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They will auction it off as soon as possible like they did several times before. I'm not sure why the bitcoin price has gone up in response to this news, becau

They will auction it off as soon as possible like they did several times before. I'm not sure why the bitcoin price has gone up in response to this news, because it means more supply is coming to the market soonish. These coins might have been presumed lost before. Certainly they would not have been able to be sold on any legitimate exchange. Now they will be washed clean and enter the markets. On the other hand, a billion dollar bitcoin auction from the US government will generate some publicity, and publicity definitely drives the Bitcoin price up. We'll see which effect dominates. There's another billion+ hoard of bitcoins which has the potential to be released to the markets in the next year or two, which is the MtGox reserves. Crazy story: MtGox went bankrupt after losing a bunch of bitcoins in hacks, but during the years-long bankruptcy proceedings the bitcoins they have left have been frozen, and their value has gone up so much that they could exit bankruptcy and pay all their debts many times over. But it's unclear what the bankruptcy court will ultimately allow them to do. If the MtGox bitcoins are released to their many thousands of creditors (MtGox customers who had balances at the time of collapse), I expect a crash in the bitcoin price as many will choose to sell at the same time. This is different from the government bitcoin auctions, where there are only a few winners who probably don't plan to sell right away.

ineedasername 6y ago
MtGox might be able to pay people the dollar value of their investment at the time, but still not the actual # of bitcoins.
- modeless 6y ago
  True, but by essentially forcing creditors to hold their bitcoins instead of allowing them to sell, it's likely that MtGox has actually done most of their creditors a perverse favor, and they will end up with more money than if they had received their full bitcoin balance in 2014 and sold some of it since then. Assuming they are actually allowed to distribute the full value to creditors in the end, either as bitcoin or yen (the bankruptcy is in Japan).
  - Scoundreller 6y ago
    The funny thought is that once the creditors are paid off in dollars/yen, the remainder goes to the shareholders that usually get wiped out in a bankruptcy, but not this one.
    - modeless 6y ago
      In this case the majority shareholder is advocating for the money to be distributed to creditors rather than given to him. https://www.ccn.com/mt-gox-ceo-mark-karpeles-tells-creditors-im-on-your-side/ https://www.ccn.com/mt-gox-ceo-mark-karpeles-tells-creditors...
  - ineedasername 6y ago
    But bitcoin is a currency. If I lost $100,000 to something like this and it took a few years to resolve, I would expect to get back $100,000, not some other form of currency that was worth $100,000 at the time. What I'm saying is that MtGox can't claim they're making people "whole" from their losses by giving them what their money was worth at the time. Plenty of those people would have held on to the bitcoins and had their full value. Sure, I don't expect MtGox to be able to make everyone whole. I just don't think it's accurate to say they're doing so by giving them their 2014 dollar equivalents.
    - modeless 6y ago
      The creditors' claims were converted to yen at the time of bankruptcy by court. MtGox has no say in the matter. Neither I nor MtGox are claiming that they are going to make people 'whole' in terms of the bitcoin balances they had. But MtGox (Mark Karpeles) is trying to get the court to allow them to pay creditors a whole lot more than their claim value, instead of distributing the excess to shareholders, and to do it in bitcoin instead of yen. All I'm saying is if you compare a hypothetical scenario where the bitcoin was distributed to creditors in 2014 to the hypothetical scenario where they receive it today, it's practically certain that creditors' aggregate wealth is astronomically higher in the latter scenario, because very few would have held the bitcoin long enough or sold at the right time to realize all of the 15x+ appreciation that has happened in that time.
SamBam 6y ago
> Certainly they would not have been able to be sold on any legitimate exchange I'm ignorant about this. Would they not have been able to be sold because there's some kind of master list of coins related to criminal activity, and exchanges blacklist them? Or would buyers somehow know specifically which coins they'd be buying and their provenance?
- modeless 6y ago
  Well, I don't know exactly how much policing of this kind exchanges generally do, but these coins in particular were very closely watched and would not have gone unnoticed, wherever they ended up. Bitcoins are 100% traceable, and when these coins were moved yesterday it was instantly posted on many news sites, before today's announcement that it was actually a seizure by law enforcement. My guess is that almost all exchanges would flag any account that deposited coins from a list of known tainted addresses like this one, and either immediately freeze it or prevent withdrawals. And any exchange that didn't do it automatically would do it manually after it hit the news.
nullc 6y ago
> the Bitcoins they have left have been frozen, The trustee actually sold bitcoins during the 2017 run up in price and secured enough funds to pay off the cash value of the bankrupcy.
ag56 6y ago
> Certainly they would not have been able to be sold on any legitimate exchange. May I ask why? (Genuine, not a crypto expert). Do exchanges by default trace any bitcoins back and see if they were connected with illegality? Is there a list of tainted bitcoin addresses that are effectively worthless?
- jcrawfordor 6y ago
  Many reputable exchanges and other Bitcoin service providers use anti-fraud/AML services which will flag transactions involving Bitcoin with an apparent history of laundering or other malfeasance. This is more or less mandatory in the US and many other countries via AML treaties. There are, of course, exchanges with no such scruples, but converting Bitcoin to currency does become more difficult when it has a known suspicious background, particularly if you want to deal with an exchange in a country with reputable financial regulation. This is of course similar to the situation with conventional currencies. Banks will refuse to open an account if they suspect the money you're depositing is laundered. Bitcoin just makes this process far more amenable to automation, since detecting a history of laundering becomes a graph analysis problem.

ineedasername 6y ago

MtGox might be able to pay people the dollar value of their investment at the time, but still not the actual # of bitcoins.

modeless 6y ago
True, but by essentially forcing creditors to hold their bitcoins instead of allowing them to sell, it's likely that MtGox has actually done most of their creditors a perverse favor, and they will end up with more money than if they had received their full bitcoin balance in 2014 and sold some of it since then. Assuming they are actually allowed to distribute the full value to creditors in the end, either as bitcoin or yen (the bankruptcy is in Japan).
- Scoundreller 6y ago
  The funny thought is that once the creditors are paid off in dollars/yen, the remainder goes to the shareholders that usually get wiped out in a bankruptcy, but not this one.
  - modeless 6y ago
    In this case the majority shareholder is advocating for the money to be distributed to creditors rather than given to him. https://www.ccn.com/mt-gox-ceo-mark-karpeles-tells-creditors-im-on-your-side/ https://www.ccn.com/mt-gox-ceo-mark-karpeles-tells-creditors...
- ineedasername 6y ago
  But bitcoin is a currency. If I lost $100,000 to something like this and it took a few years to resolve, I would expect to get back $100,000, not some other form of currency that was worth $100,000 at the time. What I'm saying is that MtGox can't claim they're making people "whole" from their losses by giving them what their money was worth at the time. Plenty of those people would have held on to the bitcoins and had their full value. Sure, I don't expect MtGox to be able to make everyone whole. I just don't think it's accurate to say they're doing so by giving them their 2014 dollar equivalents.
  - modeless 6y ago
    The creditors' claims were converted to yen at the time of bankruptcy by court. MtGox has no say in the matter. Neither I nor MtGox are claiming that they are going to make people 'whole' in terms of the bitcoin balances they had. But MtGox (Mark Karpeles) is trying to get the court to allow them to pay creditors a whole lot more than their claim value, instead of distributing the excess to shareholders, and to do it in bitcoin instead of yen. All I'm saying is if you compare a hypothetical scenario where the bitcoin was distributed to creditors in 2014 to the hypothetical scenario where they receive it today, it's practically certain that creditors' aggregate wealth is astronomically higher in the latter scenario, because very few would have held the bitcoin long enough or sold at the right time to realize all of the 15x+ appreciation that has happened in that time.

SamBam 6y ago

> Certainly they would not have been able to be sold on any legitimate exchange I'm ignorant about this. Would they not have been able to be sold because there's some kind of master list of coins related to criminal activity, and exchanges blacklist them? Or would buyers somehow know specifically which coins they'd be buying and their provenance?

modeless 6y ago
Well, I don't know exactly how much policing of this kind exchanges generally do, but these coins in particular were very closely watched and would not have gone unnoticed, wherever they ended up. Bitcoins are 100% traceable, and when these coins were moved yesterday it was instantly posted on many news sites, before today's announcement that it was actually a seizure by law enforcement. My guess is that almost all exchanges would flag any account that deposited coins from a list of known tainted addresses like this one, and either immediately freeze it or prevent withdrawals. And any exchange that didn't do it automatically would do it manually after it hit the news.

nullc 6y ago

> the Bitcoins they have left have been frozen, The trustee actually sold bitcoins during the 2017 run up in price and secured enough funds to pay off the cash value of the bankrupcy.

ag56 6y ago

> Certainly they would not have been able to be sold on any legitimate exchange. May I ask why? (Genuine, not a crypto expert). Do exchanges by default trace any bitcoins back and see if they were connected with illegality? Is there a list of tainted bitcoin addresses that are effectively worthless?

jcrawfordor 6y ago
Many reputable exchanges and other Bitcoin service providers use anti-fraud/AML services which will flag transactions involving Bitcoin with an apparent history of laundering or other malfeasance. This is more or less mandatory in the US and many other countries via AML treaties. There are, of course, exchanges with no such scruples, but converting Bitcoin to currency does become more difficult when it has a known suspicious background, particularly if you want to deal with an exchange in a country with reputable financial regulation. This is of course similar to the situation with conventional currencies. Banks will refuse to open an account if they suspect the money you're depositing is laundered. Bitcoin just makes this process far more amenable to automation, since detecting a history of laundering becomes a graph analysis problem.