Mt. Gox's liquidation an its impact...

[Jr65]

I am far too new to Bitcoin to have a fully formed opinion on this matter. However, it seems like Mt. Gox's bankruptcy liquidator, and the way he decides to liquidate to creditors, could materially impact Bitcoin's price in the short term. I'd love to get some feedback from you guys/gals.

[1715664066]

1715664066

[1715664066]

1715664066

[1715664066]

1715664066

[esse83]

I am far too new to Bitcoin to have a fully formed opinion on this matter. However, it seems like Mt. Gox's bankruptcy liquidator, and the way he decides to liquidate to creditors, could materially impact Bitcoin's price in the short term. I'd love to get some feedback from you guys/gals.

He can't liquidate because it does not belong to MtGox. It will have to be returned back to it's customers.

[master-P]

If people recover some of their btc from gox, we'll see a good chunk of those coins for sale on other exchanges from people who got burned investing everything and would be happy just to recover some fiat of of it. Not everyone wants to hodl btc till it reaches the moon like some people here would try to make you believe.

[Jr65]

Thanks for your responses. I still fear that the Japanese Bankruptcy Court can do whatever it wants to do with the 200,000 BTC it controls. In other words, they could sell them and return the proceeds to creditors or return the BTC to its creditors, pro rata. If the Court succeeded in selling the 200,000 coins, it would brutalize BTC's price. Why is this not a real possibility? I'm not trolling for cheap coins, (I'm already all in at a average cost of approx. $495! Plus, I can't control the Court's decision!) I'm just very curious about pressing BTC matters that could impact us all.   

[piramida]

If the Court succeeded in selling the 200,000 coins, it would brutalize BTC's price. Why is this not a real possibility?

Because it is not a possibility. For any gov't body to sell some new internet commodity on some slovenian exchange? Can you imagine legal paper mountain that would be associated with? Maybe auctioned off as one piece, but it definitely would happen on their jurisdiction, i.e. in Japan.

[nuff]

The most ethical and most likely thing for the Japanese government to do is to issue those 200,000 bitcoins back to their owners, pro-rated according to their last recorded amount before the shutdown. If they try to liquidate 200k worth of bitcoins at once, they need to do so at market price, and at ard $500 per btc that's a huge amount of $100 million, from where is the money going to come from? I don't think they will liquidate below market price if they do then the Japanese government is just stupid and someone else benefits. In any case, it has no impact on btc's price. The worst case would be the Japanese government decided to keep those 200k bitcoins to themselves.

[Mythul]

I really hope that they are not stupid to sell all the coins at once.

[dreamspark]

The liquidators wil not sell on an exchange, they will sell below market price at auction , likely in blocks.

It is very likely that a large portion of these coins will end up being sold on exchanges for quick profit.

The chances of a Japanese liquidator paying out Bitcoins is very unlikely to say the least. There is also all the fiat owed to consider which needs to be repaid as well.

The time scale for his is likely years too. The simple fact is there is going to be a higher supply of coins which the market will need to soak up if there isn't new fiat to meet the increased supply, price will drop. How much by who knows but simple economics means it will.

[Odalv]

I really hope that they are not stupid to sell all the coins at once.

No single coin will be sold. They have to return 750k coins to customers !!!   Liquidating GOX means -> returninng $ and BTC to their customers.

[Jr65]

Wrong! The 200,000 BTC will be sold at a huge discount and customers will get either $0 or pennies on the dollar. "The Associated Press" is already forecasting that customers will get nothing. 

[GigaCoin]

its going to be a while before those coins are sold (if ever), not sure why people think this will happen overnight!

there's still a lot of legal mumbo jumbo remaining

[joehal]

Wrong! The 200,000 BTC will be sold at a huge discount and customers will get either $0 or pennies on the dollar. "The Associated Press" is already forecasting that customers will get nothing. 

Is it possible to sue the liquidators if somehow they'll "misplace" the bitcoins or by incompetence they'll sell the btc for much much lower than they are worth ?

[esse83]

Seems like almost everyone assumes that the 200k btc is the property of MtGox. Not sure why though. If not they cant liquidate it.

[johnny211]

Seems like almost everyone assumes that the 200k btc is the property of MtGox. Not sure why though. If not they cant liquidate it.

Probably because the court seemingly authorized the statement regarding the 200k BTC.

BTW, does anyone know why the liquidator would convert the BTC to fiat? Assuming 50% of the fiat and 75% of the BTC is lost, a pro-rata payout in kind would still screw the BTC creditors harder than corresponding fiat creditors. It would actually make more sense to buy BTC for some 30% of the remaining fiat and then doing something like a 35% pro-rata distribution. Converting all to fiat equals horrible capital destruction, is that really how liquidation should be done? Maybe I'm naive, but isn't the liquidator supposed to equitably protect the interests of the creditors? Pretty much all of GOX's debt should be account balances, so why screw the holders like this?

[Wilhelm]

Seems like almost everyone assumes that the 200k btc is the property of MtGox. Not sure why though. If not they cant liquidate it.

Probably because the court seemingly authorized the statement regarding the 200k BTC.

BTW, does anyone know why the liquidator would convert the BTC to fiat? Assuming 50% of the fiat and 75% of the BTC is lost, a pro-rata payout in kind would still screw the BTC creditors harder than corresponding fiat creditors. It would actually make more sense to buy BTC for some 30% of the remaining fiat and then doing something like a 35% pro-rata distribution. Converting all to fiat equals horrible capital destruction, is that really how liquidation should be done? Maybe I'm naive, but isn't the liquidator supposed to equitably protect the interests of the creditors? Pretty much all of GOX's debt should be account balances, so why screw the holders like this?

A liquidator cannot buy BTC since his job is to pay all fiat debts. BTC  isn't a currency in many countries.
So a BTC debt possibly has a lower (or zero) priority when liquidating.
Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

[joehal]

Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

Yes but the liquidator and judge's role is to impart justice and set things right. How is wasting the btc holders money, right ?  

[johnny211]

A liquidator cannot buy BTC since his job is to pay all fiat debts. BTC  isn't a currency in many countries.
So a BTC debt possibly has a lower (or zero) priority when liquidating.
Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

Excluding BTC debt Gox is still solvent, they just need to close their USD 30M short. Why is the liquidator even involved? None of this makes any sense.

[cosmofly]

You should worry more about US Gov coins those are likely to sell soon they even said they plan to sell, ppl forget about those coins.

[nuff]

A liquidator cannot buy BTC since his job is to pay all fiat debts. BTC  isn't a currency in many countries.
So a BTC debt possibly has a lower (or zero) priority when liquidating.
Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

Except that this 'product' also has the same characteristics that of a currency. It's fungible, has a price value and accepted by vendors in exchange for services and goods. They (the liquidators) will still need to find a way to deal with these 'product' that's worth about a hundred million dollars at least.

The fact that BTC is not officially recognized as a currency may be the big stumbling block for the legislators. Because it's not recognized as a currency, they can't redistribute those btc back as btc, they need to liquidate those btc to fiat, and only then can compensation take place, in the form of fiat as defined in bankruptcy laws. You always get a fire sale whenever a company goes down, the liquidators would want to as quickly as possible liquidate any assets they're able to get their hands on to pay back creditors.

This whole fiasco is unprecedented where there hasn't been any legal provision written yet to tell legislators what to do with this 'product'. What follows should be interesting, how the Japanese will handle this.

[Wilhelm]

A liquidator cannot buy BTC since his job is to pay all fiat debts. BTC  isn't a currency in many countries.
So a BTC debt possibly has a lower (or zero) priority when liquidating.
Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

Except that this 'product' also has the same characteristics that of a currency. It's fungible, has a price value and accepted by vendors in exchange for services and goods. They (the liquidators) will still need to find a way to deal with these 'product' that's worth about a hundred million dollars at least.

The fact that BTC is not officially recognized as a currency may be the big stumbling block for the legislators. Because it's not recognized as a currency, they can't redistribute those btc back as btc, they need to liquidate those btc to fiat, and only then can compensation take place, in the form of fiat as defined in bankruptcy laws. You always get a fire sale whenever a company goes down, the liquidators would want to as quickly as possible liquidate any assets they're able to get their hands on to pay back creditors.

This whole fiasco is unprecedented where there hasn't been any legal provision written yet to tell legislators what to do with this 'product'. What follows should be interesting, how the Japanese will handle this.

+1

We have international law on a new digital product/currency. This might be a good thing for bitcoin since countries now have to acknowledge bitcoin and take a stance on bitcoin and write up legislation or agreements to handle it.

I also beleive that converting BTC to fiat might be perceived as trading or speculation an I also believe a liquidator may not speculate and thus trade.
If any converting is to be done the BTC must be auctioned to pay off all first in line fiat debts.
Then they get into the next mess and that is the price of bitcoin since many debts are in bitcoin, if any money is left they will probably have to come to an agreement with all people holding bitcoin accounts.

A liquidator cannot buy BTC since his job is to pay all fiat debts. BTC  isn't a currency in many countries.
So a BTC debt possibly has a lower (or zero) priority when liquidating.
Owning a BTC in Gox would be like having bought a product and payed upfront, you simply will never receive the product or your money.

Excluding BTC debt Gox is still solvent, they just need to close their USD 30M short. Why is the liquidator even involved? None of this makes any sense.

1) "Insolvency is the inability of a debtor to pay their debt."
2) "The state of having liabilities that are greater than assets"

It is obvious that 1 applies.
Since Gox is shut down and doesn't have a real office what assets or income do they have? A few servers, corporate car, printer, desk stapler? (most of these cost money to run)

How can you say they are still solvent?