SaveGox.com

[andy-bc]

I have one suggestion to Sunlot: Pay out all BTC balances of 1 BTC or less than BTC in full at once.

I second this motion. This would lower the cost and effort of the subsequent operations related to creditors' equity.
Moreover, such action might help to restore some confidence in Bitcoin amongst many (and possibly: not well-off) individuals who tried to buy a fraction of bitcoin out of curiosity and got Goxxed instead.

[JorgeStolfi]

I have one suggestion to Sunlot: Pay out all BTC balances of 1 BTC or less than BTC in full at once.

I second this motion. This would lower the cost and effort of the subsequent operations related to creditors' equity.
Moreover, such action might help to restore some confidence in Bitcoin amongst many (and possibly: not well-off) individuals who tried to buy a fraction of bitcoin out of curiosity and got Goxxed instead.

Yeah, it may get them confident enough to buy TWO bitcoins and leave them in the New MtGOX.

[andy-bc]

I have one suggestion to Sunlot: Pay out all BTC balances of 1 BTC or less than BTC in full at once.

I second this motion. This would lower the cost and effort of the subsequent operations related to creditors' equity.
Moreover, such action might help to restore some confidence in Bitcoin amongst many (and possibly: not well-off) individuals who tried to buy a fraction of bitcoin out of curiosity and got Goxxed instead.

Yeah, it may get them confident enough to buy TWO bitcoins and leave them in the New MtGOX.

Perhaps it may, but I rather doubt it.
Believe it or not, but when I wrote 'some confidence in Bitcoin' I meant literally Bitcoin and not any particular exchange or rehabilitation project.
Right now, Bitcoin does need as much good public relations as it can get, and a quick and full compensation for the small-fish victims of the MTGox disaster would constitute good PR indeed.
A large group of angry customers who get back their funds means many less people who have (somewhat understandable) motivation to actively criticize and oppose the whole Bitcoin project.

Besides, the idea of compensating smaller creditors with some preference over bigger creditors appeals to my sense of justice. (Despite the fact that I do not belong to the former group).

[JorgeStolfi]

Believe it or not, but when I wrote 'some confidence in Bitcoin' I meant literally Bitcoin and not any particular exchange or rehabilitation project.
Right now, Bitcoin does need as much good public relations as it can get, and a quick and full compensation for the small-fish victims of the MTGox disaster would constitute good PR indeed.
A large group of angry customers who get back their funds means many less people who have (somewhat understandable) motivation to actively criticize and oppose the whole Bitcoin project.
Besides, the idea of compensating smaller creditors with some preference over bigger creditors appeals to my sense of justice. (Despite the fact that I do not belong to the former group).

The idea of prioritizing small clients is not bad by itself, but that could perhaps be proposed to the liquidation court.  AFAIK, Japanese liquidation law already establishes a "socially just" priority scheme: first any unpaid salaries and benefits, then actual creditors (banks, suppliers, landlords, contractors, utilities, etc.), and lastly investors.  I don't know where MtGOX clients would fit in this priority ranking.

The Sunplot proposal obviously cannot change the priorities of employees and actual creditors; the court could not possibly agree to that.  It apparently inserts the new owners and managers, as well as the expert investigator (Mr. Karpelès?) into this ranking, before the clients.  Isn't that so?

There is also the question of what should count as the claim of a client against MtGOX:  (1) the account balance he had at some point before the final shutdown (when, exactly?) according to MtGOX's internal ledgers, or (2) the total amount he deposited, minus the total amount he withdrew?   It is known which approach the liquidators will follow?

Since it is possible that the ledgers may have been altered with fake trades, or that some clients may have used insider knowledge or other fraudulent means while trading, approach (2) would seem safer, besides being arguably more just.  (If we were to trust the crowd analyses of the leaked MtGOX database -- which of course can be itself fake -- Mark and several of his friends are among the largest BTC balances.)

Perhaps the implicit aim of the Sunplot proposal is also to ensure that any distribution of coins will follow approach (1), rather than (2) or some other scheme that would exclude suspicious balances?

[hardpick]

I have one suggestion to Sunlot: Pay out all BTC balances of 1 BTC or less than BTC in full at once.

I second this motion. This would lower the cost and effort of the subsequent operations related to creditors' equity.
Moreover, such action might help to restore some confidence in Bitcoin amongst many (and possibly: not well-off) individuals who tried to buy a fraction of bitcoin out of curiosity and got Goxxed instead.

I also think this is a good idea

50 % less creditors to deal with may make recovery quicker.


please note I think sunlot are buying mtgox at a bargain price
if mtgox had not "stuffed up" and lost all our money it could be worth as much as $700 mil ( about 700,000 customers at $100 per customer . )

at present I believe sunlot is the best option -see  sunlot FAQ

I would also like to see sunlot put some money in --- like $20 mil in a escrow account

-- okcoin and other plans are still un known - so cannot compare ----

[edmundedgar]

Believe it or not, but when I wrote 'some confidence in Bitcoin' I meant literally Bitcoin and not any particular exchange or rehabilitation project.
Right now, Bitcoin does need as much good public relations as it can get, and a quick and full compensation for the small-fish victims of the MTGox disaster would constitute good PR indeed.
A large group of angry customers who get back their funds means many less people who have (somewhat understandable) motivation to actively criticize and oppose the whole Bitcoin project.
Besides, the idea of compensating smaller creditors with some preference over bigger creditors appeals to my sense of justice. (Despite the fact that I do not belong to the former group).

The idea of prioritizing small clients is not bad by itself, but that could perhaps be proposed to the liquidation court.  AFAIK, Japanese liquidation law already establishes a "socially just" priority scheme: first any unpaid salaries and benefits, then actual creditors (banks, suppliers, landlords, contractors, utilities, etc.), and lastly investors.  I don't know where MtGOX clients would fit in this priority ranking.

The Sunplot proposal obviously cannot change the priorities of employees and actual creditors; the court could not possibly agree to that.  It apparently inserts the new owners and managers, as well as the expert investigator (Mr. Karpelès?) into this ranking, before the clients.  Isn't that so?

IANAL, but IIUC rehabilitation requires that you actually become solvent; You can't just unilaterally cram down your debts to everybody, even if the majority of creditors agree. An example of how this has actually worked would be Intrade, where the founder died trying to climb Mount Everest and the new management inherited a company without the money they should have had. You can follow what happened here:
http://www.intrade.com/v4/home/latest-news/

The key point about this is that they need to get creditors to agree to give up their claims on enough of the debt to make the company solvent. In Intrade's case they were missing less than half of the money, and they had a good chance of getting the rest back through litigation (which they ultimately did). Since it's a voluntarily agreement between the company and each individual creditor, they can apply whatever terms they want to, as long as each creditor is prepared to accept them. Apparently Intrade didn't bother asking people owed less than $1000 to agree to forbearance.

The problem here is that if you've only got the order of 20% to 25% of what you owe, it only takes a small proportion of creditors to say "No, I insist that you pay me in full" to torpedo the whole thing. Presumably that (plus the general mendaciousness and shadiness of the people involved) is probably why the court hasn't been taking the idea very seriously.

[JorgeStolfi]

The problem here is that if you've only got the order of 20% to 25% of what you owe, it only takes a small proportion of creditors to say "No, I insist that you pay me in full" to torpedo the whole thing. Presumably that (plus the general mendaciousness and shadiness of the people involved) is probably why the court hasn't been taking the idea very seriously.

Not disagreeing, just observing that the "concrete" debts (salaries, contractors, landlord, etc.), if any, must be much less than the remining assets.  So these  could get paid in full by liquidation.

I stil don't know how the clients will be handled by the liquidation court.  Will they be considered normal creditors, together with contractors and competing with them; or will they be considered a lower priority class?

[edmundedgar]

Another question for Jon. (I guess he'll answer my previous one when he wakes up.)

IIUC Mark Karpeles personally is a large creditor of Mt Gox the company, with a lot of bitcoins in his own exchange. A liquidation would put the claims of directors of the company last, but in rehabilitation you're supposed to pay everyone what they're owed, unless they specifically agree to forbearance.

Does this mean that Sunlot would be paying a large proportion of the remaining coins to Mark personally? If not, what would be the legal basis for not paying him?

[JorgeStolfi]

please note I think sunlot are buying mtgox at a bargain price
if mtgox had not "stuffed up" and lost all our money it could be worth as much as $700 mil ( about 700,000 customers at $100 per customer . )

This is quite incorrect. First, for the purposes of a recovery plan, each customer is worth a NEGATIVE amount equal to its account balance (that is what MtGOX owes him), plus a positive amount equal to the fees that he is expected to generate over, say 2 years.

IIRC, the sum of the accounts was found to be about 800'000 bitcoins, worth about 400'000'000 USD at current prices, plus a large amount of dollars.  That is the NEGATIVE part.

For the positive part, only active customers count; inactive customers, that do not trade, generate no income. IIRC, according to analysis of the database leak by @rpietila,  MtGOX had around 70'000 active customers, and that with a very generous definition of "active".  To pay 100 US$ of trading fees, a customer would have to trade a lot.  If the NewMtGOX decided to charge significant maintenance fees, most of those 70'000 customers would probably close their accounts.  So this positive term -- the value of MtGOX's customer base -- is very small, maybe only 1/100 of the negative term above.

The significant positive terms in the evaluation of MtGOX are the bitcoins and dollars that MtGOX actually had (I lost count, was it 220'000 BTC?).  Adding everything gives a huge NEGATIVE value for the company.  Who would pay even a satoshi for the "privilege" of having to pay hundreds of millions of dollars of debts?

The Sunlot proposal makes sense for them only because they propose to assume only the positive terms above, spend some of that money for certain expenses, and then perhaps distribute the crumbs to customers, thus declaring the debts extinct.

[Gyrsur]

*listen*

[sturle]

Two more questions:
A significant amount of BTC balances belong to very old accounts which haven't been touched for years.  93,442 BTC, 454,849 USD, 23,799 EUR, etc, in accounts not touched since 2012 or earlier.  MtGox had a clause in their ToS which allowed them to close accounts which hadn't been logged in to in more than 6 months.  Will those account owners be counted as creditors, or will the clause take effect and the account considered closed?  This will allow a significant higher payback to users.

Will there be a claims process where people have to actively make their claims?  If so, what happens to assets not claimed in this process?  Would payouts to the remaining creditors increase if some creditors fail to make their claim?

[Xelpherpolis]

Wouldn't trust it as far as I can throw it, something is just not right here..

[Nagle]

There is also the question of what should count as the claim of a client against MtGOX:  (1) the account balance he had at some point before the final shutdown (when, exactly?) according to MtGOX's internal ledgers, or (2) the total amount he deposited, minus the total amount he withdrew?   It is known which approach the liquidators will follow?

Approach (2) is the standard in US law. This was a big deal in the Madoff case, because there were lots of Madoff customers with huge account balances representing Madoff trades that never happened. But Madoff customers are being paid off based on actual deposits minus withdrawals, ignoring fictitious gains.

(There's some litigation over this in the Madoff case because the scam went on for 20 years, and some long-time Madoff customers want adjustments for US dollar inflation over the years. But that's not a big issue with Mt. Gox.)

[Anextech]

Didnt Madoff took alot of money out?

[JorgeStolfi]

Some posts on another thread about this topic:

US way of computing client claims probably hold for Japan too:
https://bitcointalk.org/index.php?topic=178336.msg6650519#msg6650519

Example of the US way of evaluating client claims vs database balances:
https://bitcointalk.org/index.php?topic=178336.msg6653000#msg6653000

Will clients get their 80% back:
https://bitcointalk.org/index.php?topic=178336.msg6654273#msg6654273

Comparison with bitmarket.eu/bitalo:
https://bitcointalk.org/index.php?topic=178336.msg6654566#msg6654566

Possible motivations of Sunlot:
https://bitcointalk.org/index.php?topic=178336.msg6655051#msg6655051

Who would pay 200'000 BTC for 16.5% of a startup:
https://bitcointalk.org/index.php?topic=178336.msg6655447#msg6655447

What MtGOX 2.0 should do to be trusted:
https://bitcointalk.org/index.php?topic=178336.msg6656213#msg6656213

[Nagle]

Didnt Madoff took a lot of money out?

Yes, he did. It was taken away from him and given back to investors. Here's the auction of all his personal stuff. Here's the auction of his Manhattan penthouse. The auction of his boat.  You get the idea. Madoff himself is in Federal prison for the rest of his life.

[sturle]

There is also the question of what should count as the claim of a client against MtGOX:  (1) the account balance he had at some point before the final shutdown (when, exactly?) according to MtGOX's internal ledgers, or (2) the total amount he deposited, minus the total amount he withdrew?   It is known which approach the liquidators will follow?

Approach (2) is the standard in US law. This was a big deal in the Madoff case, because there were lots of Madoff customers with huge account balances representing Madoff trades that never happened. But Madoff customers are being paid off based on actual deposits minus withdrawals, ignoring fictitious gains.

There main difference between this case and Madoff, is that the trades actually happened, and people were making their own trading decisions.

Several poker sites have gone bankrupt over the years.  How were their creditors paid back?  Did players who lost all their money years ago get their deposits back, leaving nothing to those who gained their money from paying well, or was their final balance used to calculate their claims?

[JorgeStolfi]

There main difference between this case and Madoff, is that the trades actually happened, and people were making their own trading decisions.

I don't know what the court will say, but they could say that the people were trading non-existent coins, so the balances are meaningless.

Actual deposits and withdrawals are numbers that the court can verify with the banks and in the blockchain.  The trades inside MtGOX are recorded only in Mark's database, and any information that comes from him must be treated as a mere hint that needs independent evidence to be trusted.  The database may have been doctored to give large bogus balances to some clients.

[sturle]

There main difference between this case and Madoff, is that the trades actually happened, and people were making their own trading decisions.

I don't know what the court will say, but they could say that the people were trading non-existent coins, so the balances are meaningless.

Actual deposits and withdrawals are numbers that the court can verify with the banks and in the blockchain.  The trades inside MtGOX are recorded only in Mark's database, and any information that comes from him must be treated as a mere hint that needs independent evidence to be trusted.  The database may have been doctored to give large bogus balances to some clients.

Nope, trades were published in real time, and more or less complete records can be retrieved from many locations.  The only unknown is which accounts the trades belonged to.  Faking account balances afterwards by switching which account did the trade will require a lot of work to make everything match up, and even more to seem credible.  Not sure if it will be possible at all if everyone will be allowed to verify their own data.  People have already been able to verify their balances for a while, and I haven't heard of an complaints.  An audit will trivially reveal if the trade data matches the balances caused by deposits and withdrawals.

[JorgeStolfi]

An audit will trivially reveal if the trade data matches the balances caused by deposits and withdrawals.

An audit done by whom?  By Mark? Gonzague? Roger Ver?

(The PR guy has not said what they intend to do about Mark, has he?)