Mt. Gox Bankrupt? | TigerDroppings.com
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Lsut81
USA Fan
Member since Jun 2005
65951 posts

Mt. Gox Bankrupt?

Here's my daily bitcoin contribution...

quote:

A week after Mt. Gox said it would temporarily prevent customers from removing their bitcoins from its online bitcoin exchange, the site has become the cheapest place in the world to buy the digital currency. Why? Because some investors think Mt. Gox is about to go bankrupt.

Welcome to the world of bitcoin, the Wild West of finance, a place where hackers and scandals and insane price fluctuations are just part of doing business. Mt. Gox, a digital currency pioneer that was once the world’s largest bitcoin exchange, is imploding before our very eyes. Investors who have accounts with the exchange are selling their bitcoins, even though they may have trouble getting hold of the proceeds. That’s because they suspect — not unreasonably — that if the company does go bankrupt, it will be be easier to retrieve their stranded funds as U.S. dollars rather than as bitcoins.

The result: bargain bitcoin prices at Mt. Gox, for anyone daring enough to take advantage of them
For the better part of the past year, bitcoins were unusually expensive at Mt. Gox. While other exchanges — BitStamp or BTC-E, for example — traded the digital currency at roughly the same rates, you had to pay a 8 to 10 percent premium on Mt Gox. As we reported back in November, people were charging extra to trade their bitcoins for U.S. dollars because it was hard to get dollars out of the Japanese exchange. But now it’s hard to get bitcoins out too. About two weeks ago, Gox suspended bitcoin withdrawals, blaming a flaw in the bitcoin wallet software that has affected Gox and at least one other exchange.

As a result, something odd has happened. Bitcoin prices have plunged dramatically on Gox, while remaining pretty much level on the other exchanges. On Tuesday, the price of a bitcoin on Bitstamp was $640. On Gox? $250. Investors are speaking through the market, and they’re saying that they’ve lost confidence, according to Donald Marron, director of economic policy initiatives at the Urban Institute, an economic policy think-tank. “It does sound like people worry that they’ll never get their bitcoins out,” he says.

But there’s another explanation for the low bitcoin price on Mt. Gox. Some investors are worried that the exchange will go bankrupt, and if that happens, they think it will be better if the exchange owes them dollars rather than an ill-defined digital currency. “I was advised that if I thought Gox was insolvent, it is better to have a fiat claim against them than a bitcoin claim, which no legal standing,” says one Gox investor, who asked not to be identified. He has about 90 bitcoins locked up in the exchange.


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This post was edited on 2/19 at 8:12 am



C
LSU Fan
The Woodlands, TX
Member since Dec 2007
23014 posts

re: Mt. Gox Bankrupt?
So the people that are selling their bitcoins on Mt Gox aren't even able to pull the dollars out? yowzers.


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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
4551 posts
Online

re: Mt. Gox Bankrupt?
I don't think I ever got an answer in the thread yesterday, but why does Mt. Gox own these? I thought if I bought a bitcoin from wherever, I held it in MY wallet. Is this not correct?

This guy that has 90 coins locked up with them, how is that even possible? Assuming a price/bitcoin of $500 (no clue what it is today), that man has $45,000 locked up now? Could he spend them while Mt. Gox had them. I just don't understand exchanges having these things.


League Champs
Bayou Self
Member since Oct 2012
3682 posts

re: Mt. Gox Bankrupt?
quote:

“I was advised that if I thought Gox was insolvent, it is better to have a fiat claim against them than a bitcoin claim, which no legal standing,” says one Gox investor

And the very reason bitcoin wont be accepted by the consumer

In fiat they trust


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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
58738 posts

re: Mt. Gox Bankrupt?
I thought they could just move them around willy nilly. I guess I was wrong.


LSURussian
LSU Fan
Member since Feb 2005
85147 posts

re: Mt. Gox Bankrupt?
quote:

but why does Mt. Gox own these? I thought if I bought a bitcoin from wherever, I held it in MY wallet. Is this not correct?
Based on josh's previous explanation of wallets on exchanges (although he has never in his entire life used MtGox, not even once, except for two or three times) there are "internal" wallets on exchanges, like having an account in a bank. To get money out of your exchange wallet, you have to withdraw the funds.

MtGox has suspended withdrawals from all wallets on their exchange.


Cold Cous Cous
LSU Fan
Member since Oct 2003
14038 posts

re: Mt. Gox Bankrupt?
If so I look forward to wiki filing a motion to intervene in the case and dismissively lecturing the bankruptcy judge on how he "just doesn't understand cryptography."


LSURussian
LSU Fan
Member since Feb 2005
85147 posts

re: Mt. Gox Bankrupt?


SDVTiger
LSU Fan
Cabo San Lucas
Member since Nov 2011
5076 posts

re: Mt. Gox Bankrupt?
Nothing to see just part of the protocol you dummies


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htownjeep
LSU Fan
Nassau Bay, TX
Member since Jun 2005
6452 posts

re: Mt. Gox Bankrupt?
Bitcoin withdrawal is frozen right now if you have them with Mt Gox.

You can get you money out of Mt Gox ONLY if someone else buys your bitcoins on Mt Gox. And right now that is substantially lower than anywhere else.

Pretty ballsy for someone to be buying up bitcoins on Mt Gox hoping that they can eventually get them out and sell them at the rate of other exchanges. Might pay off for them....might now.


ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
10176 posts

re: Mt. Gox Bankrupt?
quote:

Based on josh's previous explanation of wallets on exchanges (although he has never in his entire life used MtGox, not even once, except for two or three times) there are "internal" wallets on exchanges, like having an account in a bank. To get money out of your exchange wallet, you have to withdraw the funds.


I wonder if these folks can file a lawsuit to have the bitcoins released to another exchange or their own wallet.


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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
23014 posts

re: Mt. Gox Bankrupt?
is there a way to tell how many bitcoins mt gox is controlling?


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ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
10176 posts

re: Mt. Gox Bankrupt?
quote:

Pretty ballsy for someone to be buying up bitcoins on Mt Gox hoping that they can eventually get them out and sell them at the rate of other exchanges. Might pay off for them....might now.


This would be a good opportunity for someone with inside information on Gox's operations...


Or maybe an explanation on why dollar withdrawals were suspended in the first place?

Hmmmm....


htownjeep
LSU Fan
Nassau Bay, TX
Member since Jun 2005
6452 posts

re: Mt. Gox Bankrupt?
quote:

This would be a good opportunity for someone with inside information on Gox's operations...


Or maybe an explanation on why dollar withdrawals were suspended in the first place?

Hmmmm....

Light bulb just went off in your head huh? That's what I've suspected for a while now, but I could be wrong.

If they are legit and are truly working to fix this then their CEO is the biggest idiot ever. Instead of getting out in front of it all they do is put out a press release here and a press release there. Horrible in terms of PR.
This post was edited on 2/19 at 8:52 am


Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
17179 posts
Online

re: Mt. Gox Bankrupt?
What would the operators of MtGOX do if they recognized their exchange operations had reached the limits of profitability and wanted to cash out big? Would they consider taking advantage of a minor crisis and intentionally crashing the price of BitCoins on their exchange, then buying the Bitcoins personally for <$300 and selling them on other exchanges for >$600? What better ploy to use than announce halts on withdrawals from accounts for the public? That would allow the MtGOXx operators plenty of time to make trades on other exchanges and cover the cash positions of customer accounts. From Feb. 13 - Feb. 17, over 250,000 Bitcoins were traded on MtGOX. That would be over $75 million of arbitrage gains for those 5 days. At some point you announce you are shutting down MtGOX and you settle accounts. Those who sold their Bitcoins will be relieved to get the cash from their distress sales while anyone with Bitcoins will be more than happy to get back their Bitcoins that have higher trade value on other exchanges. Why be exchange operators working for small amounts when you could cash out for millions without serious repercussions?

I doubt the MTGOX operators had the foresight to recognize and implement such a plan. But they did have a golden opportunity to turn the company's chicken shite into personal chicken salad.


ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
10176 posts

re: Mt. Gox Bankrupt?
quote:

Light bulb just went off in your head huh? That's what I've suspected for a while now, but I could be wrong.


I have to admit...I haven't been following the daily bitcoin happenings as thoroughly as I should

It would be perfect...no one would stop them in this unregulated nightmare.

quote:

If they are legit and are truly working to fix this then their CEO is the biggest idiot ever.


Agreed and I don't think this guy is stupid. I'm thinking that he's a price-fixing crook.




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The Connoisseur
USA Fan
New Orleans
Member since Jan 2011
886 posts

re: Mt. Gox Bankrupt?
Know nothing of the matter but is anyone thinking about calling the bankrupt bluff and snagging some bitcoins much cheaper than they would otherwise be?


ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
10176 posts

re: Mt. Gox Bankrupt?
quote:

From Feb. 13 - Feb. 17, over 250,000 Bitcoins were traded on MtGOX. That would be over $75 million of arbitrage gains for those 5 days.


I was wrong....this is BETTER than perfect


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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
4551 posts
Online

re: Mt. Gox Bankrupt?
quote:

Know nothing of the matter but is anyone thinking about calling the bankrupt bluff and snagging some bitcoins much cheaper than they would otherwise be?


Probably not in this thread. Your best bet would be to start one, or bump this one.


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brucevilanch
Alabama Fan
Fort Worth, Tejas
Member since May 2011
18326 posts

re: Mt. Gox Bankrupt?
Who said Mt. Gox had a liquidity problem last week?


I did...I'm the big winner.


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