6 ms·
Pretty good Ponzi. Not as impressive as Bernie Maddof's, but extra points for the tech angle.
by guelo 13y ago
Pretty good Ponzi. Not as impressive as Bernie Maddof's, but extra points for the tech angle.
- colinbartlett 13y agoI would say quite a bit more impressive as Madoff did the same thing that's been done hundreds of times before: take money and promise huge returns. Here we have a company that took money and let the "investors" fight it out amongst themselves.
- fnordfnordfnord 13y agoHow in the hell did these guys manage to screw this up so badly? Think about the tx fees they were raking in.
- 345723 13y agoMaybe they didn't screw up. Maybe they just cashed out.
- jmomo 13y agoI am not aware of any indication that this was a ponzi scheme. Saying that it was, without evidence, is misinformation. The loss of coins was unintentional on the behalf of MtGox. It may have been stupid that basic abc123 auditing would have probably revealed that there was a problem months/years ago, but evil has not been shown at this point in time.
- Klinky 13y agoAn exchange that manipulates it's market to hide away losses and try to shore up it's balances starts to look a lot like a ponzi scheme after awhile.
- jamesaguilar 13y agoOnly given an unacceptably broad interpretation of the word "Ponzi." Fraud is the one you're looking for.
- Klinky 13y agoHalting withdrawals while still allowing deposits in an attempt to gain enough capital to payout those who were poised to withdraw sounds very ponzi-ish. The low BTC exchange rates were both indicative of the risk, but also enticing to new exchange customers trying to strike it rich off a sinking ship.
- dragonwriter 13y agoPonzi schemes are a form of fraud, sure, but the particular kind of fraud under discussion shares the key features of a Ponzi scheme, since its sustainable exactly as long as there is a sufficient net inflow of money from the outside to cover the money being extracted by uncontrollable losses. The only difference from a traditional Ponzi scheme is that in such a scheme the extraction is to the fraudsters pockets, rather than to the fraudsters incompetence.
- gnaritas 13y ago> but the particular kind of fraud under discussion shares the key features of a Ponzi scheme No it doesn't; the key feature of a Ponzi scheme is intentional fraud using a phony investment that doesn't actually exit. That's what a Ponzi scheme is. Bitcoin has nothing in common with a Ponzi scheme and all you people who keep repeating this non-sense need to go educate yourselves on what a Ponzi scheme actually is.
- dragonwriter 13y ago> No it doesn't; the key feature of a Ponzi scheme is intentional fraud on a phone investment that doesn't actually exit. Assuming the description of this as being a loss that, however unintended when it first started occurring, was known, concealed, and papered over by using other funds, it was an intentional fraud from that point on a phony investment that doesn't actually exist. > Bitcoin has nothing in common with a Ponzi scheme That may be true about Bitcoin, but not about the scenario proposed upthread about what was going on at Mt. Gox. They aren't the same thing.
- bunderbunder 13y agoIt does. . . but I think there's still plenty of room for Hanlon's Razor to remain in effect here.
- Crito 13y agoSufficiently advanced incompetence is indistinguishable from malice. That is to say, at the end of the day, does it really matter if this happened because Karpeles is an idiot or because Karpeles was malicious? No, the end result is the same, and possessing and wielding that shear amount of idiocy is no more excusable than just being malicious.
- bunderbunder 13y agoThere's really one spot where it matters: I think that when we fail to distinguish adequately between idiocy and malice, we begin to fall into the trap of seeing all catastrophes like this as malicious in hindsight, and consequently lull ourselves into assuming that any future catastrophes must also stem from malice. The end result being, we hinge huge decisions on the question, "Do I think this person might actually try to hurt me?" without giving adequate attention to the question, "Does this person possess sufficient competence to reliably avoid hurting me by accident?" Not just in finance. The issue seems to come up in health care quite a bit, too. Do you really want someone who doesn't fully grasp the germ theory of disease sticking sharp objects into you after previously having stuck them into someone else? The occasional outbreaks of hepatitis associated with acupuncture suggest this is a question we might want to spend more time thinking about. Instead, we tend to not get past worries (including legitimate ones) about whether or not Big [insert_big_thing_here] is trying to hurt us.
- jellicle 13y ago> The loss of coins was unintentional on the behalf of MtGox. Your evidence of that is...
- parasight 13y agoIn dubio pro reo.
- Fliegengott 13y agoonly in a court of law.
- AJ007 13y agoIf they continued to take in deposits after they knew they were insolvent, it was a ponzi scheme. Every ponzi operator dreams of earning themselves to solvency.
- ps4fanboy 13y agoI am pretty sure this sort of practice is illegal bitcoin or not.
- gnaritas 13y ago> If they continued to take in deposits after they knew they were insolvent, it was a ponzi scheme. You clearly have no idea what a ponzi scheme actually is; educate yourself before making such foolish public statements.
- metaphorm 13y agohonestly none of us really knows what happened behind the scenes. there's no indication it was a ponzi scheme. there's no indication it wasn't. what do you think really happened? all I know is that an awful lot of people lost money.
- 345723 13y agoI'm sure it will happen again. And again. And again. And again. The ponzi never dies because no one who participates every believes that _they_ are the one who's going to get screwed.
- driverdan 13y agoI don't think you understand what a Ponzi scheme is.
- vesinisa 13y agoIf MtGox actually had much none of the BTC they showed on their clients accounts, it was exactly that – a Ponzi scheme. Not sure if it changes the matter whether they did it intentionally or not.
- driverdan 13y agoNo, that's a different type of fraud or downright incompetence. A Ponzi is when investors who are expecting positive returns are intentionally paid with other investors' money. That's not what happened here. Exchanges don't offer investments.
- anigbrowl 13y agoIt might be more impressive than Bernie Madoff's when you consider it as a fraction of the BTC economy...about 10x more impressive.
- baddox 13y agoThis doesn't fit even the loosest definition of "Ponzi scheme."
- imperialdrive 13y agoSee my little rant, and I agree with you.