Unilateral Statement Regarding Mt. Gox from an Insider

[btcx]

http://jesse.forthewin.com/blog/2014/02/unilateral-statement-regarding-fucked-up-shit-and-the-greater-good.html

[T.Stuart]

Thanks for the article.

Your proposed point stands out:

1. Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.

This is incredible. Really really bad news. I find it impossible to believe that this, if it happened, was only known to Mark and perhaps one or two key members of his staff. Others must have been aware of this.

If you are right, then the fact that the theft of such a large number of coins has been covered up for so long is extremely damaging.

[BITCOIN-PIZZA-DAY]

https://bitcointalk.org/index.php?topic=83794.0#post_toc_21

The event's scale was widely disputed; some report a theft of almost 500000 BTC due to related account hacking. However, these reports are sparse and disreputable. Closer inspection puts the losses at closer to 2500 BTC.

They proved they had 500k coins back then. But they were the only big exchange in june 2011. What if they actually had over one million?

[Mahn]

1. Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.

This is incredible. Really really bad news. I find it impossible to believe that this, if it happened, was only known to Mark and perhaps one or two key members of his staff. Others must have been aware of this.

If you are right, then the fact that the theft of such a large number of coins has been covered up for so long is extremely damaging.

He is only speculating in the blog post when he says that. No facts, just guesses.

[T.Stuart]

1. Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.

This is incredible. Really really bad news. I find it impossible to believe that this, if it happened, was only known to Mark and perhaps one or two key members of his staff. Others must have been aware of this.

If you are right, then the fact that the theft of such a large number of coins has been covered up for so long is extremely damaging.

He is only speculating in the blog post when he says that. No facts, just guesses.

That's why I said "your proposed point"

[btcx]

https://bitcointalk.org/index.php?topic=83794.0#post_toc_21

The event's scale was widely disputed; some report a theft of almost 500000 BTC due to related account hacking. However, these reports are sparse and disreputable. Closer inspection puts the losses at closer to 2500 BTC.

They proved they had 500k coins back then. But they were the only big exchange in june 2011. What if they actually had over one million?

We know that they had around 60,000 users back in June 2011 from the leaked database, but those were all early adopters and people may have thought nothing of leaving tens/hundreds of thousands of bitcoins on the exchange--it didn't represent that much money.  They could easily have had over a million bitcoin on deposit.  When bitcoin was $1, Gox may have thought that being down $800k wasn't insurmountable, but time went on and bitcoin continued to grow in value beyond their expectations, sending the target further and further out.  They were essentially short bitcoin, which clearly has been a bad bet but if they'd been able to keep up and continue pulling fees in bitcoin, it's conceivable they would have broken even at some point.  They could also have made money back by playing the arbitrage opportunity themselves and frontrunning.

I can imagine myself being in that position, having made the decision to go ahead fractional and try to pay people back, and then every day being in a slightly worse and worse position, incrementally.  Psychologically, it's hard draw the line once you're already in it, which is why pro traders determine their exit before they open their position.  Mark was probably struggling with not wanting to let down the community/customers, not wanting to hurt Bitcoin, not wanting lose his business, not wanting to go to prison.  If he'd been able to continue, all of those problems would be solved.  I'm sure the guy has been living with a lot of stress for the past few years.  While I'm on the topic, I should mention that personally, I'm not an ends-justify-the-means kind of guy.  If Kraken is ever insolvent, you will know immediately and we will all deal with the consequences together in a transparent and open manner.

[romerun]

if they knew they short bitcoin that much it's worth to manipulate the market and buy back cheap coin to cover up over time. We'll as the exchange itself it's doable since you the referee, being ahead of the game for one step, it's not worse than running fractional reserve and ended up like this

[Jeronimus]

Finally someone who posts a somewhat believable theory of what happened. But i can almost assure you that even this theory is most likely false.


We are to swallow that Karpeles had 750k BTC that went lost long ago, when BTC was worth 10-100, and we are to believe that he kept his mouth shut about it, to not harm his customers' funds by operating a fractional reserve secretly.

I am not buying this, because even if this was the case, with all the arbitrage he has/could have done for sure and be it just to return the funds back into the exchange, and certainly also had the exchange do it's own trades at no fees, those funds should be long recovered.

It seems to me like every time we falsify some stupid theory not standing a chance when approached from every angle, some Roger Ver or some other entity which surprisingly had very close contact to Karpeles pops us to deliver another story he hopes would be easier for us to buy.

I am fed up with the lies and want to know what went really on.


At this point, i start to believe that Roger Ver and his gang knew very well what was going on, and are now in a process of saving their own asses.

[Jeronimus]

Adding to the above. If Karpeles really lost the 750 _accidentally_ , he could have stepped forward and offered everyone with funds in the exchange some shares of the company to make up for their losses.

Trading shares of Gox along with BTC on the exchange would have allowed some which did not want the shares to at least get out some BTC out of this.

He of course did nothing of the above. So this goes more towards why the story presented here is MOST LIKELY false.


edit: In fact, he could STILL hand out shares of the company to everyone who has funds stuck in gox,  on a percentage basis relative to the funds invested IF and only IF he did not go completely bananas and create more IOUs than the supposed BTC that got stolen as well as the USD.

Unfortunately i think he did exactly that, create way more IOUs than the __supposed__ stolen funds.

Otherwise it would be two simple steps

1) give all with funds stuck a percentage in shares relative to their funds in gox and allow to trade shares along with BTC on gox

2) have the shareholders vote on a new CEO which is trusted by the community, giving gox as an exchange back it's value as with Karpeles as CEO the value would be ZERO and the exchange would close again soon

done!

[Bit_Happy]

I lived through the 2011 bs and am ready to see Gox gone forever.

[smoothie]

whoa whoa whoa whoa whoa...

The guy says first:

He met with Mark to discuss their Bitcoin Cafe just a few weeks ago.


Then he says:

I had funds stuck in MTGOX from Bitcoinica.



WTF? Why did you not ask Mark then about those funds dumbass? LOL  

[DeathAndTaxes]

if they knew they short bitcoin that much it's worth to manipulate the market and buy back cheap coin to cover up over time. We'll as the exchange itself it's doable since you the referee, being ahead of the game for one step, it's not worse than running fractional reserve and ended up like this

Except when the exchange rate continued to explode upward for the better part of two years.  Suddenly a $2M liability became a $1B liability (at the peak price).  It wouldn't be a problem unless something happened that cause everyone to flood to the door at the same time.