you will buy it or already own it), why would you think you can earn more than this amount from gox in foreseeable future? With 1% fee you need a volume of 74,240,800 BTC to earn this amount. With 10,000 BTC per day, it will take you 20 years to recoup your investment. New markets are emerging and some have much lower fee, so I won't be surprised it would take >100 years to recoup your investment, if ever

Question 4: Taking 10% of your 742,408 BTC you can build the most solid exchange ever. You will attract all serious traders very soon. Why do you need the gox brand?

Question 5: Have you considered all the legal consequence of taking up a company with ongoing lawsuit with CoinLab and US DHS, and possibly the Japanese government?

Question 6: Have you considered the possibility that someone has taken all the 742,408 BTC and claims it was lost due to a security hole? How could you disprove this theory given the anonymous nature of bitcoin? For me this theory is much more plausible than someone kept draining the cold wallet and did not realize the problem until it became empty.

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My comments:

To be honest my biggest concern is question 2. The market cannot absorb such a huge amount if it is released in no time.

Of course, all these questions are based on the 742408 BTC assumption. If the amount is more reasonable, like 20,000 BTC, that could be a good deal.

Declaration: gox owes me nothing

[un_ordinateur]

I'm pretty sure that the plan is not to recoup all those bitcoins at once. Of course finding all this money would be impossible.

The plan is not to "bailout" Mt.Gox per se, but buy all it's assets, including it's clients. Scrap the employes, management, and software.

If I were them, I'd do something like this:

I'd open my exchange, with all gox's clients pre-registered on it. Those account would contain a certain amount of "points" equivalent to their Mt.Gox outstanding balance.

They I'd say something like that: "If you login on our exchange, we'll credit you... 5% of that amount. For every BTC you trade with us, we'll credit you back another 1% up to all your outstanding points, up to 1 BTC per year. (I'm throwing numbers here. I'm sure they'll plan things carefully)

That way, they just ensured success of their exchange, as they will have guaranteed thousands of clients. Yet the money they must advance upfront is a lot less than all the mtgox debt.


About question 5, if mtgox is foreclosed, and they buy all it's assets, then they dodge all the lawsuits.


About question 6, It can easily be at least disproved. Mt.Gox was stolen because they automated their payment system double-paid people. It -shoud- be pretty easy to check the logs of the automated payment system, and ensure that no other transactions happened on the hot wallet. Any transaction that the program did not authorise is very suspicious. If all the transactions that happened in the hot wallet were authorized by the program, then I think we can exclude internal theft.

[wtfvanity]

But then you wake up and realize it's not authentic... and then lock this thread.

[Sheldor333]

What if no one of the potential MtGox investors is interested in its debt? What if they are after something else. For me it would be foolish to buy all that debt from someone with no apparent reason. It makes no sense.

[un_ordinateur]

What if no one of the potential MtGox investors is interested in its debt? What if they are after something else. For me it would be foolish to buy all that debt from someone with no apparent reason. It makes no sense.

Of course! Tha's my point: They'll buy the dept... If it comes with the users. They want to buy users.

[ericdc30]

Here I assume the "Crisis Strategy Draft" is authentic, as suggested here: https://twitter.com/paulbuitink/status/438428157948219392 . That means it requires 742408 BTC to cover Mark's ass.

Question 1: How do you acquire 742408 BTC? It's nearly 6% of all the existing bitcoin. Satoshi is probably the only person who holds such amount but I can't imagine he would bail out gox, nor sell a single satoshi to you. You may buy such amount from multiple early adoptors but you need to spend at least $0.22 billion for the deal even at a rate of $300/BTC

Question 2: Whether you buy the coins from Satoshi, from other early adopters, or your good self is Satoshi, you are releasing 6% of all bitcoin from dead cold wallet. That equals to 200 days of mining revenue and 5 times of FBI's holding. Do you think releasing such an amount in no time will cause a big chaos and crash in the market? How could you prevent this?

Question 3: If you have 742,408 BTC (whether you will buy it or already own it), why would you think you can earn more than this amount from gox in foreseeable future? With 1% fee you need a volume of 74,240,800 BTC to earn this amount. With 10,000 BTC per day, it will take you 20 years to recoup your investment. New markets are emerging and some have much lower fee, so I won't be surprised it would take >100 years to recoup your investment, if ever

Question 4: Taking 10% of your 742,408 BTC you can build the most solid exchange ever. You will attract all serious traders very soon. Why do you need the gox brand?

Question 5: Have you considered all the legal consequence of taking up a company with ongoing lawsuit with CoinLab and US DHS, and possibly the Japanese government?

Question 6: Have you considered the possibility that someone has taken all the 742,408 BTC and claims it was lost due to a security hole? How could you disprove this theory given the anonymous nature of bitcoin? For me this theory is much more plausible than someone kept draining the cold wallet and did not realize the problem until it became empty.

---------------------
My comments:

To be honest my biggest concern is question 2. The market cannot absorb such a huge amount if it is released in no time.

Of course, all these questions are based on the 742408 BTC assumption. If the amount is more reasonable, like 20,000 BTC, that could be a good deal.

Declaration: gox owes me nothing

I can answer question 1. MtGox is probably in possession of a large amount of goxBTC so they can at least write off that part so it may not be ~740 KBTC.

Can't they just concentrate on tracking down who ran with the funds already? (NSA where are you when we need you?)

[un_ordinateur]

Can't they just concentrate on tracking down who ran with the funds already?

The leaked draft bailout plan talked about a few thousand GoxBTC being "locked" into a few suspicious account, accounts which I believe are those who used the malleability bug to get more BTC than they were owned.

[Loozik]

Questions to potential MtGox investors: are you sure you want to bail it out?

One bails out businesses that are operational. MtGox business was to facilitate trades. Maybe there were bail out discussions between Mark and potential investors. If there were such talks, they surely ended on the moment trading was halted or a few days prior to halting trading.

At the moment there is no business to bail out.