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Author Topic: New Mt. Gox class action in U.S.  (Read 5649 times)
DrApricot
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June 19, 2014, 11:20:51 AM
 #61

I don't think they every actually "lost the 200k" wallet, they rather tried to take bitcoin out of their cold storage only too see that the cold storage was (virtually) empty. As far as I can tell they did not have a good way to keep track of their cold storage addresses and they assumed that all were empty. When they later discovered that they controlled 200k in bitcoin they disclosed it.
I suppose it is possible they simply lost 200k BTC, but that's not consistent with their bankruptcy filing. Mt. Gox has always been careful to use the word "disappeared" or the term "unable to access" with regard to the missing bitcoins. To me that implies they knew all along that at least some of the bitcoins were still around, and not, as now claimed, removed by some "massive theft."
They blamed the malleability issue, other exchanges looked into the issue and determined it would really not be a threat to them. There have been reports that malleability could not have done the damage that was done to GOX but the scope of time that this research did was less then the time that GOX was in existence, it would be very possible that a large part of this kind of attack happened several years ago, in GOX's early days when bitcoin was worth much less.This kind of attack could have happened when the price of bitcoin was much lower and would not have had as large of an impact at the time.
From what I can understand, the removal of bitcoins through the exploitation of transaction malleability would require a degree of social engineering. Someone would have to request a refund for bitcoins that appeared to have been sent by Mt. Gox, but supposedly could not be verified by the hacker-recipient. Then a Mt. Gox person would actually have to manually make such a refund. That either suggests that it didn't happen that way, or else if it did, perhaps a confederate of the hacker(s) was operating inside Mt. Gox.

Nevertheless, the scenario as you outline it seems rather far-fetched, because it requires one to believe that Mt. Gox lost track some time ago of how much it had in cold storage. However, there are records of an IRC chat with CEO Mark Karpeles during mid-2011 in which he moves 424,242 BTC from one wallet to another as a demonstration of Mt. Gox's solvency. So, at least by this early date, it appears Karpeles did have a handle on how much was in cold storage.
As far as the bot trading is concerned, anything that says the were manulipating the price of bitcoin is crazy. There is evidence that they were trading on behalf of large investors. If they were buying from others without any "real" person paying the price that the bots paid for the bitcoin and receiving the bitcoin that the bots purchased then the exchange would have a massive shortage of fiat.
True enough, and I can quote you numerous press reports from the fall of 2013, during the big price spike occurring at that time, in which Mt. Gox customers were wanting to withdraw fiat, yet had to suffer very long delays in having their withdrawals completed. That does indeed suggest a shortage of fiat, for otherwise why else would there by these long delays?
If the bots were "trying to suppress he price of bitcoin via a massive uncovered short positiion" then the exchange would have a massive surplus of fiat to the turn of tens (if not hundreds) of millions of dollars. The trades that the bots executed were (almost) always buy orders so a short position would make even less sense. I don't think there is evidence that has been leaked that shows the bots sold bitcoin to that degree.
I'll concede you're right on this point, at least a little, as I've seen no evidence that Markus and Willy (the  two bots) ever sold bitcoin--only bought them. Though, that does not change any the basic argument I made. Buying bitcoin without ever paying for them suggests that they were bought on margin. These bitcoins could have been unloaded in a private placement[s). The point being that if the bitcoins, purchased by the bots, were actually never paid for, and afterwards through some means sold, then that effectively constitutes an uncovered short position.
I don't follow your logic to say that GOX would have needed a credit line to fund their short term liquidity needs. It is my understanding that GOX only used one bank (it was in Japan) for receiving deposits from customers and processing withdrawals for customers (and for any other banking needs that the exchange had).
The LOC could be used to handle any situation whenin there was some urgent need to cut a check, or send out a wire transfer, yet Mt. Gox was still awaiting deposits to clear. As previously mentioned, the Swiss investigators, CCI, discovered a pattern of mis-routing deposits bound for Mt. Gox from Europe. These deposits would have been handled by the European network of correspondent banks to Mizuho Bank in Japan.
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freedombit
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June 20, 2014, 04:00:02 AM
 #62

The LOC could be used to handle any situation whenin there was some urgent need to cut a check, or send out a wire transfer, yet Mt. Gox was still awaiting deposits to clear. As previously mentioned, the Swiss investigators, CCI, discovered a pattern of mis-routing deposits bound for Mt. Gox from Europe. These deposits would have been handled by the European network of correspondent banks to Mizuho Bank in Japan.

This is absolutely how most businesses operate. I just wonder to what extent MtGox used an LOC, as they must have known any LOC would have been a cash flow risk. Or I suppose, maybe they didn't, being more tech then biz oriented. I suppose that their own bank may have suggested it, even pushed it on them, as a way to stop getting the daily call, "Did the check come in from Poland?"

Even if they did have an LOC, what was the average weekly trading volume versus the total liquid asset base (fiat + Bitcoin)? I imagine weekly trading was no more than 10% of the entire asset holdings, therefore the LOC wouldn't have needed to be much more than that.

I am looking at your asset stripping idea. Maybe banks put the FIAT squeeze on MtGox, and Karpeles seeing the injustice and afraid of further losses, hid the Bitcoin to protect his users. Now he just needs enough evidence to prove that he didn't loose $100million USD, so that he can give $500 million USD worth of Bitcoin back to his depositors. The move by the Japanese government today is probably a step in the right direction.
DrApricot
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June 20, 2014, 06:39:10 AM
 #63

I am looking at your asset stripping idea. Maybe banks put the FIAT squeeze on MtGox, and Karpeles seeing the injustice and afraid of further losses, hid the Bitcoin to protect his users. Now he just needs enough evidence to prove that he didn't loose $100million USD, so that he can give $500 million USD worth of Bitcoin back to his depositors. The move by the Japanese government today is probably a step in the right direction.
Mt. Gox depositors, as a community, are missing a serious opportunity to obtain justice in Japan should they fail to build bridges with the committee within the ruling Liberal Democratic Party that is trying to address bitcoin and Mt. Gox. The committee's stated goal is that “Japan should become the world’s easiest place to run bitcoin businesses", but I'd say "not so much" unless they can help clean up the Mt. Gox situation and assure depositors are made whole.  
freedombit
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June 23, 2014, 04:13:04 AM
 #64

I am looking at your asset stripping idea. Maybe banks put the FIAT squeeze on MtGox, and Karpeles seeing the injustice and afraid of further losses, hid the Bitcoin to protect his users. Now he just needs enough evidence to prove that he didn't loose $100million USD, so that he can give $500 million USD worth of Bitcoin back to his depositors. The move by the Japanese government today is probably a step in the right direction.
Mt. Gox depositors, as a community, are missing a serious opportunity to obtain justice in Japan should they fail to build bridges with the committee within the ruling Liberal Democratic Party that is trying to address bitcoin and Mt. Gox. The committee's stated goal is that “Japan should become the world’s easiest place to run bitcoin businesses", but I'd say "not so much" unless they can help clean up the Mt. Gox situation and assure depositors are made whole. 
It appears an army of two can't do a whole lot.... yet...
DrApricot
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June 23, 2014, 06:04:05 AM
 #65

Mt. Gox depositors, as a community, are missing a serious opportunity to obtain justice in Japan should they fail to build bridges with the committee within the ruling Liberal Democratic Party that is trying to address bitcoin and Mt. Gox. The committee's stated goal is that “Japan should become the world’s easiest place to run bitcoin businesses", but I'd say "not so much" unless they can help clean up the Mt. Gox situation and assure depositors are made whole. 
It appears an army of two can't do a whole lot.... yet...
Depositors have bought into the whole false reality of a hacked Mt. Gox, when it is provably false, and have become utterly convinced to passively await their fate at the mercy of the Tokyo bankruptcy court. It never occurs to anyone that some very clever people have been manipulating the whole situation, behind the scenes, in order to create the outcomes that they have wanted.

I was always taught to "question my assumptions", yet I fear that's not a very popular outlook these days. Most people would rather just be spoon fed their opinions by the media, when it is well known, that with enough money, one can greatly influence media through public relations and manipulation. Why would anyone do that? I can give you about 500,000,000 or 650,000 ones, depending upon which flavour of dough you prefer.

One final note:

* Attorney Nobuaki Kobayashi, the Mt. Gox court-appointed bankruptcy trustee

* Kobayashi Maru    http://en.wikipedia.org/wiki/Kobayashi_Maru
Please read this wikipedia entry about Star Trek, and tell me whether it doesn't sound very analogous to what the Mt. Gox depositor's have experienced?

Don't you ever get the feeling that some very clever fellows are ROFL at depositor's expense, and have left behind this Trekish clue as their calling card?
freedombit
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June 25, 2014, 05:09:34 AM
 #66

Mt. Gox depositors, as a community, are missing a serious opportunity to obtain justice in Japan should they fail to build bridges with the committee within the ruling Liberal Democratic Party that is trying to address bitcoin and Mt. Gox. The committee's stated goal is that “Japan should become the world’s easiest place to run bitcoin businesses", but I'd say "not so much" unless they can help clean up the Mt. Gox situation and assure depositors are made whole. 
It appears an army of two can't do a whole lot.... yet...
Depositors have bought into the whole false reality of a hacked Mt. Gox, when it is provably false, and have become utterly convinced to passively await their fate at the mercy of the Tokyo bankruptcy court. It never occurs to anyone that some very clever people have been manipulating the whole situation, behind the scenes, in order to create the outcomes that they have wanted.

I was always taught to "question my assumptions", yet I fear that's not a very popular outlook these days. Most people would rather just be spoon fed their opinions by the media, when it is well known, that with enough money, one can greatly influence media through public relations and manipulation. Why would anyone do that? I can give you about 500,000,000 or 650,000 ones, depending upon which flavour of dough you prefer.

One final note:

* Attorney Nobuaki Kobayashi, the Mt. Gox court-appointed bankruptcy trustee

* Kobayashi Maru    http://en.wikipedia.org/wiki/Kobayashi_Maru
Please read this wikipedia entry about Star Trek, and tell me whether it doesn't sound very analogous to what the Mt. Gox depositor's have experienced?

Don't you ever get the feeling that some very clever fellows are ROFL at depositor's expense, and have left behind this Trekish clue as their calling card?

If that is the case, there are unintended casualties. These are some of the first people that saw the light. Where are the medics?
DrApricot
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July 06, 2014, 07:30:51 AM
 #67

Mt. Gox depositors, as a community, are missing a serious opportunity to obtain justice in Japan should they fail to build bridges with the committee within the ruling Liberal Democratic Party that is trying to address bitcoin and Mt. Gox. The committee's stated goal is that “Japan should become the world’s easiest place to run bitcoin businesses", but I'd say "not so much" unless they can help clean up the Mt. Gox situation and assure depositors are made whole. 
It appears an army of two can't do a whole lot.... yet...
Depositors have bought into the whole false reality of a hacked Mt. Gox, when it is provably false, and have become utterly convinced to passively await their fate at the mercy of the Tokyo bankruptcy court. It never occurs to anyone that some very clever people have been manipulating the whole situation, behind the scenes, in order to create the outcomes that they have wanted.

I was always taught to "question my assumptions", yet I fear that's not a very popular outlook these days. Most people would rather just be spoon fed their opinions by the media, when it is well known, that with enough money, one can greatly influence media through public relations and manipulation. Why would anyone do that? I can give you about 500,000,000 or 650,000 ones, depending upon which flavour of dough you prefer.

One final note:

* Attorney Nobuaki Kobayashi, the Mt. Gox court-appointed bankruptcy trustee

* Kobayashi Maru    http://en.wikipedia.org/wiki/Kobayashi_Maru
Please read this wikipedia entry about Star Trek, and tell me whether it doesn't sound very analogous to what the Mt. Gox depositor's have experienced?

Don't you ever get the feeling that some very clever fellows are ROFL at depositor's expense, and have left behind this Trekish clue as their calling card?

If that is the case, there are unintended casualties. These are some of the first people that saw the light. Where are the medics?
The situation requires you to be your own medic. There is really nobody looking out for Mt. Gox depositors - in fact they have been officially redefined as "creditors" by the court, or as Investopedia says, a creditor is "An entity (person or institution) that extends credit by giving another entity permission to borrow money [emphasis added] if it is paid back at a later date."

Once again, depositors would gain a valuable ally by getting the Japanese government on their side. This is a lot more likely to happen should some benefit be found to offer in return. That's why I suggested cooperating with their development strategy which is hinged upon using bitcoin for micropayments in developing Asian economies. They need the bitcoin tech community to get on board with it.
LostDutchman
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July 06, 2014, 01:36:12 PM
 #68

Good luck getting any judgement granted in the USA to fly in any Japanese court.

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DrApricot
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July 06, 2014, 03:24:29 PM
 #69

Good luck getting any judgement granted in the USA to fly in any Japanese court.
I agree. In fact the best you can probably hope for is to talk the Japanese government into overseeing the actions of the Tokyo court in order to make sure that it is not defrauded. 
DrApricot
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July 10, 2014, 02:30:02 PM
 #70

http://www.coindesk.com/government-backed-bitcoin-industry-association-launch-japan/
Quote
Miyaguchi said that while bitcoin’s media image in Japan may  have started out negative, thanks to Silk Road and Mt. Gox, it also led to 90% of Japanese becoming aware of bitcoin.

“In Japan, the negative often turns out positive”, she said, referring to years of stories disparaging the non-Japanese attributes of Facebook and iPhones before they eventually became market leaders in the country.

How to flip the Mt. Gox depositors' story "positive"?

Should probably talk to these guys. Mt. Gox depositors need someone on their side to make sure they get a fair shake. Things are not looking so great at this point.
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