10 ms·

The Mt. Gox alleged insolvency document has been posted

333 points by jordhy 13y ago

crazypyro 13y ago
I enjoy the proposed April 1st date of relaunch... Should be noted that at the time of this document release, all trading on MtGox is shutdown.
- smtddr 13y ago
  Yup, articles showing up online. http://www.businessinsider.com/reports-mtgox-halts-all-trading-2014-2 http://www.businessinsider.com/reports-mtgox-halts-all-tradi... http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disabled_on_mt_gox_its_happening/ http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disa...
deleted 13y ago
[deleted]
dustcoin 13y ago
Drop the "Mt.". Just "Gox". It's cleaner. On a serious note: I still doubt the legitimacy of this document, given how absurd it is to lose that much BTC without noticing.
- stusmall 13y ago
  Same here. The statement that got me was "The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company." That is no way to start out a slide show that says there is still hope for recovery from this mess.
- taternuts 13y ago
  Given the volatility of btc and the 'Gox' situation, it certainly wouldn't be too out of the question that someone is pushing false info to drive the Gox BTC => BTC trade prices down, but unfortunately I feel as if this might be legit
  - anigbrowl 13y ago
    Mt Gox BTC is trading at a 75% discount already, this seems superfluous. I'm betting on real.
- robzyb 13y ago
  > On a serious note: I still doubt the legitimacy of this document, given how absurd it is to lose that much BTC without noticing. Far more absurd things have happened.
- brudgers 13y ago
  What would you have expected them to have done if they had noticed but the people who noticed were netting millions of dollars a year? Sacrifice all that money or ride the gravy train to the end of the line? Suppose they figured it out three or four months ago that all their bitcoins were gone, what would have made things better? Suppose they figured they'd commit a small fraud two years ago before bitcoin took off, when were they supposed to come clean? People are building supercomputers to mine bitcoins. The whole idea of bitcoin is as rational as Easter Island totems but organized religion is probably a better analogy.
  - encoderer 13y ago
    Then to shame with all of the other actors in the industry. It is not unreasonable to expect your financial counterparties to subject themselves to audit. There are a lot of heavy bats in the Bitcoin community. If MtGox wouldn't consent to the same level of auditing any normal publicly traded US company is subject to (to say nothing of financial institution) then say so publicly and refuse to do business. The amount of lost BTC is in the hundreds of millions of dollars. I personally cannot believe it possible that this is not an insider job. I admit, I've traded on MtGox (speculation in 2011) but things were different back then and I never had my own wallet. My assumption is that it would be trivial to run DAILY reporting that verifies the amount of BTC you think you have on deposit with what you actually do. This is banking 101 and the ONLY way to ensure there is not a bug in your transaction handling. You are right brudgers that you cannot necessarily expect somebody to police themselves. But Coinbase. Winklevosses. Etc. I'm looking at you. These guys are CLEARLY crooks and have been all along and you let yourselves get snowed.
- gojomo 13y ago
  It'd be easier to believe an insider embezzlement, or deep hack/physical-heist by outsiders, that took all cold-wallet funds in one go. A gradual drain would have given so many chances to notice, mitigate, or correct.
dustcoin 13y ago
whois gox.com Domain Name: GOX.COM Registry Domain ID: 816800_DOMAIN_COM-VRSN Registrar WHOIS Server: whois.godaddy.com Registrar URL: http://www.godaddy.com Update Date: 2014-02-24 17:29:44 Creation Date: 1997-10-09 23:00:00 Registrar Registration Expiration Date: 2017-10-08 23:00:00 Registrar: GoDaddy.com, LLC Registrar IANA ID: 146 Registrar Abuse Contact Email: abuse@godaddy.com Registrar Abuse Contact Phone: +1.480-624-2505 Domain Status: clientTransferProhibited Domain Status: clientUpdateProhibited Domain Status: clientRenewProhibited Domain Status: clientDeleteProhibited Registry Registrant ID: Registrant Name: Mark Karpeles Registrant Organization: Tibanne Co. Ltd.
- patio11 13y ago
  The update date on that and this document recommending an insane and utterly ineffectual rebrand caused me to revise my opinion of its accuracy from "Oh please, nobody, not even Gox, is that stupid" to "I think today will be a very interesting news day."
  - 650REDHAIR 13y ago
    How hard would it be to fake that registration though? Create burner email addresses, prepaid cards, etc and setup the domain. Sounds as plausible as all of the other MtGox conspiracies.
    - patio11 13y ago
      On a three letter domain name, that's at least six figures hard.
      - nly 13y ago
        archive.org seems to indicate nothing of any value has used the domain in the last ~18 years Did find this though, which was nostalgic https://web.archive.org/web/19961223071948/http://www.gox.com/ https://web.archive.org/web/19961223071948/http://www.gox.co...
steven2012 13y ago
I'm not convinced this is real, and I happen to think that MtGox is going to go bankrupt. But this doesn't smell right to me. If it's a hoax, then it's well done. I would guess it's something done by an investment banker who knows how to write documents up like this. But the write up is far too melodramatic for me to believe this was written by someone actually involved in the situation. "At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public." "This isn’t about saving MtGox anymore." Why is there only a single line on preventing a run on MtGox? That to me would be the most pressing issue once MtGox opened up the floodgates.
- stusmall 13y ago
  Not only does it put a bigger focus on bitcoin as whole than MtGox, it is extremely negative about the company. I don't know what the intended audience for this is but it wouldn't do a good job of selling the company as a good investment or as good rallying cry for the troops. It reads like it was written by someone who believes in BTC but was burned by MtGox.
  - pmorici 13y ago
    Probably targeted toward Gox's investors who are going to be the ones that have to deal with this mess.
- deleted 13y ago
  [deleted]
  - Avalaxy 13y ago
    Doh, those are just events that already happened. Not rocket science here.
- Yorn 13y ago
  It also uses "robbery" in a really unbusiness-like way. Still, there's only a few things here and there that are kind of out-of-line, and might be of the sort I'd expect for a intended-to-be-internal document.
lazyloop 13y ago
Clearly a hoax or an inside job, nobody loses that much money without noticing, this might go down in history as the Gox scheme.
- colinbartlett 13y ago
  Nobody said they were completely unaware of it. They might have known about the theft and been hoping they could dig their way out of it.
  - eco 13y ago
    Wouldn't that make it a Ponzi scheme then?
    - colinbartlett 13y ago
      Precisely the analogy I was thinking. Even at the very end, epic Ponzi scammer Marc Dreier was convinced he could dig himself out with more "investments".
jasonlingx 13y ago
Let this be a warning to everybody with bitcoin in wallets they do no absolutely control, for example, Coinbase - you can and almost certainly will lose them at a moment's notice, sooner or later. I feel really sorry for those with funds tied up with MtGox. It was only recently where I used MtGox to store most of my bitcoin and I am lucky to have decided to move them all to paper wallets. This demonstrates one of the biggest issues holding back widespread adoption of bitcoin, the ability of the layperson to securely hold large amounts of bitcoin.
- MBCook 13y ago
  > Let this be a warning to everybody with bitcoin in wallets they do no absolutely control Is that how this happened? Given that bitcoins are supposed to be owned by addresses that are protected by private key, I wondered why people couldn't "withdrawal" their bitcoins. If Mt. Gox was controlling the private keys (as a hosted wallet service) that makes more sense.
  - Karunamon 13y ago
    That's generally how the exchange services work.. you send money from your wallet to one under their control, which credits an "account" you use to make trades.
    - MBCook 13y ago
      Honestly that's a bit creepy. I've started to play around with Dogecoin and decided to see how I could buy $50 or so worth and was horrified at the answers. * Make a physical deposit against an account number we give you at a bank branch * Buy Linden Dollars, swap them for Bitcoin, swap them for Dogecoin * Give people gift card codes * Pay random people via PayPal or Google Wallet The last of those was the least sketchy looking but by and large it creeped me the hell out. The options looked like 50% scamming and 50% money laundering.
      - zanny 13y ago
        Well nobody is going to sign up for you using anything that can chargeback, because they can't get their money back if they give it to you. And a lot of the intermediary payment services like Dwolla stopped working with btc. So if you want doge, either mine it, get sent it from random strangers, or trade it for btc (which is more readily available through services like coinbase).
knyt 13y ago
Whoever censored the tables on page 7 appears to have forgotten about deleting the text behind the black bars.
- ars 13y ago
  So uncensor it and post it for us here.
  - deleted 13y ago
    [deleted]
  - sylvinus 13y ago
    There you go: http://imgur.com/MwPTktl http://imgur.com/MwPTktl
- 650REDHAIR 13y ago
  Is any of it retrievable?
- dokkles 13y ago
  http://cl.ly/image/2L043C464030 http://cl.ly/image/2L043C464030
- newy 13y ago
  http://f.cl.ly/items/3a0C2e122c3q02473T1x/Image%202014-02-24%20at%206.26.38%20PM.png http://f.cl.ly/items/3a0C2e122c3q02473T1x/Image%202014-02-24...
- hackerjews 13y ago
  You can un-redact it yourself if you stick an ID on one of the surrounding divs, and then do $("#mydiv img").remove(); http://i.imgur.com/jixb1FZ.png http://i.imgur.com/jixb1FZ.png
arasmussen 13y ago
In my opinion, Mt. Gox announcing insolvency would be a good thing for Bitcoin. Given that Mt. Gox froze trades and this document was released around the same time, this might actually be legitimate. This is a good thing because right now Mt. Gox is giving Bitcoin a very bad name. Silk Road made Bitcoin seem shady. Mt. Gox makes Bitcoin seem like a joke, like you can lose it all because the exchanges are so immature compared to exchanges for USD or etc. Better now than in a year when a much larger portion of the public has accepted Bitcoin. In the meantime, here comes sub-500 on Bitstamp. Buy the rumor, sell the news, folks.
smtddr 13y ago
Waaayyyyy too dramatic to be real; even for MtGox. Not that I think MtGox is coming back. I'm only interested in how(there's no "if" anymore) they shutdown. Will they be able to make everyone whole again. Now, if this is real and they really did lose over 700K of coins... they better just pack up and run to a far away galaxy.
MWil 13y ago
why Singapore?
- Gigablah 13y ago
  Maybe due to their official approach to bitcoin taxation: http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoin-treat-it-like-a-product-not-money/ http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoi...
- jpatokal 13y ago
  Because it's Bitcoin-friendly and a great place to run a company? http://gyrovague.com/2013/10/30/half-the-donut-why-an-entrepreneur-earning-100k-gets-to-keep-over-99k-in-singapore-but-under-57k-in-san-francisco/ http://gyrovague.com/2013/10/30/half-the-donut-why-an-entrep...
sunseb 13y ago
Gox is better crafting crisis strategy draft than coding softwares. :-/
fiatpandas 13y ago
Well, they certainly could have tried harder to sensor the income statement. It's 100% visible if you open that particular page in Illustrator.
- eieio 13y ago
  Would you mind posting the figure for those of us who don't have illustrator? I'm curious.
  - petsounds 13y ago
    https://news.ycombinator.com/item?id=7294888 https://news.ycombinator.com/item?id=7294888
    - eieio 13y ago
      Thanks!
    - teawithcarl 13y ago
      Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection Draft": http://i.imgur.com/u9aP9Hg.png http://i.imgur.com/u9aP9Hg.png
bdc 13y ago
Listed under "Assets": "New brand and services ready to be launched." Just what the community needs most - new Gox-quality services, hidden behind brand obfuscation. Ready to go!
ubi 13y ago
Clearly MT Gox is too big to fail.
- bronson 13y ago
  Ha, right. And they're asking for a bailout. Wasn't Bitcoin supposed to be different?
  - knodi 13y ago
    People will be people.
jessexoc 13y ago
Simply putting black bars over text (p.8) in a PDF is not sufficient to redact it.
- thrill 13y ago
  Whoever created this PDF knew that.
moeedm 13y ago
Currency of the future guys!!!!!!11
NoPiece 13y ago
Where is the slide about a criminal investigation. If this is real, it has to happen, right?
- MarkTee 13y ago
  What laws have they broken?
  - foobarqux 13y ago
    Gross negligence
anigbrowl 13y ago
Download the PDF and set the highlight opacity to 20% if you want to read the balance sheet/projections on page 11.
- bobbyongce 13y ago
  download the PDF - click on Comments. Delete all the comments and you can see all the numbers
petsounds 13y ago
Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection Draft": http://i.imgur.com/u9aP9Hg.png http://i.imgur.com/u9aP9Hg.png
- dustcoin 13y ago
  Is this a fake/placeholder balance sheet? Why would MtGox have a "Cost of Goods Sold"?
  - tptacek 13y ago
    There are software companies that account for hosting fees and payment processing fees as COGS; COGS are non-marketing expenses that scale with sales, which can be nonzero for Internet software companies.
- ck2 13y ago
  They give 4 million USD a year to accountants and lawyers? That's a bit mind boggling.
  - patio11 13y ago
    That is their projection for the future, and if you assume protracted litigation while they're restructuring is going to be the order of the day, that doesn't sound insane at all.
    - danielweber 13y ago
      Hindsight is 20/20, but: whatever they were paying to accountants and lawyers already, it wasn't enough.
tlrobinson 13y ago
It's highly likely this is a hoax. I don't even understand who this is allegedly written by? Gox themselves? Or is the 2nd slide written by someone else? Why would they hypothesize about the demise of Bitcoin, not to mention say "The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company" about themselves?
- sylvinus 13y ago
  Maybe somebody like the Bitcoin foundation doing some crisis management and taking over what's left of MtGox to save the market?
- dragonwriter 13y ago
  > It's highly likely this is a hoax. I don't even understand who this is allegedly written by? Gox themselves? The only way I can see it making sense is if it is by someone inside Gox, probably (from the tone) without formal tasking, seeking to galvanize action from decision-makers in a mixture of denial and panic at the time it was written.
- gojomo 13y ago
  It sounds like it's written from the vantage point of an incoming turnaround/bailout team, which explains the shifting perspectives. It's not quite existing management, but a wanna-be new team that shifts into speaking on behalf of the envisioned future incarnation. Still, I agree there's a high probability it's a hoax. Re-launch April 1? No discussion whatsoever of criminal liabilities? Tallying seized funds in others' hands (including CoinLab and USGov), pending legal cases, as assets? Totally fanciful belief there'd be donations and new buyers/investors ("cash injections to buy coins [that by the way actually don't exist] at the cheap MtGox price") through a 1-month shutdown-restart, where the only asset is Gox's brand? It's hallucinatory, to whatever extent it's not an intentional parody of other 'too big to fail' bailouts.
verroq 13y ago
> cash injections to buy coins at the cheap MtGox price are some options among many > cash for buying coins at MtGox price - Target: 50% covered Called it: https://news.ycombinator.com/item?id=7289629 https://news.ycombinator.com/item?id=7289629
snitko 13y ago
> The cold storage has been wiped out due to a leak in the hot wallet. This sounds like some kind of bullshit.
- pmorici 13y ago
  I believe it. We know there have been times when withdrawals of BTC stopped and the stated resolution was that they had to top off the hot wallet from cold storage. Now you might think it would be pretty dan hard to be scammed for years and not notice so many missing coins but we also know they are incompetent so I'm gonna say this could be legit.
  - snitko 13y ago
    Yeah, but how incompetent can you be to lose 700k of coins? I mean at some point you'd look and say, "hey, that's weird, we only have 400k left in our cold storage!"
    - smoyer 13y ago
      It's entirely possible that the "leak" is a cover story for someone at the company getting rich. Or that an insider knew the company had a security hole and exploited it while incognito. The downside to helping out Gox is that the incompetent people don't pay. I'd suggest those with deposits would see a better return if they allowed Gox to go bankrupt, then filed a class-action lawsuit in an attempt to pierce the corporate veil and go after the company's officer's assets. It might still be pennies-on-the-dollar but it wouldn't be zero pennies.
- deleted 13y ago
  [deleted]
dokkles 13y ago
yeah the uncensored doc on page 7...http://cl.ly/image/2L043C464030 http://cl.ly/image/2L043C464030. This just stinks of a hoax
dfc 13y ago
What is a "leak in the hot wallet"? Is that a euphemism for "we did not correctly move coins to cold storage"?
RRRA 13y ago
It'll be interesting to see if Silk Road 2 will be able to recover from their loss by creating a truly (crypto) trustable escrow service that can be reused by exchange... I don't understand how you can trust any exchange otherwise!
fredgrott 13y ago
a question how does one audit an anonymous money transaction? NO, really from a standpoint of say security, financial,etc? The Fiat is only as trust worthy as its baddest actor. This works not only for physical but for bitcoin a well. Another way to put it is if you have 100% transparency you have 0% bad information ..ie less price swings and less opportunities to make money on swings either up or down.
kevinthew 13y ago
That this even could be conceivably real is the entire problem with Bitcoin.
pjan 13y ago
For those interested: page 8 unredacted... http://imgur.com/aU5mCVP http://imgur.com/aU5mCVP
valar_m 13y ago
At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. Placing this sentence in bold text seems like an attempt to create panic. It seems unlikely that Mt. Gox would want to do that. The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company. I find it extraordinarily difficult to believe that Mt. Gox would make a statement of this nature. "MtGox can go bankrupt at any moment" has a very amateurish ring to it, in stark contrast to recent communications from Mt. Gox. [1] Publicly stating that they deserve to go bankrupt seems highly inconsistent with planning for a relaunch. Also, the document alternates between first person ("we will use SNS platforms...") and third person ("Publicly, MtGox declared that"), which is suspicious given that the statements released by Mt. Gox recently do not do that. [1] It's possible that this is real. Personally, I doubt it. [1] https://www.mtgox.com/img/pdf/20140220-Announcement.pdf https://www.mtgox.com/img/pdf/20140220-Announcement.pdf
- buro9 13y ago
  They have given their stakeholders and customers a clear signal which amounts to: "Work with us in everyone's interest and we may slowly be able to return some value to you, work on your own interests and we all will lose everything.".
- wpietri 13y ago
  Nah, I'd believe it. From reading it, I think the purpose of the document was to get other Bitcoin players to help bail out MtGox. Possibly something written by a credible outsider at MtGox's request. The normal answer to that would be, "fuck you", so this document a) has to make it clear that MtGox is doomed without a bailout, and b) the other players will be hurt more if they don't chip in than if they do.
zacinbusiness 13y ago
How will the MtGox fiasco affect the bit coin economy in the long term.
ck2 13y ago
Wait, what is that line with 5.5 million USD held by DHS ? Department of Homeland Security? ps. also, they have 80 THOUSAND seized btc from banned accounts? that is a whopping bit of profit if that space is a comma and not a decimal anyone notice this document is a bit sloppy with commas vs spaces?
- dustcoin 13y ago
  Yes. The feds seized funds from MtGox's US subsidiary's bank accounts. http://techcrunch.com/2013/08/23/feds-seize-another-2-1-million-from-mt-gox-adding-up-to-5-million/ http://techcrunch.com/2013/08/23/feds-seize-another-2-1-mill...
- christoph 13y ago
  Yes. http://techcrunch.com/2013/08/23/feds-seize-another-2-1-million-from-mt-gox-adding-up-to-5-million/ http://techcrunch.com/2013/08/23/feds-seize-another-2-1-mill...
mschuster91 13y ago
This is showing the weakness in that there is no central entity to control BTC. In a "fiat currency" world regulators would step in and a) supply liquidity (either in BTC or fiat) and b) impose withdrawal limits while at the same time try to prevent a bank run by backing the weak actor. (Not that I dislike BTCs lack of a central authority, but it certainly would come in handy here)
- SwellJoe 13y ago
  If this document is real, the criminality of what's going on is mindblowing (and I don't just mean the theft from Mt Gox, I mean the theft from Gox customers by Gox...the "buy Gox BTC while it's cheap" and then manipulating the market to insure it stays cheap and gets cheaper over time, is straight up fraud). If this is real, I don't want Mt Gox to survive. Just like I don't think many of the banks during the mortgage crisis should have survived. We'd be better off today had the market been allowed to destroy them (or, if not today...then in five or ten more years; in the long run, all we've ever gotten from bailouts and Hail Mary passes for the big banks has been more criminality on an even larger scale further down the road, and less justice for the people they hurt). I don't know what the right answer is here, but bailing out a criminal enterprise isn't it.
- MBCook 13y ago
  Fiat regulators would've prevented them from running such slipshod operation in the first place. Or at least required better accounting controls.
TomGullen 13y ago
Sold all our coins @$500. Not for this reason only, it's the straw on the camels back. It doesn't smell like BS to me (although it could be of course). I highly doubt the author is intentionally misleading us, be he could be being mislead. He's ex VC apparently, seems to be plausible that this document was MtGox's solution to their problem proposed to potential VC's, and one of his VC friends passed it on to him. Whether or not the document is real or not is pretty irrelevant to me at this stage. Only bad news can now come from Gox. - Moved to a virtual office - No withdrawls - AstroPay rumoured to be non functional - Communication failure of the highest order - etc etc This is a company going bankrupt. If we had our coins in MtGox and they go bust, I'm going to be pretty distraught by the experience and it would sting enough for me to pay it no more attention going into the future. If Gox does go bankrupt, Bitcoin could lose a large % of their 'userbase', and some passionate and technical ones at that. Chance of MtGox going bust is probable in my opinion. I can't really any scenario where good news comes from Gox. Happy to buy back in again, but probably wont consider it until the dust has settled, and there's a lot more dust to be kicked up in my opinion. Been watching Bitcoin religiously for a while now and it feels a little relieving to not have any more serious skin in, for a while at least. Happy to look like an idiot tomorrow morning/next week whenever.
- zanny 13y ago
  > Happy to buy back in again, but probably wont consider it until the dust has settled, and there's a lot more dust to be kicked up in my opinion. I rode this ride all the way down from $800 where I was investing and never sold. Still won't, because I can't imagine the economy being that stupid. All the money that was in Gox that was going to get out already did. The rest is already deflated from the death of confidence in Gox. All the rest of the money is going into a black hole of whatever the US fed got and whatever MtGox dies with. Unless people start panic selling their coins on the other exchanges (which I don't even get why you would - Gox is dead, the greatest blemish of incompetence in the trading scene is no more, that is a good thing), I don't see how this would impact the general btc price any more. If anything, I'd hope it would rally, but that malleable transactions nonsense probably is going to keep people scared for a while.
spiralpolitik 13y ago
I'm going with hoax. When the brown stuff is hitting the fan you lawyer up and stay quiet. You don't write a Powerpoint presentation that could later be used to sue your ass off. Update: Tracking the Coinbase spot price it dipped below $500 for a short while just after the document went public. It's now back over $500. Smells even more that someone is trying to push the non Mt.Gox BTC price down to buy cheap to sell on the rebound.
Danieru 13y ago
My bet is on hoax and here is why: 1. A business like mtgox would expect to be moving coins into cold storage. The moment they need to move coins from cold storage into the hot wallet they would take notice and check their accounting. Theft from transaction malleability would show up in any simple summing of the balances and liabilities. They would notice the theft and stop pulling money from cold storage long before cold storage was empty. 2. The tone is too harsh on mtgox to be a report from a client of mtgox. Who produced it? If you hire a consultancy you can be sure they will brand any document produced. 3. Where did the cash liabilities imbalance come from? The "leaked" financial report did not show them spending the fiat reserve so where did the missing 20M go? How could the fiat liability be unclear? Shouldn't fiat liability be the one thing their accountant has a clear picture of? How do you "average across currencies", you cannot "average" exchange rates, the word makes no sense. The more I look at this the more it feels like a post on bitcointalk.
- Aqueous 13y ago
  Mt. Gox itself feels like a post on BitCoinTalk
- snikch 13y ago
  3. is the most important there. The other questions could be speculatively answered. But there's no way to explain a 20M imbalance without some sort of criminal negligence, which would make any sort of rebrand / relaunch absolutely impossible.
- tlrobinson 13y ago
  "Where did the cash liabilities imbalance come from?" Bank accounts seized by DHS?
  - wmf 13y ago
    Nope, the document accounts for that. It claims there is a massive additional amount of USD missing besides what was seized—with no explanation of how the money went missing.
agorabinary 13y ago
(Assuming this is real) How do you lose HUNDREDS of millions of dollars worth of bitcoins over the course of years and not notice it?? There is no evidence that this "accidental loss" is not merely obfuscated theft.
halfdeadcat 13y ago
Maybe it's a hoax. But the pieces seem to be falling according to the plan. http://money.cnn.com/2014/02/24/technology/security/mtgox-bitcoin/ http://money.cnn.com/2014/02/24/technology/security/mtgox-bi...
apaprocki 13y ago
If it's a hoax, I wonder if it is trolling companies as well. These headlines just flashed across the terminal: *COINBASE RELEASES STATEMENT ON MT. GOX INSOLVENCY *COINBASE SAYS MT. GOX VIOLATED TRUST OF USERS Edit: Ah, joint statement by: Fred Ehrsam — Co-founder of Coinbase Jesse Powell — CEO of Kraken Nejc Kodrič — CEO of Bitstamp.net Bobby Lee — CEO of BTC China Nicolas Cary — CEO of Blockchain.info Jeremy Allaire — CEO of Circle
foobarqux 13y ago
I said several times that Mt.Gox needed an independent financial audit. Even after this announcement it still does.
snizzysnaps 13y ago
Hold. The. Phone... Are you telling me that this unregulated, nonsense, digital currency, that the entire nerd community masterbates over incessantly, is waste of time, total insecure mess, that is prone to massive theft? That is just horrible. Really really terrible. God forbid the technical community focuses on something that matters, and we all go back to using dollars, yen, or what have you, and then continue to use normal banks and regulated methods of transfer, like any of the hundreds of online payment companies that do this every day without a problem. I hope Bitcoin, Dogecoin, Kanye West Coin, and all these other stupid currencies die a fast fiery death. Good riddance. Another thought...I would literally imprison everyone even using crypto-currency if I had the chance. The only thing this is used for is for drugs, hacking, wares, child pornography, and other sorts of crime; The entire Bitcoin community is comprised of anarchist, anti-government nut jobs, socialists, and commies. We would be doing the world a favor by locking them up and throwing away the key.
knodi 13y ago
744,408 BTC is 367,704,753 USD... (at $493 per BTC). This is bullshit. No way it went unnoticed for years. They're trying to pull what SR2.0 pulled, stole the money and are now trying to run.
- zeroDivisible 13y ago
  Also, I was wondering why they had allowed trading, even after finding the issues with their systems - but that document made everything clear. If they would shut down immediately, they would own: 744,408 BTC is 367,704,753 USD... (at $493 per BTC). But based on linked document: 744,408 BTC (MtGox av price 160 USD= 119,105,280 USD) Brilliant move.
foobarqux 13y ago
200 million dollars in net liabilities. Restructuring is not going to happen.
EvanMiller 13y ago
And this, children, is why markets are regulated.
maaku 13y ago
Please explain this like I'm 5. Gox has for some time required verification for withdraws. So it knows (government ID, passport scans) who withdrew funds twice. Why can't they just ask for their money back like any other business?
cyphunk 13y ago
If nothing else it would be clearly irresponsible of MTGox to remain silent
ChristianMarks 13y ago
If MtGox were too big to fail, the taxpayer would cover their losses. Looks like someone wants a bailout. Nice work if you can get it--the question for me is, how do I get in on this? If the answer is that I cannot, then allow me some shadenfreude.
pmorici 13y ago
Anyone know who Ryan Selkis is? If you download the original PDF, right click the blacked out parts, and select properties his name is listed as the "Author" under the General tab; last modified 2/24/2014 8:46:51 PM. According to his linkedin he is the Founder of Inscrypto, "We are like Bitcoin’s privately funded, decentralized version of the FDIC." http://go.inscrypto.com/ http://go.inscrypto.com/ http://www.linkedin.com/in/ryanselkis http://www.linkedin.com/in/ryanselkis Either they lost a lot on this or they just got the best advertisement ever for why one might need their services.
- ayu 13y ago
  Ryan is the guy who originally shared the slide deck. He blogs/tweets under the pseudonym @twobitidiot: http://www.slideshare.net/selkisr/bitcoin-market-opportunity-excellent-early-merchant-adopters http://www.slideshare.net/selkisr/bitcoin-market-opportunity... (see slide 2) original tweet sharing the slide deck: https://twitter.com/twobitidiot/status/438131088607965184 https://twitter.com/twobitidiot/status/438131088607965184
  - pmorici 13y ago
    Ah, that makes sense, looks like this Wired article agrees... http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-implodes/ http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox... Edit: the NYT article attributes the leaked document to someone else though, http://www.nytimes.com/2014/02/25/business/apparent-theft-at-mt-gox-shakes-bitcoin-world.html http://www.nytimes.com/2014/02/25/business/apparent-theft-at...
nikcub 13y ago
It is real - this is an internal strategy doc shared between the exchanges and other Bitcoin people with MtGox and it was never supposed to be public. Something has gone wrong with the plan. Here is what i've worked out so far what has happen. MtGox worked out a while ago that they were insolvent, so they reached out to prominent members of the Bitcoin community to help them out. The plan was instead of just having MtGox make a statement saying 'we are insolvent, no more money' they would team up with the other exchanges and come up with a plan where they could wrap that news around some 'good' news. This document is the draft of that plan as it was being worked on by the exchanges and MtGox. The 'good' news parts would be: 1. MtGox customers would be transferred to a new entity Gox 2. Karpeles wouldn't be involved 3. The new exchange would have old 'owed' figures from MtGox 4. The other exchanges would attempt to partially bail out the MtGox holders edit: point 4.5. the Mt Gox closing statement would shift blame away from Bitcoin - which is important. MtGox has spent the last 3 months blaming on a 'bitcoin bug' what was a failure of their own accounting and auditing system. A lot of media bought up the 'bitcoin bug' story. 5. The other exchanges and Gox would announce all this at the same time on Tue 25th Feb 6. For some reason the exchanges did their part but Gox didn't do their part 7. Someone from the exchanges leaked this internal strategy doc that was written between MtGox and the exchanges to show what should have happen today but didn't since MtGox bailed out on their part of it. We are now stuck in a situation where part of this internal plan has been implemented (the exchanges, gox.com being registered) but the majority of it has not. edit: most interesting q's for me atm are: why did MtGox reneg on this plan (or have they?), when did MtGox finally reach out for help? and how long have these insiders known that MtGox is in trouble - there was a huge sell spike in MtGox coins days ago. edit 2: note that outside of verifying this doc with somebody who works at one of the companies, since this doc was leaked and published the following has happen, as outlined in the doc: * the other markets released their joint statement * the gox.com domain was registered/activated * trading halted edit 3: you may have noticed slide 8 of the presentation is censored, i've managed to remove the black bars. It is details of MtGox's financials, image here: http://i.imgur.com/Rb5MIcg.png http://i.imgur.com/Rb5MIcg.png Google Doc version here: https://docs.google.com/document/d/1miioFP1oFnLa8OQ1MZ91ABUDfLKY8X9KDGwz8Izjaa0/edit https://docs.google.com/document/d/1miioFP1oFnLa8OQ1MZ91ABUD...
- hrrsn 13y ago
_pmf_ 13y ago
> The plan was instead of just having MtGox make a statement saying 'we are insolvent, no more money' they would team up with the other exchanges and come up with a plan where they could wrap that news around some 'good' news. Or, as I think is the more common term, "commit fraud".
zmk_ 13y ago
And this is how Bitcoin community discovers the virtues of industry-sponsored deposit insurance.
llamataboot 13y ago
I don't understand. Either they got robbed very slowly over a long time, which means they literally did not do even the most basic accounting. Or they got robbed all at once which means they had no cold storage for bitcoins. Neither seems likely. I knew there were some problems with MTGox lack of communication about problems over the past few years, but you can't be so dumb as to not hire a competent auditing team with millions of dollars at your disposal and hundreds of millions that you are in charge of protecting right?
fsk 13y ago
According to that document, they only have enough assets to pay 0.1%-0.3% of customer deposits. That's a 100% loss to customers. There's no way the other Bitcoin users can afford to pay 100M to bail out their customers.
Tycho 13y ago
You've got to break a few eggs to make an omlette.
- jondtaylor 13y ago
  What would the omlette be in this analogy?
  - Tycho 13y ago
    A stable market with trusted financial intermediaries etc.

333 points by jordhy 13y ago

I enjoy the proposed April 1st date of relaunch... Should be noted that at the time of this document release, all trading on MtGox is shutdown.

smtddr 13y ago
Yup, articles showing up online. http://www.businessinsider.com/reports-mtgox-halts-all-trading-2014-2 http://www.businessinsider.com/reports-mtgox-halts-all-tradi... http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disabled_on_mt_gox_its_happening/ http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disa...

deleted 13y ago

[deleted]

dustcoin 13y ago

Drop the "Mt.". Just "Gox". It's cleaner. On a serious note: I still doubt the legitimacy of this document, given how absurd it is to lose that much BTC without noticing.

stusmall 13y ago
Same here. The statement that got me was "The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company." That is no way to start out a slide show that says there is still hope for recovery from this mess.
taternuts 13y ago
Given the volatility of btc and the 'Gox' situation, it certainly wouldn't be too out of the question that someone is pushing false info to drive the Gox BTC => BTC trade prices down, but unfortunately I feel as if this might be legit
- anigbrowl 13y ago
  Mt Gox BTC is trading at a 75% discount already, this seems superfluous. I'm betting on real.
robzyb 13y ago
> On a serious note: I still doubt the legitimacy of this document, given how absurd it is to lose that much BTC without noticing. Far more absurd things have happened.
brudgers 13y ago
What would you have expected them to have done if they had noticed but the people who noticed were netting millions of dollars a year? Sacrifice all that money or ride the gravy train to the end of the line? Suppose they figured it out three or four months ago that all their bitcoins were gone, what would have made things better? Suppose they figured they'd commit a small fraud two years ago before bitcoin took off, when were they supposed to come clean? People are building supercomputers to mine bitcoins. The whole idea of bitcoin is as rational as Easter Island totems but organized religion is probably a better analogy.
- encoderer 13y ago
  Then to shame with all of the other actors in the industry. It is not unreasonable to expect your financial counterparties to subject themselves to audit. There are a lot of heavy bats in the Bitcoin community. If MtGox wouldn't consent to the same level of auditing any normal publicly traded US company is subject to (to say nothing of financial institution) then say so publicly and refuse to do business. The amount of lost BTC is in the hundreds of millions of dollars. I personally cannot believe it possible that this is not an insider job. I admit, I've traded on MtGox (speculation in 2011) but things were different back then and I never had my own wallet. My assumption is that it would be trivial to run DAILY reporting that verifies the amount of BTC you think you have on deposit with what you actually do. This is banking 101 and the ONLY way to ensure there is not a bug in your transaction handling. You are right brudgers that you cannot necessarily expect somebody to police themselves. But Coinbase. Winklevosses. Etc. I'm looking at you. These guys are CLEARLY crooks and have been all along and you let yourselves get snowed.
gojomo 13y ago
It'd be easier to believe an insider embezzlement, or deep hack/physical-heist by outsiders, that took all cold-wallet funds in one go. A gradual drain would have given so many chances to notice, mitigate, or correct.

dustcoin 13y ago

whois gox.com Domain Name: GOX.COM Registry Domain ID: 816800_DOMAIN_COM-VRSN Registrar WHOIS Server: whois.godaddy.com Registrar URL: http://www.godaddy.com Update Date: 2014-02-24 17:29:44 Creation Date: 1997-10-09 23:00:00 Registrar Registration Expiration Date: 2017-10-08 23:00:00 Registrar: GoDaddy.com, LLC Registrar IANA ID: 146 Registrar Abuse Contact Email: abuse@godaddy.com Registrar Abuse Contact Phone: +1.480-624-2505 Domain Status: clientTransferProhibited Domain Status: clientUpdateProhibited Domain Status: clientRenewProhibited Domain Status: clientDeleteProhibited Registry Registrant ID: Registrant Name: Mark Karpeles Registrant Organization: Tibanne Co. Ltd.

patio11 13y ago
The update date on that and this document recommending an insane and utterly ineffectual rebrand caused me to revise my opinion of its accuracy from "Oh please, nobody, not even Gox, is that stupid" to "I think today will be a very interesting news day."
- 650REDHAIR 13y ago
  How hard would it be to fake that registration though? Create burner email addresses, prepaid cards, etc and setup the domain. Sounds as plausible as all of the other MtGox conspiracies.
  - patio11 13y ago
    On a three letter domain name, that's at least six figures hard.
    - nly 13y ago
      archive.org seems to indicate nothing of any value has used the domain in the last ~18 years Did find this though, which was nostalgic https://web.archive.org/web/19961223071948/http://www.gox.com/ https://web.archive.org/web/19961223071948/http://www.gox.co...

steven2012 13y ago

I'm not convinced this is real, and I happen to think that MtGox is going to go bankrupt. But this doesn't smell right to me. If it's a hoax, then it's well done. I would guess it's something done by an investment banker who knows how to write documents up like this. But the write up is far too melodramatic for me to believe this was written by someone actually involved in the situation. "At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public." "This isn’t about saving MtGox anymore." Why is there only a single line on preventing a run on MtGox? That to me would be the most pressing issue once MtGox opened up the floodgates.

stusmall 13y ago
Not only does it put a bigger focus on bitcoin as whole than MtGox, it is extremely negative about the company. I don't know what the intended audience for this is but it wouldn't do a good job of selling the company as a good investment or as good rallying cry for the troops. It reads like it was written by someone who believes in BTC but was burned by MtGox.
- pmorici 13y ago
  Probably targeted toward Gox's investors who are going to be the ones that have to deal with this mess.
deleted 13y ago
[deleted]
- Avalaxy 13y ago
  Doh, those are just events that already happened. Not rocket science here.
Yorn 13y ago
It also uses "robbery" in a really unbusiness-like way. Still, there's only a few things here and there that are kind of out-of-line, and might be of the sort I'd expect for a intended-to-be-internal document.

lazyloop 13y ago

Clearly a hoax or an inside job, nobody loses that much money without noticing, this might go down in history as the Gox scheme.

colinbartlett 13y ago
Nobody said they were completely unaware of it. They might have known about the theft and been hoping they could dig their way out of it.
- eco 13y ago
  Wouldn't that make it a Ponzi scheme then?
  - colinbartlett 13y ago
    Precisely the analogy I was thinking. Even at the very end, epic Ponzi scammer Marc Dreier was convinced he could dig himself out with more "investments".

jasonlingx 13y ago

Let this be a warning to everybody with bitcoin in wallets they do no absolutely control, for example, Coinbase - you can and almost certainly will lose them at a moment's notice, sooner or later. I feel really sorry for those with funds tied up with MtGox. It was only recently where I used MtGox to store most of my bitcoin and I am lucky to have decided to move them all to paper wallets. This demonstrates one of the biggest issues holding back widespread adoption of bitcoin, the ability of the layperson to securely hold large amounts of bitcoin.

MBCook 13y ago
> Let this be a warning to everybody with bitcoin in wallets they do no absolutely control Is that how this happened? Given that bitcoins are supposed to be owned by addresses that are protected by private key, I wondered why people couldn't "withdrawal" their bitcoins. If Mt. Gox was controlling the private keys (as a hosted wallet service) that makes more sense.
- Karunamon 13y ago
  That's generally how the exchange services work.. you send money from your wallet to one under their control, which credits an "account" you use to make trades.
  - MBCook 13y ago
    Honestly that's a bit creepy. I've started to play around with Dogecoin and decided to see how I could buy $50 or so worth and was horrified at the answers. * Make a physical deposit against an account number we give you at a bank branch * Buy Linden Dollars, swap them for Bitcoin, swap them for Dogecoin * Give people gift card codes * Pay random people via PayPal or Google Wallet The last of those was the least sketchy looking but by and large it creeped me the hell out. The options looked like 50% scamming and 50% money laundering.
    - zanny 13y ago
      Well nobody is going to sign up for you using anything that can chargeback, because they can't get their money back if they give it to you. And a lot of the intermediary payment services like Dwolla stopped working with btc. So if you want doge, either mine it, get sent it from random strangers, or trade it for btc (which is more readily available through services like coinbase).

knyt 13y ago

Whoever censored the tables on page 7 appears to have forgotten about deleting the text behind the black bars.

ars 13y ago
So uncensor it and post it for us here.
- deleted 13y ago
  [deleted]
- sylvinus 13y ago
  There you go: http://imgur.com/MwPTktl http://imgur.com/MwPTktl
650REDHAIR 13y ago
Is any of it retrievable?
dokkles 13y ago
http://cl.ly/image/2L043C464030 http://cl.ly/image/2L043C464030
newy 13y ago
http://f.cl.ly/items/3a0C2e122c3q02473T1x/Image%202014-02-24%20at%206.26.38%20PM.png http://f.cl.ly/items/3a0C2e122c3q02473T1x/Image%202014-02-24...
hackerjews 13y ago
You can un-redact it yourself if you stick an ID on one of the surrounding divs, and then do $("#mydiv img").remove(); http://i.imgur.com/jixb1FZ.png http://i.imgur.com/jixb1FZ.png

arasmussen 13y ago

In my opinion, Mt. Gox announcing insolvency would be a good thing for Bitcoin. Given that Mt. Gox froze trades and this document was released around the same time, this might actually be legitimate. This is a good thing because right now Mt. Gox is giving Bitcoin a very bad name. Silk Road made Bitcoin seem shady. Mt. Gox makes Bitcoin seem like a joke, like you can lose it all because the exchanges are so immature compared to exchanges for USD or etc. Better now than in a year when a much larger portion of the public has accepted Bitcoin. In the meantime, here comes sub-500 on Bitstamp. Buy the rumor, sell the news, folks.

smtddr 13y ago

Waaayyyyy too dramatic to be real; even for MtGox. Not that I think MtGox is coming back. I'm only interested in how(there's no "if" anymore) they shutdown. Will they be able to make everyone whole again. Now, if this is real and they really did lose over 700K of coins... they better just pack up and run to a far away galaxy.

MWil 13y ago

why Singapore?

Gigablah 13y ago
Maybe due to their official approach to bitcoin taxation: http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoin-treat-it-like-a-product-not-money/ http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoi...
jpatokal 13y ago
Because it's Bitcoin-friendly and a great place to run a company? http://gyrovague.com/2013/10/30/half-the-donut-why-an-entrepreneur-earning-100k-gets-to-keep-over-99k-in-singapore-but-under-57k-in-san-francisco/ http://gyrovague.com/2013/10/30/half-the-donut-why-an-entrep...

sunseb 13y ago

Gox is better crafting crisis strategy draft than coding softwares. :-/

fiatpandas 13y ago

Well, they certainly could have tried harder to sensor the income statement. It's 100% visible if you open that particular page in Illustrator.

eieio 13y ago
Would you mind posting the figure for those of us who don't have illustrator? I'm curious.
- petsounds 13y ago
  https://news.ycombinator.com/item?id=7294888 https://news.ycombinator.com/item?id=7294888
  - eieio 13y ago
    Thanks!
  - teawithcarl 13y ago
    Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection Draft": http://i.imgur.com/u9aP9Hg.png http://i.imgur.com/u9aP9Hg.png

bdc 13y ago

Listed under "Assets": "New brand and services ready to be launched." Just what the community needs most - new Gox-quality services, hidden behind brand obfuscation. Ready to go!

ubi 13y ago

Clearly MT Gox is too big to fail.

bronson 13y ago
Ha, right. And they're asking for a bailout. Wasn't Bitcoin supposed to be different?
- knodi 13y ago
  People will be people.

jessexoc 13y ago

Simply putting black bars over text (p.8) in a PDF is not sufficient to redact it.

thrill 13y ago
Whoever created this PDF knew that.

moeedm 13y ago

Currency of the future guys!!!!!!11

NoPiece 13y ago

Where is the slide about a criminal investigation. If this is real, it has to happen, right?

MarkTee 13y ago
What laws have they broken?
- foobarqux 13y ago
  Gross negligence

anigbrowl 13y ago

Download the PDF and set the highlight opacity to 20% if you want to read the balance sheet/projections on page 11.

bobbyongce 13y ago
download the PDF - click on Comments. Delete all the comments and you can see all the numbers

petsounds 13y ago

Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection Draft": http://i.imgur.com/u9aP9Hg.png http://i.imgur.com/u9aP9Hg.png

dustcoin 13y ago
Is this a fake/placeholder balance sheet? Why would MtGox have a "Cost of Goods Sold"?
- tptacek 13y ago
  There are software companies that account for hosting fees and payment processing fees as COGS; COGS are non-marketing expenses that scale with sales, which can be nonzero for Internet software companies.
ck2 13y ago
They give 4 million USD a year to accountants and lawyers? That's a bit mind boggling.
- patio11 13y ago
  That is their projection for the future, and if you assume protracted litigation while they're restructuring is going to be the order of the day, that doesn't sound insane at all.
  - danielweber 13y ago
    Hindsight is 20/20, but: whatever they were paying to accountants and lawyers already, it wasn't enough.

tlrobinson 13y ago

It's highly likely this is a hoax. I don't even understand who this is allegedly written by? Gox themselves? Or is the 2nd slide written by someone else? Why would they hypothesize about the demise of Bitcoin, not to mention say "The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company" about themselves?

sylvinus 13y ago
Maybe somebody like the Bitcoin foundation doing some crisis management and taking over what's left of MtGox to save the market?
dragonwriter 13y ago
> It's highly likely this is a hoax. I don't even understand who this is allegedly written by? Gox themselves? The only way I can see it making sense is if it is by someone inside Gox, probably (from the tone) without formal tasking, seeking to galvanize action from decision-makers in a mixture of denial and panic at the time it was written.
gojomo 13y ago
It sounds like it's written from the vantage point of an incoming turnaround/bailout team, which explains the shifting perspectives. It's not quite existing management, but a wanna-be new team that shifts into speaking on behalf of the envisioned future incarnation. Still, I agree there's a high probability it's a hoax. Re-launch April 1? No discussion whatsoever of criminal liabilities? Tallying seized funds in others' hands (including CoinLab and USGov), pending legal cases, as assets? Totally fanciful belief there'd be donations and new buyers/investors ("cash injections to buy coins [that by the way actually don't exist] at the cheap MtGox price") through a 1-month shutdown-restart, where the only asset is Gox's brand? It's hallucinatory, to whatever extent it's not an intentional parody of other 'too big to fail' bailouts.

verroq 13y ago

> cash injections to buy coins at the cheap MtGox price are some options among many > cash for buying coins at MtGox price - Target: 50% covered Called it: https://news.ycombinator.com/item?id=7289629 https://news.ycombinator.com/item?id=7289629

snitko 13y ago

> The cold storage has been wiped out due to a leak in the hot wallet. This sounds like some kind of bullshit.

pmorici 13y ago
I believe it. We know there have been times when withdrawals of BTC stopped and the stated resolution was that they had to top off the hot wallet from cold storage. Now you might think it would be pretty dan hard to be scammed for years and not notice so many missing coins but we also know they are incompetent so I'm gonna say this could be legit.
- snitko 13y ago
  Yeah, but how incompetent can you be to lose 700k of coins? I mean at some point you'd look and say, "hey, that's weird, we only have 400k left in our cold storage!"
  - smoyer 13y ago
    It's entirely possible that the "leak" is a cover story for someone at the company getting rich. Or that an insider knew the company had a security hole and exploited it while incognito. The downside to helping out Gox is that the incompetent people don't pay. I'd suggest those with deposits would see a better return if they allowed Gox to go bankrupt, then filed a class-action lawsuit in an attempt to pierce the corporate veil and go after the company's officer's assets. It might still be pennies-on-the-dollar but it wouldn't be zero pennies.
deleted 13y ago
[deleted]

dokkles 13y ago

yeah the uncensored doc on page 7...http://cl.ly/image/2L043C464030 http://cl.ly/image/2L043C464030. This just stinks of a hoax

dfc 13y ago

What is a "leak in the hot wallet"? Is that a euphemism for "we did not correctly move coins to cold storage"?

RRRA 13y ago

It'll be interesting to see if Silk Road 2 will be able to recover from their loss by creating a truly (crypto) trustable escrow service that can be reused by exchange... I don't understand how you can trust any exchange otherwise!

fredgrott 13y ago

a question how does one audit an anonymous money transaction? NO, really from a standpoint of say security, financial,etc? The Fiat is only as trust worthy as its baddest actor. This works not only for physical but for bitcoin a well. Another way to put it is if you have 100% transparency you have 0% bad information ..ie less price swings and less opportunities to make money on swings either up or down.

kevinthew 13y ago

That this even could be conceivably real is the entire problem with Bitcoin.

pjan 13y ago

For those interested: page 8 unredacted... http://imgur.com/aU5mCVP http://imgur.com/aU5mCVP

valar_m 13y ago

At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. Placing this sentence in bold text seems like an attempt to create panic. It seems unlikely that Mt. Gox would want to do that. The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company. I find it extraordinarily difficult to believe that Mt. Gox would make a statement of this nature. "MtGox can go bankrupt at any moment" has a very amateurish ring to it, in stark contrast to recent communications from Mt. Gox. [1] Publicly stating that they deserve to go bankrupt seems highly inconsistent with planning for a relaunch. Also, the document alternates between first person ("we will use SNS platforms...") and third person ("Publicly, MtGox declared that"), which is suspicious given that the statements released by Mt. Gox recently do not do that. [1] It's possible that this is real. Personally, I doubt it. [1] https://www.mtgox.com/img/pdf/20140220-Announcement.pdf https://www.mtgox.com/img/pdf/20140220-Announcement.pdf

buro9 13y ago
They have given their stakeholders and customers a clear signal which amounts to: "Work with us in everyone's interest and we may slowly be able to return some value to you, work on your own interests and we all will lose everything.".
wpietri 13y ago
Nah, I'd believe it. From reading it, I think the purpose of the document was to get other Bitcoin players to help bail out MtGox. Possibly something written by a credible outsider at MtGox's request. The normal answer to that would be, "fuck you", so this document a) has to make it clear that MtGox is doomed without a bailout, and b) the other players will be hurt more if they don't chip in than if they do.

zacinbusiness 13y ago

How will the MtGox fiasco affect the bit coin economy in the long term.

ck2 13y ago

Wait, what is that line with 5.5 million USD held by DHS ? Department of Homeland Security? ps. also, they have 80 THOUSAND seized btc from banned accounts? that is a whopping bit of profit if that space is a comma and not a decimal anyone notice this document is a bit sloppy with commas vs spaces?

dustcoin 13y ago
Yes. The feds seized funds from MtGox's US subsidiary's bank accounts. http://techcrunch.com/2013/08/23/feds-seize-another-2-1-million-from-mt-gox-adding-up-to-5-million/ http://techcrunch.com/2013/08/23/feds-seize-another-2-1-mill...
christoph 13y ago
Yes. http://techcrunch.com/2013/08/23/feds-seize-another-2-1-million-from-mt-gox-adding-up-to-5-million/ http://techcrunch.com/2013/08/23/feds-seize-another-2-1-mill...

mschuster91 13y ago

This is showing the weakness in that there is no central entity to control BTC. In a "fiat currency" world regulators would step in and a) supply liquidity (either in BTC or fiat) and b) impose withdrawal limits while at the same time try to prevent a bank run by backing the weak actor. (Not that I dislike BTCs lack of a central authority, but it certainly would come in handy here)

SwellJoe 13y ago
If this document is real, the criminality of what's going on is mindblowing (and I don't just mean the theft from Mt Gox, I mean the theft from Gox customers by Gox...the "buy Gox BTC while it's cheap" and then manipulating the market to insure it stays cheap and gets cheaper over time, is straight up fraud). If this is real, I don't want Mt Gox to survive. Just like I don't think many of the banks during the mortgage crisis should have survived. We'd be better off today had the market been allowed to destroy them (or, if not today...then in five or ten more years; in the long run, all we've ever gotten from bailouts and Hail Mary passes for the big banks has been more criminality on an even larger scale further down the road, and less justice for the people they hurt). I don't know what the right answer is here, but bailing out a criminal enterprise isn't it.
MBCook 13y ago
Fiat regulators would've prevented them from running such slipshod operation in the first place. Or at least required better accounting controls.

TomGullen 13y ago

Sold all our coins @$500. Not for this reason only, it's the straw on the camels back. It doesn't smell like BS to me (although it could be of course). I highly doubt the author is intentionally misleading us, be he could be being mislead. He's ex VC apparently, seems to be plausible that this document was MtGox's solution to their problem proposed to potential VC's, and one of his VC friends passed it on to him. Whether or not the document is real or not is pretty irrelevant to me at this stage. Only bad news can now come from Gox. - Moved to a virtual office - No withdrawls - AstroPay rumoured to be non functional - Communication failure of the highest order - etc etc This is a company going bankrupt. If we had our coins in MtGox and they go bust, I'm going to be pretty distraught by the experience and it would sting enough for me to pay it no more attention going into the future. If Gox does go bankrupt, Bitcoin could lose a large % of their 'userbase', and some passionate and technical ones at that. Chance of MtGox going bust is probable in my opinion. I can't really any scenario where good news comes from Gox. Happy to buy back in again, but probably wont consider it until the dust has settled, and there's a lot more dust to be kicked up in my opinion. Been watching Bitcoin religiously for a while now and it feels a little relieving to not have any more serious skin in, for a while at least. Happy to look like an idiot tomorrow morning/next week whenever.

zanny 13y ago
> Happy to buy back in again, but probably wont consider it until the dust has settled, and there's a lot more dust to be kicked up in my opinion. I rode this ride all the way down from $800 where I was investing and never sold. Still won't, because I can't imagine the economy being that stupid. All the money that was in Gox that was going to get out already did. The rest is already deflated from the death of confidence in Gox. All the rest of the money is going into a black hole of whatever the US fed got and whatever MtGox dies with. Unless people start panic selling their coins on the other exchanges (which I don't even get why you would - Gox is dead, the greatest blemish of incompetence in the trading scene is no more, that is a good thing), I don't see how this would impact the general btc price any more. If anything, I'd hope it would rally, but that malleable transactions nonsense probably is going to keep people scared for a while.

spiralpolitik 13y ago

I'm going with hoax. When the brown stuff is hitting the fan you lawyer up and stay quiet. You don't write a Powerpoint presentation that could later be used to sue your ass off. Update: Tracking the Coinbase spot price it dipped below $500 for a short while just after the document went public. It's now back over $500. Smells even more that someone is trying to push the non Mt.Gox BTC price down to buy cheap to sell on the rebound.

Danieru 13y ago

My bet is on hoax and here is why: 1. A business like mtgox would expect to be moving coins into cold storage. The moment they need to move coins from cold storage into the hot wallet they would take notice and check their accounting. Theft from transaction malleability would show up in any simple summing of the balances and liabilities. They would notice the theft and stop pulling money from cold storage long before cold storage was empty. 2. The tone is too harsh on mtgox to be a report from a client of mtgox. Who produced it? If you hire a consultancy you can be sure they will brand any document produced. 3. Where did the cash liabilities imbalance come from? The "leaked" financial report did not show them spending the fiat reserve so where did the missing 20M go? How could the fiat liability be unclear? Shouldn't fiat liability be the one thing their accountant has a clear picture of? How do you "average across currencies", you cannot "average" exchange rates, the word makes no sense. The more I look at this the more it feels like a post on bitcointalk.

Aqueous 13y ago
Mt. Gox itself feels like a post on BitCoinTalk
snikch 13y ago
3. is the most important there. The other questions could be speculatively answered. But there's no way to explain a 20M imbalance without some sort of criminal negligence, which would make any sort of rebrand / relaunch absolutely impossible.
tlrobinson 13y ago
"Where did the cash liabilities imbalance come from?" Bank accounts seized by DHS?
- wmf 13y ago
  Nope, the document accounts for that. It claims there is a massive additional amount of USD missing besides what was seized—with no explanation of how the money went missing.

agorabinary 13y ago

(Assuming this is real) How do you lose HUNDREDS of millions of dollars worth of bitcoins over the course of years and not notice it?? There is no evidence that this "accidental loss" is not merely obfuscated theft.

halfdeadcat 13y ago

Maybe it's a hoax. But the pieces seem to be falling according to the plan. http://money.cnn.com/2014/02/24/technology/security/mtgox-bitcoin/ http://money.cnn.com/2014/02/24/technology/security/mtgox-bi...

apaprocki 13y ago

If it's a hoax, I wonder if it is trolling companies as well. These headlines just flashed across the terminal: *COINBASE RELEASES STATEMENT ON MT. GOX INSOLVENCY *COINBASE SAYS MT. GOX VIOLATED TRUST OF USERS Edit: Ah, joint statement by: Fred Ehrsam — Co-founder of Coinbase Jesse Powell — CEO of Kraken Nejc Kodrič — CEO of Bitstamp.net Bobby Lee — CEO of BTC China Nicolas Cary — CEO of Blockchain.info Jeremy Allaire — CEO of Circle

foobarqux 13y ago

I said several times that Mt.Gox needed an independent financial audit. Even after this announcement it still does.

snizzysnaps 13y ago

Hold. The. Phone... Are you telling me that this unregulated, nonsense, digital currency, that the entire nerd community masterbates over incessantly, is waste of time, total insecure mess, that is prone to massive theft? That is just horrible. Really really terrible. God forbid the technical community focuses on something that matters, and we all go back to using dollars, yen, or what have you, and then continue to use normal banks and regulated methods of transfer, like any of the hundreds of online payment companies that do this every day without a problem. I hope Bitcoin, Dogecoin, Kanye West Coin, and all these other stupid currencies die a fast fiery death. Good riddance. Another thought...I would literally imprison everyone even using crypto-currency if I had the chance. The only thing this is used for is for drugs, hacking, wares, child pornography, and other sorts of crime; The entire Bitcoin community is comprised of anarchist, anti-government nut jobs, socialists, and commies. We would be doing the world a favor by locking them up and throwing away the key.

knodi 13y ago

744,408 BTC is 367,704,753 USD... (at $493 per BTC). This is bullshit. No way it went unnoticed for years. They're trying to pull what SR2.0 pulled, stole the money and are now trying to run.

zeroDivisible 13y ago
Also, I was wondering why they had allowed trading, even after finding the issues with their systems - but that document made everything clear. If they would shut down immediately, they would own: 744,408 BTC is 367,704,753 USD... (at $493 per BTC). But based on linked document: 744,408 BTC (MtGox av price 160 USD= 119,105,280 USD) Brilliant move.

foobarqux 13y ago

200 million dollars in net liabilities. Restructuring is not going to happen.

EvanMiller 13y ago

And this, children, is why markets are regulated.

maaku 13y ago

Please explain this like I'm 5. Gox has for some time required verification for withdraws. So it knows (government ID, passport scans) who withdrew funds twice. Why can't they just ask for their money back like any other business?

cyphunk 13y ago

If nothing else it would be clearly irresponsible of MTGox to remain silent

ChristianMarks 13y ago

If MtGox were too big to fail, the taxpayer would cover their losses. Looks like someone wants a bailout. Nice work if you can get it--the question for me is, how do I get in on this? If the answer is that I cannot, then allow me some shadenfreude.

pmorici 13y ago

Anyone know who Ryan Selkis is? If you download the original PDF, right click the blacked out parts, and select properties his name is listed as the "Author" under the General tab; last modified 2/24/2014 8:46:51 PM. According to his linkedin he is the Founder of Inscrypto, "We are like Bitcoin’s privately funded, decentralized version of the FDIC." http://go.inscrypto.com/ http://go.inscrypto.com/ http://www.linkedin.com/in/ryanselkis http://www.linkedin.com/in/ryanselkis Either they lost a lot on this or they just got the best advertisement ever for why one might need their services.

ayu 13y ago
Ryan is the guy who originally shared the slide deck. He blogs/tweets under the pseudonym @twobitidiot: http://www.slideshare.net/selkisr/bitcoin-market-opportunity-excellent-early-merchant-adopters http://www.slideshare.net/selkisr/bitcoin-market-opportunity... (see slide 2) original tweet sharing the slide deck: https://twitter.com/twobitidiot/status/438131088607965184 https://twitter.com/twobitidiot/status/438131088607965184
- pmorici 13y ago
  Ah, that makes sense, looks like this Wired article agrees... http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-implodes/ http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox... Edit: the NYT article attributes the leaked document to someone else though, http://www.nytimes.com/2014/02/25/business/apparent-theft-at-mt-gox-shakes-bitcoin-world.html http://www.nytimes.com/2014/02/25/business/apparent-theft-at...

nikcub 13y ago

It is real - this is an internal strategy doc shared between the exchanges and other Bitcoin people with MtGox and it was never supposed to be public. Something has gone wrong with the plan. Here is what i've worked out so far what has happen. MtGox worked out a while ago that they were insolvent, so they reached out to prominent members of the Bitcoin community to help them out. The plan was instead of just having MtGox make a statement saying 'we are insolvent, no more money' they would team up with the other exchanges and come up with a plan where they could wrap that news around some 'good' news. This document is the draft of that plan as it was being worked on by the exchanges and MtGox. The 'good' news parts would be: 1. MtGox customers would be transferred to a new entity Gox 2. Karpeles wouldn't be involved 3. The new exchange would have old 'owed' figures from MtGox 4. The other exchanges would attempt to partially bail out the MtGox holders edit: point 4.5. the Mt Gox closing statement would shift blame away from Bitcoin - which is important. MtGox has spent the last 3 months blaming on a 'bitcoin bug' what was a failure of their own accounting and auditing system. A lot of media bought up the 'bitcoin bug' story. 5. The other exchanges and Gox would announce all this at the same time on Tue 25th Feb 6. For some reason the exchanges did their part but Gox didn't do their part 7. Someone from the exchanges leaked this internal strategy doc that was written between MtGox and the exchanges to show what should have happen today but didn't since MtGox bailed out on their part of it. We are now stuck in a situation where part of this internal plan has been implemented (the exchanges, gox.com being registered) but the majority of it has not. edit: most interesting q's for me atm are: why did MtGox reneg on this plan (or have they?), when did MtGox finally reach out for help? and how long have these insiders known that MtGox is in trouble - there was a huge sell spike in MtGox coins days ago. edit 2: note that outside of verifying this doc with somebody who works at one of the companies, since this doc was leaked and published the following has happen, as outlined in the doc: * the other markets released their joint statement * the gox.com domain was registered/activated * trading halted edit 3: you may have noticed slide 8 of the presentation is censored, i've managed to remove the black bars. It is details of MtGox's financials, image here: http://i.imgur.com/Rb5MIcg.png http://i.imgur.com/Rb5MIcg.png Google Doc version here: https://docs.google.com/document/d/1miioFP1oFnLa8OQ1MZ91ABUDfLKY8X9KDGwz8Izjaa0/edit https://docs.google.com/document/d/1miioFP1oFnLa8OQ1MZ91ABUD...

hrrsn 13y ago

_pmf_ 13y ago

> The plan was instead of just having MtGox make a statement saying 'we are insolvent, no more money' they would team up with the other exchanges and come up with a plan where they could wrap that news around some 'good' news. Or, as I think is the more common term, "commit fraud".

zmk_ 13y ago

And this is how Bitcoin community discovers the virtues of industry-sponsored deposit insurance.

llamataboot 13y ago

I don't understand. Either they got robbed very slowly over a long time, which means they literally did not do even the most basic accounting. Or they got robbed all at once which means they had no cold storage for bitcoins. Neither seems likely. I knew there were some problems with MTGox lack of communication about problems over the past few years, but you can't be so dumb as to not hire a competent auditing team with millions of dollars at your disposal and hundreds of millions that you are in charge of protecting right?

fsk 13y ago

According to that document, they only have enough assets to pay 0.1%-0.3% of customer deposits. That's a 100% loss to customers. There's no way the other Bitcoin users can afford to pay 100M to bail out their customers.

Tycho 13y ago

You've got to break a few eggs to make an omlette.

jondtaylor 13y ago
What would the omlette be in this analogy?
- Tycho 13y ago
  A stable market with trusted financial intermediaries etc.