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CONSPIRACY THEORY TIME. What if Mt. Gox didn't really lose a post-Panamax boatload of Bitcoin (just a small amount)? They're just manufacturing a panic so they

CONSPIRACY THEORY TIME. What if Mt. Gox didn't really lose a post-Panamax boatload of Bitcoin (just a small amount)? They're just manufacturing a panic so they can buy Bitcoins at fire-sale prices, declare "We have all the BitCoin we need after all, we fixed our bug, everything's fiiiine" and maybe even turn a cash profit on the upside? </conspiracy theory, assumes a modicum of competence, etc>

swombat 13y ago
If there was any evidence of that they'd go to jail for a long time - even if bitcoin is not directly regulated, I'm sure there are still some anti-fraud regulations that would kick in...
- wpietri 13y ago
  Which statement do you think is fraudulent? They could actually have lost the bitcoins. They could be still having technical problems. Fennecfoxen's theory could be illegal market manipulation, but I wouldn't be surprised if the BTC market is weird enough that it doesn't fit under the laws against that. Or at least that it'd be such a mess to prosecute that prosecutors would all find something better for their careers to do.
  - dagw 13y ago
    Fennecfoxen's theory could be illegal market manipulation Market manipulation in general isn't illegal, so it would basically boil down to if the SEC considered BTC a currency or not.
- kome 13y ago
  > I'm sure there are still some anti-fraud regulations that would kick in... I don't know, but I don't think so. For the law you may be trading in monopoly money at your risk.
  - VLM 13y ago
    Intentional misrepresentation of fact for material gain doesn't seem to require currency of any sort. So Kome I'll make you a deal, I've got a ownership title for the Brooklyn Bridge and I'll trade this title to you for a case of beer... deal? Deal. Sucka. Then it goes to court. Assuming you can convince the court I knew the title was fake, and the case of beer is worth more than the fake title (maybe the title has artistic merit, or maybe the beer was worthless American Lite "beer" of negative worth) then its pretty cut and dried as fraud.
    - kbenson 13y ago
      What's the fake in this case? They would be convincing people that bitcoins are worth less due to their actions (and it is worth less during this period, as people have lost much faith), buying at the reduced priced, and then covering their losses and supposedly restoring at least some faith in the market, once again raising prices. Where's the fake title? Where's the lie?
    - SilasX 13y ago
      What about the people who exploited transaction malleability to defraud MtGox? Will someone go after them? Doesn't MtGox have their details?
  - ordinary 13y ago
    If not fraud, then simple theft.
- paborden 13y ago
  Yeah, regulated or not, that would almost certainly qualify as wire fraud, at the very least.
  - psykovsky 13y ago
    Does "wire fraud" even exist anywhere else in the world besides the good old USofA?
    - dragonwriter 13y ago
      In most of the world it may be just plain fraud; the "wire" distinction is a justification for invoking the interstate commerce clause and, thus, federal jurisdiction in the US. But its still probably illegal just about everywhere.
- deleted 13y ago
  [deleted]
- laichzeit0 13y ago
  I sure hope there's no such law. Let those who panicked and sold cry, because they were speculators to begin with. Should there be the same laws kick in if they drive the price up, by say, adding fake orders on their exchange? I don't even think that should be illegal. The market should move as it moves, through whichever means: fairness, deceit or ruse. I wouldn't want BTC any other way.
  - thisiswrong 13y ago
    > Should there be the same laws kick in if they drive the price up, by say, adding fake orders on their exchange? I don't even think that should be illegal. I strongly agree, and I do believe that there's price manipulation going on with the Gox situation at the moment. Is it just an attempt by Gox to make some money back? Or is it something far bigger aimed at damaging the reputation of BTC? Don't forget that Karpeles has recently been vulnerable to manipulation from the USG [1]. But It's surprising that you wouldn't want BTC, when on the road ahead lies Open Transactions, distributed exchanges, and so much more innovation that will take your above statement and put it directly into code. Thus making these wall-street tactics obsolete. [1] http://thegenesisblock.com/warrant-for-mt-gox-wells-fargo-accounts-shows-additional-2-1m-seized/ http://thegenesisblock.com/warrant-for-mt-gox-wells-fargo-ac...
- josu 13y ago
  For now a bitcoin is just like a soda can to the eyes of the regulators. So here is a fun exercise, think of bitcoins as soda cans and rethink the whole situation.
bhouston 13y ago
It doesn't have to be MtGox, but anyone who wants to see a quick collapse in the price. And given the anonymous nature of the internet, it is super easy to do.
- colinbartlett 13y ago
  I don't think it's the anonymous nature of the internet that makes this easy. After all, the internet is far less anonymous than many think. It's likely the unregulated nature of Bitcoin that makes this easy to do. After all, who is going to chase down market manipulators with search warrants and wiretaps?
- diydsp 13y ago
  Yeah, speaking of conspiracy theories, why is no one kicking around the possibility of sabotage from established banks? and/or governments?
dcosson 13y ago
They also mentioned buying back at low prices in one of those leaked documents. What I don't understand is why people would continue selling at any reasonable volumes at firesale prices when other exchanges are doing "fine" (Bitstamp down ~25% vs 2 months ago). Unless I misunderstand it, the malleability bug won't prevent sending btc to other wallets. Is mtgox going to block their users from sending btc and only allow them to sell internally? That would be pretty much equivalent to seizing all their users' coins. Is it just the combination of lots people who own small enough amounts of btc not to care going "fuck it, I just want out"? People not trusting other exchanges after this, or betting that other exchanges will crash too before they can get accounts verified at them and sell their coins?
- jcampbell1 13y ago
  Presumably when Mt Gox's bank accounts get seized, whatever money in them will be used to pay off accounts with real currency balances. The people holding bitcoins will get nothing.
  - JackFr 13y ago
    That brings up a point of confusion for me. As understand the news, Mt Gox didn't lose a single dollar. They lost 700K BTC. It is neither being pedantic, nor beside the point that this is not the same as $400M. It is the point.
    - pmorici 13y ago
      That's not entirely true, about $5 million was seized by and is currently being held by the US government and another $5 million is being held hostage by CoinLab a US company that once had a deal with Gox to handle US customers but things went south along the way and they are not being sued by them instead. So about $10 million is tied up in less than ideal situations.
    - ianferrel 13y ago
      If the leaked crisis plan memo is correct, then they had ~$50 million in dollars on account with them, and total cash assets around $22 million. So, even ignoring the Bitcoin, they lost quite a lot of dollars.
madaxe_again 13y ago
Or they're fucking up comms as best they can deliberately in order to drive the price down, so they can buy enough btc to "repay" everyone.
- ChrisNorstrom 13y ago
  THIS. The whole lack of communication, the dead quiet, no explanations attitude. It's so easy to just admit what happened but they're deliberately keeping people in the dark. Giving out only enough information like "we're monitoring the situation and will react accordingly" to let people know they're working on something and prevent themselves from being sued (for now). I don't blame them for doing what they're doing at this point. They're trying to be realistic in their approach to fix it as best as they can. Driving down the price to 100-300, buying up coins and waiting till the whole market goes back up to 800 and selling them to pay off the losses is really all they've got.

swombat 13y ago

If there was any evidence of that they'd go to jail for a long time - even if bitcoin is not directly regulated, I'm sure there are still some anti-fraud regulations that would kick in...

wpietri 13y ago
Which statement do you think is fraudulent? They could actually have lost the bitcoins. They could be still having technical problems. Fennecfoxen's theory could be illegal market manipulation, but I wouldn't be surprised if the BTC market is weird enough that it doesn't fit under the laws against that. Or at least that it'd be such a mess to prosecute that prosecutors would all find something better for their careers to do.
- dagw 13y ago
  Fennecfoxen's theory could be illegal market manipulation Market manipulation in general isn't illegal, so it would basically boil down to if the SEC considered BTC a currency or not.
kome 13y ago
> I'm sure there are still some anti-fraud regulations that would kick in... I don't know, but I don't think so. For the law you may be trading in monopoly money at your risk.
- VLM 13y ago
  Intentional misrepresentation of fact for material gain doesn't seem to require currency of any sort. So Kome I'll make you a deal, I've got a ownership title for the Brooklyn Bridge and I'll trade this title to you for a case of beer... deal? Deal. Sucka. Then it goes to court. Assuming you can convince the court I knew the title was fake, and the case of beer is worth more than the fake title (maybe the title has artistic merit, or maybe the beer was worthless American Lite "beer" of negative worth) then its pretty cut and dried as fraud.
  - kbenson 13y ago
    What's the fake in this case? They would be convincing people that bitcoins are worth less due to their actions (and it is worth less during this period, as people have lost much faith), buying at the reduced priced, and then covering their losses and supposedly restoring at least some faith in the market, once again raising prices. Where's the fake title? Where's the lie?
  - SilasX 13y ago
    What about the people who exploited transaction malleability to defraud MtGox? Will someone go after them? Doesn't MtGox have their details?
- ordinary 13y ago
  If not fraud, then simple theft.
paborden 13y ago
Yeah, regulated or not, that would almost certainly qualify as wire fraud, at the very least.
- psykovsky 13y ago
  Does "wire fraud" even exist anywhere else in the world besides the good old USofA?
  - dragonwriter 13y ago
    In most of the world it may be just plain fraud; the "wire" distinction is a justification for invoking the interstate commerce clause and, thus, federal jurisdiction in the US. But its still probably illegal just about everywhere.
deleted 13y ago
[deleted]
laichzeit0 13y ago
I sure hope there's no such law. Let those who panicked and sold cry, because they were speculators to begin with. Should there be the same laws kick in if they drive the price up, by say, adding fake orders on their exchange? I don't even think that should be illegal. The market should move as it moves, through whichever means: fairness, deceit or ruse. I wouldn't want BTC any other way.
- thisiswrong 13y ago
  > Should there be the same laws kick in if they drive the price up, by say, adding fake orders on their exchange? I don't even think that should be illegal. I strongly agree, and I do believe that there's price manipulation going on with the Gox situation at the moment. Is it just an attempt by Gox to make some money back? Or is it something far bigger aimed at damaging the reputation of BTC? Don't forget that Karpeles has recently been vulnerable to manipulation from the USG [1]. But It's surprising that you wouldn't want BTC, when on the road ahead lies Open Transactions, distributed exchanges, and so much more innovation that will take your above statement and put it directly into code. Thus making these wall-street tactics obsolete. [1] http://thegenesisblock.com/warrant-for-mt-gox-wells-fargo-accounts-shows-additional-2-1m-seized/ http://thegenesisblock.com/warrant-for-mt-gox-wells-fargo-ac...
josu 13y ago
For now a bitcoin is just like a soda can to the eyes of the regulators. So here is a fun exercise, think of bitcoins as soda cans and rethink the whole situation.

bhouston 13y ago

It doesn't have to be MtGox, but anyone who wants to see a quick collapse in the price. And given the anonymous nature of the internet, it is super easy to do.

colinbartlett 13y ago
I don't think it's the anonymous nature of the internet that makes this easy. After all, the internet is far less anonymous than many think. It's likely the unregulated nature of Bitcoin that makes this easy to do. After all, who is going to chase down market manipulators with search warrants and wiretaps?
diydsp 13y ago
Yeah, speaking of conspiracy theories, why is no one kicking around the possibility of sabotage from established banks? and/or governments?

dcosson 13y ago

They also mentioned buying back at low prices in one of those leaked documents. What I don't understand is why people would continue selling at any reasonable volumes at firesale prices when other exchanges are doing "fine" (Bitstamp down ~25% vs 2 months ago). Unless I misunderstand it, the malleability bug won't prevent sending btc to other wallets. Is mtgox going to block their users from sending btc and only allow them to sell internally? That would be pretty much equivalent to seizing all their users' coins. Is it just the combination of lots people who own small enough amounts of btc not to care going "fuck it, I just want out"? People not trusting other exchanges after this, or betting that other exchanges will crash too before they can get accounts verified at them and sell their coins?

jcampbell1 13y ago
Presumably when Mt Gox's bank accounts get seized, whatever money in them will be used to pay off accounts with real currency balances. The people holding bitcoins will get nothing.
- JackFr 13y ago
  That brings up a point of confusion for me. As understand the news, Mt Gox didn't lose a single dollar. They lost 700K BTC. It is neither being pedantic, nor beside the point that this is not the same as $400M. It is the point.
  - pmorici 13y ago
    That's not entirely true, about $5 million was seized by and is currently being held by the US government and another $5 million is being held hostage by CoinLab a US company that once had a deal with Gox to handle US customers but things went south along the way and they are not being sued by them instead. So about $10 million is tied up in less than ideal situations.
  - ianferrel 13y ago
    If the leaked crisis plan memo is correct, then they had ~$50 million in dollars on account with them, and total cash assets around $22 million. So, even ignoring the Bitcoin, they lost quite a lot of dollars.

madaxe_again 13y ago

Or they're fucking up comms as best they can deliberately in order to drive the price down, so they can buy enough btc to "repay" everyone.

ChrisNorstrom 13y ago
THIS. The whole lack of communication, the dead quiet, no explanations attitude. It's so easy to just admit what happened but they're deliberately keeping people in the dark. Giving out only enough information like "we're monitoring the situation and will react accordingly" to let people know they're working on something and prevent themselves from being sued (for now). I don't blame them for doing what they're doing at this point. They're trying to be realistic in their approach to fix it as best as they can. Driving down the price to 100-300, buying up coins and waiting till the whole market goes back up to 800 and selling them to pay off the losses is really all they've got.