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> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposi

by jonknee 13y ago

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead to that situation. Then there's the issue of seizure which apparently has happened at least once. Relying on your unlicensed money changer to be fair because "he is motivated to not go to jail" is precarious. Madoff's client's probably said the same thing... That's the beauty of the FDIC and the terrifying part about BTC exchanges.

sillysaurus2 13y ago
The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_been_transferring_around_440k/ http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect things will happen: Gox will refund all "stuck" withdrawls. (Mine have already been refunded.) Then they will fix the technical problem, hopefully by Monday, but certainly within a couple weeks. Then they'll re-enable bitcoin withdraws. At that point, everybody will yank their bitcoin out of Gox. But then people will realize that there is value in trading on Gox as a platform, and Gox will be used for what it's meant to be used for: Trading, not storage. EDIT: To clarify, I don't believe it's possible they had a technical problem that led to them losing more bitcoins than the profits they've made from trading fees. (This is me being hopeful that people can't be that incompetent.)
- XorNot 13y ago
  It's not a technical problem. The problem is Mt. Gox is almost certainly doing arbitrage with the cash on hand, and the BTC on hand. The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out. Of course seeing their origins and backing, they've screwed up - and BTC being volatile it has probably moved against them - so low and behold "technical problem" while they try to figure out how to get solvent again. Punchline: real cash gets refunded, the BTC will not be, anyone holding BTC is going to lose big as the price tanks.
  - jrockway 13y ago
    The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out. I would guess this is a fraud-stopping measure. Time is a fraudster's enemy; you may have guessed someone's password, but if they read the email that says someone changed their email address, they can react before the money disappears into the ether. Furthermore, Mt. Gox can probably predict in advance how much cash they'll need to fulfill withdrawals, and liquidate the instruments in advance to make withdrawals instant, if they so chose. Everyone loves a good conspiracy theory, but the reality of running a money transfer business makes Mt. Gox look pretty normal.
    - username223 13y ago
      > Time is a fraudster's enemy; If I agree to hold your money, then "need more time" to give it back to you, how exactly is time being my enemy?
- deleted 13y ago
  [deleted]
- anigbrowl 13y ago
  But then people will realize that there is value in trading on Gox as a platform What value is this, exactly? You seem to be assuming that having fixed this problem the platform will never break down again, ever.
- GigabyteCoin 13y ago
  If he had 440k coins then, imagine how many he has now. Those ~440,000 Bitcoin were property of the Mt. Gox traders, not Mt. Gox the company. Mt. Gox was moving the money publicly in a show of good faith that they still controlled it. They have yet to do that in this new case. For all we know, Mt. Gox could have sent the ~40,000 missing Bitcoin to an unrecoverable/non-existant address by mistake.

by jonknee 13y ago

sillysaurus2 13y ago

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_been_transferring_around_440k/ http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect things will happen: Gox will refund all "stuck" withdrawls. (Mine have already been refunded.) Then they will fix the technical problem, hopefully by Monday, but certainly within a couple weeks. Then they'll re-enable bitcoin withdraws. At that point, everybody will yank their bitcoin out of Gox. But then people will realize that there is value in trading on Gox as a platform, and Gox will be used for what it's meant to be used for: Trading, not storage. EDIT: To clarify, I don't believe it's possible they had a technical problem that led to them losing more bitcoins than the profits they've made from trading fees. (This is me being hopeful that people can't be that incompetent.)

XorNot 13y ago
It's not a technical problem. The problem is Mt. Gox is almost certainly doing arbitrage with the cash on hand, and the BTC on hand. The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out. Of course seeing their origins and backing, they've screwed up - and BTC being volatile it has probably moved against them - so low and behold "technical problem" while they try to figure out how to get solvent again. Punchline: real cash gets refunded, the BTC will not be, anyone holding BTC is going to lose big as the price tanks.
- jrockway 13y ago
  The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out. I would guess this is a fraud-stopping measure. Time is a fraudster's enemy; you may have guessed someone's password, but if they read the email that says someone changed their email address, they can react before the money disappears into the ether. Furthermore, Mt. Gox can probably predict in advance how much cash they'll need to fulfill withdrawals, and liquidate the instruments in advance to make withdrawals instant, if they so chose. Everyone loves a good conspiracy theory, but the reality of running a money transfer business makes Mt. Gox look pretty normal.
  - username223 13y ago
    > Time is a fraudster's enemy; If I agree to hold your money, then "need more time" to give it back to you, how exactly is time being my enemy?
deleted 13y ago
[deleted]
anigbrowl 13y ago
But then people will realize that there is value in trading on Gox as a platform What value is this, exactly? You seem to be assuming that having fixed this problem the platform will never break down again, ever.
GigabyteCoin 13y ago
If he had 440k coins then, imagine how many he has now. Those ~440,000 Bitcoin were property of the Mt. Gox traders, not Mt. Gox the company. Mt. Gox was moving the money publicly in a show of good faith that they still controlled it. They have yet to do that in this new case. For all we know, Mt. Gox could have sent the ~40,000 missing Bitcoin to an unrecoverable/non-existant address by mistake.