SaveGox.com

[JonHolmquist]

What makes you think that they really want to find the lost funds? Just because they said so?

Ah, you are playing idiot again.  No, saying so makes no difference. There are several parts to this: [ ... ]

Perhaps the problem will be easier to understand if explained in a bigger font:

What makes you think that they really want to find the lost funds?

There is a sizable bounty in our proposal to give incentive to anyone to find them.

Not to mention we'll be releasing evidence we find to the Bitcoin community. These aren't just lost funds, they're the community's funds and everyone should be given the tools to help track them down.

[JonHolmquist]

Thank you guys for being patient for my responses, I've been sick the last couple days.

[JayJuanGee]

Regarding convicting criminals, there may or may NOT be proof of criminal activity, and accordingly, a better result may be to attempt to make whole as many customers as possible.  We do NOT have enough information to make broad general statements to pursue one avenue at the exclusion of another, and we do NOT know the extent to which multiple avenues may be pursued simultaneously.

According to Mark, 600'000 BTC were stolen from his company, that is why he cannot pay to clients what they were due according to his terms of service. Whether he lied or told the truth, a crime obviously has been committed. 

That's a good point that if the BTC were really stolen, then there is a crime.  If the BTC were NOT stolen, then there was a crime.  However, your earlier point was that you could give a fuck about the investors, so long as the crime is pursued.. and the wrong doers are punished.

There may NOT be enough evidence to resolve these potential criminal matters, and it would be really stupid and short-sighted to pursue this matter from only one angle....

At some point, it may be deemed to be a better course of action to discontinue the pursuit of the criminal angle, and those kinds of decisions would, in part, be affected by the existence of evidence and the willingness of prosecutors to pursue such direction in light of all developments and going forward agreements.

[JorgeStolfi]

Not to mention we'll be releasing evidence we find to the Bitcoin community. These aren't just lost funds, they're the community's funds and everyone should be given the tools to help track them down.

As a minimum, those tools should be the complete database of trades, deposits and withdrawals.  Some clients seem to object to that, though.  Whithout that information, what could people do?

[T.Stuart]

Step 1: Audit. Figure out who is owed what and if there are any fake (or invalid) accounts in the database.
Step 2: Everyone gets equity on a pro rata basis. If you owned 1% of the money that went missing, you'd get 1% of the 16.5% going to creditors.
Step 3: Everyone is free to withdraw their funds after the audit is done.

Could you give more details about how Sunlot came up with the figure of 16.5% equity to creditors?

As a creditor not directly involved with the US lawsuit I would appreciate a copy of the business plan or proposal that must have been presented to lawyers working on that case.

How is the rest of the equity divided?

Thanks in advance for the information.

[freedombit]

Hey guys!

I'm on the SaveGox team. If you guys have questions for the team, please post them.

I'm opening this thread because Goat closed the other one.

Thanks,

-Jon

Will your investment provide enough injection to cover the negative balance of lost deposits if there is one?

If not, then I have a second question.

How will the new exchange offer complete transparency to its books and balances?

Hi Jon. Still seeking answers to these questions.  Will DEPOSITORS receive the full amount of lost deposits back - whether in the form of Bitcoin or FIAT. It appears that your plan will convert Bitcoin to Fiat based on some valuation.

John, now that you are back, can you please answer these questions? Feel free to PM.

[edmundedgar]

Hi Jon. Not a creditor so maybe it's none of my business, but I'm wondering: The FAQ says,

Q: Will people be free to withdraw their assets right away?

Yes. Any recovered assets will be deposited into customer accounts immediately with no withdrawal restrictions.

As you know,
1) People responsible for stealing bitcoins and/or hacking the database, whether insiders or external people, may have positive balances in the current system.
2) There is an ongoing police investigation into who is responsible for stealing bitcoins. This may turn up information that won't be available to Sunlot, since the police have a lot of powers that Sunlot doesn't.
3) Regardless of what happens in the bankruptcy, this investigation may not be completed very quickly.

Does Sunlot really intend to pay out before the police investigation is completed, even at the risk of giving the legitimate creditors' money to the people who have already robbed them?

Or would Sunlot in fact wait until the police investigation was complete, in which case things might not happen quite as quickly as the FAQ makes it sound?

After an audit or once it appears that it is safe to allow withdrawals. We are aiming to get people paid out as quickly as possible while still staying safe.

That sounds sensible, but "once it appears that it is safe to allow withdrawals" is a very different thing to "right away" and "immediately". You might want to fix the FAQ... Are there any other bits of your public statements that read like things that you're promising to do but are really things that you're hoping to do?

[JorgeStolfi]

It would be interesting to know, for starters, when did Mr. Gay-Bouchery became aware of MtGOX's insolvency, and what did he do about it then.

You'd have to ask GGB, I haven't talked with him about the events leading up to collapse.

So he is being given immunity by Sunlot without even issuing a public statement about his role in the collapse?  (He was MtGOX's CFO, is this correct?)

My own personal opinion is that Mark is at fault.

Obviously someone needs to be held responsible for this event. Keep in mind this deal was made with creditors. I doubt any creditors would support a [ deal similar to GGB's ] with Mark. I know I wouldn't. [ ... ] Mark will be pursued for any wrongdoing that can be proven in a court of law.

IIUC Mark Karpeles personally is a large creditor of Mt Gox the company [ ... ] 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?

I believe John has stated that Mark wouldn't be getting paid out. I'm not a lawyer so I don't know what the legal basis is.

Thanks for the clarification.  However, is the intent to exclude the former management of MtGOX from the asset distribution a mere feeling and vague intention, or is Sunlot commiting to that in writing through a legally binding contract/proposal?

Otherwise, one big difference between the liquidation and the Sunlot proposal is that Mr. Karpelès (and Mr. Gay-Bouchery, and  Mr. McCaleb?) would get nothing from the first, and maybe a good slice of the 220'000 BTC from the second.

By the way, was Sunlot one of the potential MtGOX buyers contacted by Mr. Karpelès before he finally filed for bankruptcy?

[ The audit of the MtGOX database will be ] done by whom?  By Mark? Gonzague? Roger Ver?

Top 4 auditing firm. http://en.wikipedia.org/wiki/Big_Four_(audit_firms) Take your pick.

Again, is Sunlot commiting to this point in writing, in a legally binding document?  Have any of those firms been contacted to confirm that they would accept this task?  (I am asking because a reputable auditing firm will probably refuse to do an audit of something if it thinks that there isn't sufficient reliable data to support a useful conclusion.)

[JorgeStolfi]

Thank you guys for being patient for my responses, I've been sick the last couple days.

As you must be aware, there is another big difference between liquidation and the Sunlot proposal, which is how the claim of each client is computed.

IIUC, Sunlot will use the account balance that each client had in MtGOX's database, at some point in time; whereas the liquidators (if Japanes law is like US law) will consider the total amount deposited into MtGOX minus the total withdrawn, converted to Yen at the historical BTC prices, ignoring the trades made inside the exchange and the final balances in the database.

Obviously, some clients will have a strong preference for one criterion, some for the other criterion.  Does Sunlot intend to force the "database balance" criterion also on the clients who would prefer the "input-output" one?  Note that clients who have a large database balance might have no claim under the latter criterion, and vice-versa.  IIUC, clients with larger claims do not have more right to define the terms of the liquidation than those with smaller claims.

Moreover, when exactly will the balances be counted? 

Before MtGOX finally closed, there was a long period when withdrawals were blocked or nearly so.  During that period, MtGOX's clients were selling or buying bitcoins inside the exchange not for speculation, but in desperate attempts to get their money out, or to have a better change to recover after its probable collapse --- while there was still no information about the status of its assets.  Thus, using the balances after that frantic trading would be potentially very unfair to some clients, especally if some clients had inside knowledge and were able to acquire large balances through that unfair advantage.  (This, by the way, is another argument for using the "input-output" criterion instead of the "database balance" one to define the claims.)

[sturle]

liquidators (if Japanes law is like US law) will consider the total amount deposited into MtGOX minus the total withdrawn, converted to Yen at the historical BTC prices, ignoring the trades made inside the exchange and the final balances in the database.

This is pure speculation.  The liquidators might do this, but it is by no means a fact or an absolute requirement.  I asked before what they did in the liquidation of various online poker companies.  Did people who deposited many years before the bankruptsy, and lost their money, get money back?  There are plenty of bankruptsy cases to choose between, and so far I haven't found a single example of this in comparable cases.

[JorgeStolfi]

liquidators (if Japanes law is like US law) will consider the total amount deposited into MtGOX minus the total withdrawn, converted to Yen at the historical BTC prices, ignoring the trades made inside the exchange and the final balances in the database.

This is pure speculation.  The liquidators might do this, but it is by no means a fact or an absolute requirement.  I asked before what they did in the liquidation of various online poker companies.  Did people who deposited many years before the bankruptsy, and lost their money, get money back?  There are plenty of bankruptsy cases to choose between, and so far I haven't found a single example of this in comparable cases.

In what conditions were those online poker companies closed -- because their activities were illegal?  Did they have any assets to distribute at all?  Were they based in the US?  Did ANY clients get refunded?

IIRC two posters claimed that US law specifies the "input-output" criterion rather than the "database balance' criterion.  One of them cited Madoff's case as an example.

[sturle]

liquidators (if Japanes law is like US law) will consider the total amount deposited into MtGOX minus the total withdrawn, converted to Yen at the historical BTC prices, ignoring the trades made inside the exchange and the final balances in the database.

This is pure speculation.  The liquidators might do this, but it is by no means a fact or an absolute requirement.  I asked before what they did in the liquidation of various online poker companies.  Did people who deposited many years before the bankruptsy, and lost their money, get money back?  There are plenty of bankruptsy cases to choose between, and so far I haven't found a single example of this in comparable cases.

In what conditions were those online poker companies closed -- because their activities were illegal?  Did they have any assets to distribute at all?  Were they based in the US?  Did ANY clients get refunded?

IIRC two posters claimed that US law specifies the "input-output" criterion rather than the "database balance' criterion.  One of them cited Madoff's case as an example.

Online poker companies in the US and elsewhere have gone bankrupt or closed for various reasons over the last 20 years.  Some may have been involved in illegal investment of user deposits.  I assume there were assets left.  I don't know how to search for foreign court documents.

How about bank bankruptsies then?  If I deposited 100 USD back in 1914, and someone else borrowed 100 USD with no downpayments for the next 100 years.  Does the creditor and debtor both get/owe 100 USD?  No interest considered, just what they put in / got out?  How about online forex or gold trading coimpanies?

Another way to look at it, is to let every trade count as a withdrawal and deposit and fee payment.  In this case final balances will be correct.

[JorgeStolfi]

How about bank bankruptsies then?  If I deposited 100 USD back in 1914, and someone else borrowed 100 USD with no downpayments for the next 100 years.  Does the creditor and debtor both get/owe 100 USD? No interest considered, just what they put in / got out?  How about online forex or gold trading coimpanies?

According to the earlier poster, the Madoff clients are disputing with the courts to get dollar inflation over the 20 years considered.  That sounds reasonable. But the profits that they made according to Madoff's books, and did not withdraw, were ignored.

I don't know about forex and gold companies, but they probably work the same.  It may depend on the terms of service, but if whatever asset you deposited was worth 1000$ when you deposited it, iit is effectively the same as if you sold the asset on market just before depositing and deposited the 1000$.

That is the amount by which your wealth was diminished at the time.  Once you deposited, you did not own the asset any more, you owned a paper from the company promising you something.  Once the company failed, its promises became meaningless, only the wealth you lost when investing was still meaningful.  That is my understanding of the logic behind the inputs-minus-outputs criterion.

Another way to look at it, is to let every trade count as a withdrawal and deposit and fee payment.  In this case final balances will be correct.

No, in this case the inputs-minus-outputs will still be the original deposit, since those intermediate withdrawals and deposits will cancel out.  (Deposited 1000 BTC when price was 200$/BTC, withdrew 1000 BTC when price was 500$/BTC, deposited immediately 500'000$ = the inputs-minus-outputs balance is still 200'000$, not 500'000$.) This is in fact an argument for the input-output rule.

You may have some argument if the price at MtGOX was different than the assumed market price.  In the example above, if market price was 500 $/BTC but MtGOX price was 600 $/BTC, you could say that you withdrew 1000 BTC worth 500'000$ but deposited 600'000$.  But the court/adversary would say that you deposited exactly what you withdrew, whether you count that 500'000$ or 600'000$ (because you did not add a cent from your pocket in that operation); if MtGOX's books showed that you had 1000 BTC before the trade and 600'000$ after that, not 200'000$, it is only because MtGOX's accounting was bogus (like Madoff's').

[JorgeStolfi]

PS. I must add that courts of law generally do not count "missing an opportunity of some hypothetical gain" as a loss.  In particular, they won't be impressed by the argument "if I had not deposted my 1000 BTC into MtGOX in 2012, I could be selling them today for 500'000$". 

[T.Stuart]

Hello Jon Holmquist?

Could you provide details of how the equity distribution has been calculated?

Thanks.

[sobriket]

liquidators (if Japanes law is like US law) will consider the total amount deposited into MtGOX minus the total withdrawn, converted to Yen at the historical BTC prices, ignoring the trades made inside the exchange and the final balances in the database.

Think about it, this would be completely ludicrous. Madoff's example also isn't comparable with MtGox, a virtual currency exchange.

[ArticMine]

One question for the SaveGox team. Will existing MTGox customers be able to access their historical trading and account information? This may be needed in some cases for income tax compliance for example.

[JorgeStolfi]

Is there a link to that "favorable decision by the US court" about Savegox's plan?  (Not a news article, but the actual court paper?)
Thanks...

[sturle]

Another way to look at it, is to let every trade count as a withdrawal and deposit and fee payment.  In this case final balances will be correct.

No, in this case the inputs-minus-outputs will still be the original deposit, since those intermediate withdrawals and deposits will cancel out.

Only if you ignore the fee.  My bot paid generous amounts in fees over the years, to put it mildly..

What if you had two accounts?  I only deposited 10 BTC on my bot account, and withdrew much more than that.  Mostly to a verified MtGox account where I sold the BTC and withdrew fiat.  The value at the time of deposit was about the same as at the time of withdrawal, and I am probably very far in the negative on my bot account, while my normal account will have a positive balance according to your method.  If I knew about this rule, I would have exploited it hard to get as much money as possible from the bankruptsy just by moving BTC between accounts, and some people may have done that intentionally.  (If this rule is chosen, I will of course choose not to mention my bot account in my claim.)

You may have some argument if the price at MtGOX was different than the assumed market price.  In the example above, if market price was 500 $/BTC but MtGOX price was 600 $/BTC, you could say that you withdrew 1000 BTC worth 500'000$ but deposited 600'000$.  But the court/adversary would say that you deposited exactly what you withdrew, whether you count that 500'000$ or 600'000$ (because you did not add a cent from your pocket in that operation); if MtGOX's books showed that you had 1000 BTC before the trade and 600'000$ after that, not 200'000$, it is only because MtGOX's accounting was bogus (like Madoff's').

So far we don't know if MtGox's accounting was bogus or not.  Probably not.  The leaked data seems to be in good shape.  We just know they somehow lost a lot of BTC and some fiat, and we still don't know how this happened.  I believe Mark thought he had the BTC until he shut off withdrawals.  Madoff knew all along his books were bogus.

[JorgeStolfi]

No, in this case the inputs-minus-outputs will still be the original deposit, since those intermediate withdrawals and deposits will cancel out.

Only if you ignore the fee.  My bot paid generous amounts in fees over the years, to put it mildly.
[/quote]
Since MtGOX was not doing what clients thought it was doing, the fee

What if you had two accounts? [...] (If this rule is chosen, I will of course choose not to mention my bot account in my claim.)

I am pretty sure that the court will consider a creditor to be a person (or company), not an account.  Creditors will have to identify themselves and state their claims.

If you thought MtGOX was going bankrupt of course you would not have put your money and coins there in the first place.

People with multiple accounts may try to be smart and claim only accounts where they mostly deposited, omitting those from which they mostly withdrew.  That would be an attempt to defraud the court (like a contractor claiming a debt that was actually paid in cash), which means jail if caught.  For money withdrawals, the risk is too big.  For bitcoin withdrawals, the risk may be smaller but an audit with expert assistance may identify the owner of the omitted account.

So far we don't know if MtGox's accounting was bogus or not.  Probably not.  The leaked data seems to be in good shape.  We just know they somehow lost a lot of BTC and some fiat, and we still don't know how this happened.  I believe Mark thought he had the BTC until he shut off withdrawals.  Madoff knew all along his books were bogus.

The accounting was bogus in the sense that the coins that clients thought they were buyng and selling and/or the money they thought that Mark was keeping for them  did not actually exist.

It is risky to state publicly suppositions about crimes, but in restrospect there is only one plausible explanation for the withdrawals delays that started many months before the total block, including why the "malleability bug" was not understood and fixed promptly. 

There is another website devoted to the analysis of the database (the one with many colorful plots), whose link I cannot find now.  Some of those plots are hard to understand, they seem to show lots of trades at prices well removed from the then-current market prices. 

One of the main worries about that database is whether accounts of some "friends" were inflated in order to snatch a large portion of the remaining coins.   Also there is the possibility of insider trading, fudging with "dead" accounts, mislabeling of managers' accounts as accounts of friends, etc..  Basically, since the previous management was caught lying (about MtGOX's solvency), and their role in the disappearance of hundreds of millions of dollars has still to be explained, one cannot trust any information that comes from them.