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Author Topic: This Gox mess will drag on for many years - USD balances are protected  (Read 1519 times)
nmtrader100
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March 01, 2014, 01:40:34 AM
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There were a lot of money in USD balances and it is unclear how this will be handled.  It seems that USD balances are protected under current law, but the problem is that there was a lot of trading going on after the theft when Gox said nothing was wrong (this is criminal by the way).  This is one reason why the price of BTC fell so low after the theft compared to the other exchanges-- people in the know rushed to turn their BTC into USD for this very reason.  This is also criminal.  They will have to roll back all trades to the time of the theft and separate the bitcoin balances from the USD balances.  All of this will be debated and dragged on in court for many years.  What a mess!
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DeathAndTaxes
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March 01, 2014, 01:46:59 AM
 #2

There were a lot of money in USD balances and it is unclear how this will be handled.  It seems that USD balances are protected under current law, but the problem is that there was a lot of trading going on after the theft when Gox said nothing was wrong (this is criminal by the way).  This is one reason why the price of BTC fell so low after the theft compared to the other exchanges-- people in the know rushed to turn their BTC into USD for this very reason.  This is also criminal.  They will have to roll back all trades to the time of the theft and separate the bitcoin balances from the USD balances.  All of this will be debated and dragged on in court for many years.  What a mess!

Well there is also the issue that MtGox somehow doesn't have enough USD to cover the USD owed to users.    Exactly how that happened who knows?  Maybe their bank network also suffered from "check malleability".
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March 01, 2014, 02:00:47 AM
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There were a lot of money in USD balances and it is unclear how this will be handled.  It seems that USD balances are protected under current law, but the problem is that there was a lot of trading going on after the theft when Gox said nothing was wrong (this is criminal by the way).  This is one reason why the price of BTC fell so low after the theft compared to the other exchanges-- people in the know rushed to turn their BTC into USD for this very reason.  This is also criminal.  They will have to roll back all trades to the time of the theft and separate the bitcoin balances from the USD balances.  All of this will be debated and dragged on in court for many years.  What a mess!
I hope this happens as I had several thousand dollars in my account. When the price dropped dumb me converted USD into BTC.
I didn't have the inside info though. Sad
When did the actual theft occur?
 
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March 01, 2014, 05:06:04 AM
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Are they protected? Are you sure? I haven't read much up on it, but I'd presume they are insured. And if the company is bankrupt who are you thinking will cover your losses for this Japanese company?
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March 01, 2014, 08:41:29 AM
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As the price plunged I bought 3.4 BTC at $650.

Are they going to allow BTC withdrawals anytime soon or ever? Or do I just eat it?
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March 01, 2014, 08:56:58 AM
 #6

As the price plunged I bought 3.4 BTC at $650.

Are they going to allow BTC withdrawals anytime soon or ever? Or do I just eat it?

Don't you read the news? One way or another the coins are gone. Sorry but that's the reality of it.
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March 01, 2014, 09:26:11 AM
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Sounds like they are working on it but nothing set in concrete. bad news nonetheless.
nmtrader100
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March 01, 2014, 01:45:32 PM
 #8

USD balances were segregated and held in a Japanese bank.  The reason they continued to allow trading after the theft was so Gox management and others could get rid of their coins.  I'm sure they have withdrawn "their" money at this point.  Any withdrawals from the bank will end up being scrutinized during the bankruptcy hearings and these people will end up going to jail. 
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March 01, 2014, 02:09:00 PM
 #9

There were a lot of money in USD balances and it is unclear how this will be handled.  It seems that USD balances are protected under current law, but the problem is that there was a lot of trading going on after the theft when Gox said nothing was wrong (this is criminal by the way).  This is one reason why the price of BTC fell so low after the theft compared to the other exchanges-- people in the know rushed to turn their BTC into USD for this very reason.  This is also criminal.  They will have to roll back all trades to the time of the theft and separate the bitcoin balances from the USD balances.  All of this will be debated and dragged on in court for many years.  What a mess!

Well there is also the issue that MtGox somehow doesn't have enough USD to cover the USD owed to users.    Exactly how that happened who knows?  Maybe their bank network also suffered from "check malleability".
Good one sir.
Mark transfers funds to his own bank account..3,2,1.. MtGox missing USD balances.


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SixSignatory
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March 01, 2014, 02:15:04 PM
 #10

Some judge is going to make a list a assets (very small relatively, and probably includes cash accounts unless this dude was simply spending the cash), and a lits of liabilities (huge).  Liabilities will be represented by debt holders who will form a line (usually following bankruptcy law -Japan I guess) and the assets will quickly get paid out (sometimes fractionally) to the folks at the head of the line.  You will be at the back of the line, rest assured - probably simply because you are not local and not Japanese.
TheFootMan
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March 01, 2014, 02:45:34 PM
 #11

Well, I would assume this is complicated


I am not a lawyer..

Let's assume a big investor purchased bitcoin for 100K USD at MTGox.

He bought at 100 a long time ago, and kept coins at MtGox. His transfer records showed 100K USD transferred. MtGox's bank shows 100K USD received.

Yet, he sells everything at 200 when price goes down right before MtGox shuts down. He now has 200K USD in GoxUSD.

GoxUSD exists merely as entries in MtGox's database. This database can be easily deleted along with backups, then it can be claimed that there were no backups, and the HDD containing the live system crashed, got stolen, lost, accidentally deleted, keys to encrypted volumes lost or whatever excuse MtGox comes up with. Then there will be no record of that 100K USD gain, and it would be very hard to prove that you have more than 100K USD with MtGox. Maybe you didn't buy bitcoins, maybe you just stored the money there, where would the evidence be? If you bought bitcoins at MtGox, this would still only be an entry in their database, there would be no evidence on the block chain, unless you transferred bitcoins outside mtGox.

You could've had screenshots. But these could be doctored. What would be the difference between someone depositing 100K USD and claiming to have 200K USD on MtGox, vs. someone depositing 5K BTC very early on, and then claiming to have 100K USD today? Well, if you look isolated at the price increase, this might just be true, but it's a bigger chance that this person just traded, and maybe have 15K MtGox USD and not 100K MtGox USD today.

Since probably MtGox does not have a license to make MtGox USD, the only hard evidence you have is the amount transferred to MtGox.

There will likely be some false claims asking for more money than people actually have on MtGox. If MtGox records is not presented in court, it's quite likely that all numbers claimed to exist in the MtGox database will be declared irrelevant, and your only chance is to get back your initial investment with a haircut, which of course would be better than nothing.

Again I am not a lawyer, but it seems to me this is a distinct possibility. If something cannot be proved without reasonable doubt, I think it will be tossed out.
Bluemustang
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March 01, 2014, 06:26:12 PM
 #12

I am just glad to see gox dead.

Hopefully now bitcoins can come back up.
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