Bitstamp issues statement and temporarily suspends service

[mayax]

Apparently they say they will resume operations in the next 24 hours:

https://www.cryptocoinsnews.com/bitstamp-resume-operations-next-24-hours/

GOX said more than once they would resume operations.

Let's see if they will honor what they say or if things will go even worse

yes, take a look and remember :   https://www.cryptocoinsnews.com/mtgox-withdrawals-resume/

almost the same title 

[1714554363]

1714554363

[1714554363]

1714554363

[1714554363]

1714554363

[Nagle]

Apparently they say they will resume operations in the next 24 hours:
https://www.cryptocoinsnews.com/bitstamp-resume-operations-next-24-hours/

25 hours later, still down.

Bitstamp's announcement of setting up a duplicate site in San Francisco reminds me of Mt. Gox claiming their "new trading engine" would fix their problems.  That was just an excuse for stalling.  

[OhShei8e]

Bitstamp's announcement of setting up a duplicate site in San Francisco reminds me of Mt. Gox claiming their "new trading engine" would fix their problems.  That was just an excuse for stalling.  

I don't think that they going down yet. But they have serous problems. So let's hope the best!

[mayax]

Bitstamp's announcement of setting up a duplicate site in San Francisco reminds me of Mt. Gox claiming their "new trading engine" would fix their problems.  That was just an excuse for stalling.  

I don't think that they going down yet. But they have serous problems. So let's hope the best!

they will drag down Ripple and other sister companies related to them. the scandal will be huge if they don't pay

[johnyj]

more than 10% of their coins in their possession stolen.

So how do they handle the instant run on bitcoin and fiat once they reopen?

Institute bullshit daily limits?

That won't fly well given their situation. I would imagine there would be a pretty big uproar among customers/users should they not allow FULL btc and fiat withdraws.

Just consider that as a long term loan to a hacker. MTGOX managed to operate 2 years before they could never make the lost coin back, but MTGOX is unlucky since they were hit by the ASIC evolution of bitcoin mining, and the bitcoin price rose by 100x because of ASIC miners

At current situation, with no large mining tech advance in horizon, bitstamp have plenty of time to make those coin back

[RoadStress]

Just consider that as a long term loan to a hacker. MTGOX managed to operate 2 years before they could never make the lost coin back, but MTGOX is unlucky since they were hit by the ASIC evolution of bitcoin mining, and the bitcoin price rose by 100x because of ASIC miners

I wish it would be that simple to raise the bitcoin price I am doing my part in buying ASICs, do you?

[smoothie]

more than 10% of their coins in their possession stolen.

So how do they handle the instant run on bitcoin and fiat once they reopen?

Institute bullshit daily limits?

That won't fly well given their situation. I would imagine there would be a pretty big uproar among customers/users should they not allow FULL btc and fiat withdraws.

Just consider that as a long term loan to a hacker. MTGOX managed to operate 2 years before they could never make the lost coin back, but MTGOX is unlucky since they were hit by the ASIC evolution of bitcoin mining, and the bitcoin price rose by 100x because of ASIC miners

At current situation, with no large mining tech advance in horizon, bitstamp have plenty of time to make those coin back

How will they make those coin back?

If users are allowed to withdraw...I can see their daily trade volume for the next year going down much lower than it has been due to lack of trust.

[mayax]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

That Bitcoin doesn't belong to Bitstamp.

Bitstamp must cover the loss from their pocket. 5 MiL USD. Huge amount.

Imagine how it is to count 5 MIL USD....

They know very well that they won't rebuilt their reputation soon so they money won't come to them. Maybe they will risk to cover the less... 5 MIL.Would you?

[Rampion]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

[celebreze32]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

And $10 million investment of venture capital money, plus sales from ripples which they sold at way above market price.

[mayax]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

I may add...and not only on trading fees. You cannot make millions from 0.03%. This is like free so they have other source of making money from this biz; maybe the price difference...

[celebreze32]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

I may add...and not only on trading fees. You cannot make millions from 0.03%. This is like free so they have other source of making money from this biz; maybe the price difference...

There's also withdrawal fees for both cash and bitcoins.

[mayax]

in short, 5 Millions USD are not easy to be covered from fees.

You need millions of transactions in one year just to cover .

How many transactions does have an exchanger like Bitsmap per day?

[celebreze32]

in short, 5 Millions USD are not easy to be covered from fees.

You need millions of transactions in one year just to cover .

How many transactions does have an exchanger like Bitsmap per day?

There was a discussion about this.

Now, there are not a million options here:
1. Bitstamp pays $5M with the fees they charged. That's tough, because they had about $1.5M worth of trading each day. At a 0.3% average, that gives $4500 per day. It would take them 1111 days of such fees to pay for those $5M, running costs non accounted for. Impossible.
2. They get $5M from their insurance. I've been working with insurers for such matters myself. Can't find one that would do that, so I'd bet they weren't insured for such a hack.
3. They get $5M from investors. That's tricky. New investors won't be stepping into this mess, so that leaves the previous VC that brought $10M. But this money was probably spent. If not, why bringing it in in the first place? Maybe they'd add $5M to protect the $10M they invested prior to the hack, but that's a dangerous move. Not impossible, but doubtful...
4. They run on fractional reserves. Easy, as long as 88% of the funds remain there.

On which option would you bet?

I think your numbers are very misleading. At a price of $300, thats 5k coins a day. Most of the time they are doing significiantly higher volumes than this and the price was higher. I think you could reasonably double your volume estimate and the average price for last year for a more reasonable estimate, quadrupling your total, and quartering you time estimate. Not impossible.

Agreed.  

The average weekly volume for 2014 was ~BTC 96 000 (~BTC13 700 per day) . (Based on raw data from http://bitcoincharts.com/charts/bitstampUSD)
0.3% x2 of 96 000 * 52 =BTC29 952 in fees.  I'm not sure about the 0.3% number.  The times two is because it's charged on both sides of the trade.
You are assuming they have to repay the full loss.  We can reduce the loss by any safety margins they have already, although they may wish to re-establish those (at a higher level?).
The fee number needs to reduce by operating expenses.

So we have 19 000 less what they have already vs 30 000 less opex.

Where it lands up after those adjustments is anyone's guess.

If they had been converting to USD at higher prices then that would reduce their burden significantly (if they can buy back at current low prices).

And Bitstamp's profits from selling ripples needs adding to the total. You could buy ripples directly from Bitstamp at a price they decided, which was always way above the going market price.

[singular]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

I may add...and not only on trading fees. You cannot make millions from 0.03%. This is like free so they have other source of making money from this biz; maybe the price difference...

Fees are from 0.4 to 1% at bitstamp (buyer and seller pay from 0.2-0.5%), they generate majority of the profits, check volume and you will see, so they can cover loss with that.

[mayax]

many people forget that Bitstamp "reserve" it's the client's Bitcoin.

Pretty much this. People forget customer's money is NOT a Bitstamp asset. They have to cover up the losses from their income, which is based on trading fees.

I may add...and not only on trading fees. You cannot make millions from 0.03%. This is like free so they have other source of making money from this biz; maybe the price difference...

Fees are from 0.4 to 1% at bitstamp (buyer and seller pay from 0.2-0.5%), they generate majority of the profits, check volume and you will see, so they can cover loss with that.

let's not forget that they reported a profit of about 800k USD in 2013....

even we double it because Bitstamp may report fake numbers in order to avoid possible taxes....it's 2 mil USD per year net profit roughly.

we can say they need 2 years to recover the loss (IF they will have the same amount of clients; clients who will run away ones the Bitstamp will open the withdrawals).

in the mean time, they have to open their pockets and hoping that everything will be as in 2014.... very hard to believe that,

[Nagle]

This is conjecture on my part, based on Bitstamp's Twitter statements, such as "Working alongside the team from San Francisco, progress towards redeployment is strong. Huge thank you to for your confidence and patience."

Bitstamp desperately needs a few million dollars right now. Where are they going to get it? They're two unknown guys in their twenties, in Slovenia, with a mail drop in London. Nobody is going to fund that. If they were in Silicon Valley, they might be able to get VC funding. They have a user base; they're fundable. That's probably the motivation for the move to San Francisco.

Whether they can get funding remains unknown. If they'd closed a deal, they would probably announce it. So it's unlikely there's a deal in place.

[Walsoraj]

This is conjecture on my part, based on Bitstamp's Twitter statements, such as "Working alongside the team from San Francisco, progress towards redeployment is strong. Huge thank you to for your confidence and patience."

Bitstamp desperately needs a few million dollars right now. Where are they going to get it? They're two unknown guys in their twenties, in Slovenia, with a mail drop in London. Nobody is going to fund that. If they were in Silicon Valley, they might be able to get VC funding. They have a user base; they're fundable. That's probably the motivation for the move to San Francisco.

Whether they can get funding remains unknown. If they'd closed a deal, they would probably announce it. So it's unlikely there's a deal in place.

I think Walsoraj figured it out:

Stamp might be sitting on loads of unclaimed bitcoins from traders who are incarcerated or failed to submit kyc documents. However, most governments require unclaimed funds be turned over to the State. Perhaps Stamp believes it has legal standing to keep bitcoins on grounds that such laws apply to fiat funds only? Weak argument, but may buy Stamp some time.

Just a few months ago, Stamp required ALL traders to verify their identities to avoid forfeiture of balances.

[smoothie]

Forfeiture of balances?

If true...then wow!

Not sure if that is legal anywhere on the planet to just take shit because they didn't get verified in a certain time frame.

[Keyser Soze]

Forfeiture of balances?

If true...then wow!

Not sure if that is legal anywhere on the planet to just take shit because they didn't get verified in a certain time frame.

From my understanding they sent out various warnings over a ~1 year period about verifying accounts. After the period was up, accounts that were unverified had to give up their identity before any transactions are processed. I guess if you refused to verify and did not withdrawal within the given time, then you would have to verify or lose you balances.