quote:
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.

That would be highly unethical and likely illegal. No one involved with bitcoins would ever do anything unethical or illegal. You Luddite!!!

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Posted by Poodlebrain

Way Right of Rex

Member since Jan 2004

19860 posts

Posted on 2/19/14 at 10:12 am to LSURussian

quote:
That would be highly unethical and likely illegal.

I imagine that the MtGOX folks have made significant investments into the legal ramifications of their operations after the U.S. government announced its requirements for Bitcoin exchanges to follow moneychanger regulations. They would have been fools not to consider exit strategies as well. When they lost their banking relationship(s) with U.S. bank(s) the handwriting on the wall should have become more clear to them. Thus I'd be willing to bet they have good reason to believe their actions are not violating any laws they are likely to be prosecuted for.

If I had concocted an exit strategy involving the use of arbitrage gains to cash out big. I would have taken steps to avoid upsetting account holders who might use violence as retribution. I would have advised them to liquidate their accounts before I started manipulating the spreads available. Definitely unethical, but still I would have tried to limit the risk.

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