
The Mt. Gox alleged insolvency document has been posted - jordhy
http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft
======
steven2012
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.

~~~
selectodude
Definitely real. Joint statement just released on Coinbase.

[http://blog.coinbase.com/post/77766809700/joint-statement-
re...](http://blog.coinbase.com/post/77766809700/joint-statement-regarding-
the-insolvency-of-mtgox)

Edit: and now the MtGox website is totally down.

~~~
graetzer
The statement doesn't imply anything about a insolvency

~~~
girvo
The original title specifically said "Insolvency of MtGox"

------
dustcoin
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
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."

~~~
pvarangot
Hmmm I still think it is a hoax, and a way for someone intelligent to earn a
lot of money by manipulating bitcoin prices... The release in April 1st?
Domain registered hours ago? Algo mtgox.com is registered in 1api. I don't see
why they would switch registrars only for this, and there is a post in Mark
Karpeles' blog accusing GoDaddy of shitty security practices:
[http://blog.magicaltux.net/tag/godaddy/](http://blog.magicaltux.net/tag/godaddy/)

Also, if I were on that situation and soundly advised I wouldn't touch a US
based registrar for my new domain even with a 10 foot Bitpole.

~~~
carbocation
gox.com was registered in 1997; it's just the record that was updated today.

~~~
pvarangot
Of course, its a three letter domain name, it has been transfered. Someone
transfered it today, I'm saying that person is not Mark Karpeles because he is
using GoDaddy.

~~~
nly
Maybe the domain was already with GoDaddy, and an inter-client push was just
faster? I've taken domains at registrars I'd rather not use to ease things for
the other party.

------
valar_m
_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)

~~~
wpietri
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.

------
Danieru
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.

~~~
tlrobinson
_" Where did the cash liabilities imbalance come from?"_

Bank accounts seized by DHS?

~~~
wmf
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.

------
jasonlingx
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
> 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.

~~~
oscilloscope
Yep. At the exchanges, you're basically buying Bitcoin credits when you send
them Bitcoin. You can trade these credits for dollar credits. On a functioning
exchange, you can withdraw these credits one-to-one for Bitcoin or dollars to
a wallet or bank account you control.

In the future there will potentially be decentralized exchanges where a
Bitcoin transaction can be a component of an exchange transaction and there is
no third-party involved. But not today.

~~~
dsuth
I was under the impression that the whole point of Bitcoin was that it was a
decentralised currency, and your coins lived in your wallet. What is the value
of actually entrusting your coins to 3rd party where they're outside of your
control? Just the ability to exchange them for USD? Why would you keep coins
with them on a long-term basis?

~~~
logicchains
Presumably under the assumption that an exchange such as Mt Gox would be able
to keep the coins safer than they themselves could, which now doesn't seem
like a particularly sound assumption to make.

~~~
tinco
I can confirm, this was my line of thought. After the first hack, and the
seemingly professionalisation of MtGox, especially compared to the other
exchanges.

In a proper BTC exchange, most of the Bitcoin are in cold storage, which means
they can't be stolen even if the exchange was hacked. The hot wallet would
represent the variability in the exchanges BTC holdings and would be very
small, so that in case of theft it could be either insured or covered.

That to me sounds like it's safer than any scheme I can come up with, without
losing the mobility of the BTC.

Of course, if this document is true, it means MtGox did absolutely no
accountancy on their cold wallets for the past 3 years.. that's just plain
crazy :(

~~~
logicchains
I wonder if it would be possible to write an AI to manage a Bitcoin exchange;
cut out the human element and the potential for mistakes/scamming completely?
Before the exchange is launched, publish the AI's source and have it undergo
an extensive public audit.

------
pmorici
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
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...](http://www.slideshare.net/selkisr/bitcoin-market-opportunity-
excellent-early-merchant-adopters)

(see slide 2)

original tweet sharing the slide deck:

[https://twitter.com/twobitidiot/status/438131088607965184](https://twitter.com/twobitidiot/status/438131088607965184)

~~~
pmorici
Ah, that makes sense, looks like this Wired article agrees...

[http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-
gox...](http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-
implodes/)

Edit: the NYT article attributes the leaked document to someone else though,
[http://www.nytimes.com/2014/02/25/business/apparent-theft-
at...](http://www.nytimes.com/2014/02/25/business/apparent-theft-at-mt-gox-
shakes-bitcoin-world.html)

------
TomGullen
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
> 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.

------
verroq
> 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)

------
dustcoin
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.

~~~
brudgers
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
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.

------
ck2
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
Yes. The feds seized funds from MtGox's US subsidiary's bank accounts.

[http://techcrunch.com/2013/08/23/feds-seize-
another-2-1-mill...](http://techcrunch.com/2013/08/23/feds-seize-
another-2-1-million-from-mt-gox-adding-up-to-5-million/)

------
snitko
_> The cold storage has been wiped out due to a leak in the hot wallet. _

This sounds like some kind of bullshit.

~~~
pmorici
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
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
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.

------
petsounds
Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection
Draft": [http://i.imgur.com/u9aP9Hg.png](http://i.imgur.com/u9aP9Hg.png)

~~~
dustcoin
Is this a fake/placeholder balance sheet? Why would MtGox have a "Cost of
Goods Sold"?

~~~
tptacek
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.

------
crazypyro
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
Yup, articles showing up online.

[http://www.businessinsider.com/reports-mtgox-halts-all-
tradi...](http://www.businessinsider.com/reports-mtgox-halts-all-
trading-2014-2)

[http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disa...](http://www.reddit.com/r/Bitcoin/comments/1yuopj/trading_disabled_on_mt_gox_its_happening/)

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

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

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

------
nikcub
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/1miioFP1oFnLa8OQ1MZ91ABUD...](https://docs.google.com/document/d/1miioFP1oFnLa8OQ1MZ91ABUDfLKY8X9KDGwz8Izjaa0/edit)

~~~
gojomo
But major aspects of this plan are delusional. Take p. 7, "To reduce
liabilities":

 _" Coins for equity,…"_

You can't just improvise a private-offering of shares for Bitcoin in the
envisioned timeframe. The other exchanges know this. The kind of people with
the deep pockets and credibility to consider a reboot/turnaround would know
this.

 _" …coin donations,…"_

Who's going to donate to a distrusted brand with large, poorly-understood
multi-jurisdictional legal problems, which also starts out 633K BTC ($280
million, at $450/BTC) and $33 million USD in debt?

 _" …and cash injections to buy coins at the cheap MtGox price are some
options among many."_

THERE ARE NO COINS TO SELL AT THE CHEAP MT GOX PRICE, if the rest of the
document is to be believed. Even if they launched this plan and kept that fact
secret – against the other implied steps of bringing in credible new expert
team members – there's no net-improvement in the entities' position if it
keeps selling BTC (adding BTC-denominated debt to its balance sheet) at a
lower price it would take to acquire BTC elsewhere. That's not even competent
as fraud: you'd want to _buy_ at the artificially-low price, not _sell_.

It's nonsense on its face, even according to its own terms.

I can believe this is a _parody_ of some industry bailout idea that was
floated… but recrafted to poke fun at it. (The proposed April 1 relaunch and
reasoning evocative of "too big to fail" bailouts are more hints.)

For this to have been a legitimate outline of a believed-possible plan,
everyone involved in its authorship would have to be high on their leftover
Silk Road stashes.

~~~
eterm
They could buy bitcoins on gox at gox prices, then unlike anyone else, could
arbitrage by transferring those coins out and selling on other exchanges.

Of course there are coins to sell on gox, up until they halted trading, all
trading is just shuffling their internal ledger, they didn't need the actual
hard currencies underneath. (Which is why they should have been siloed, both
the 780k reported missing bitcoins but ALSO the less highlighted 30m deficit
on USD. (which is in part critical to show it wasn't _just_ tx mallebility or
btc problems, it was general bad accounting))

~~~
gojomo
_If_ the presentation is to be believed, there are only 2000 actual coins at
Gox, and Gox already controls them. Gox already can transfer them out and sell
at a higher price. (The low round number balance suggests they've already been
doing that.)

Meanwhile, there are 624K+ phantom coins listed as being in customers'
accounts. So you can't (honestly) attract _new_ "long term, high leverage"
investor/trader fiat cash with the idea "there are cheap real coins here for
_you_ to buy then transfer out at a profit!" No one gets any new real coins by
shuffling phantom coins around, and Gox needs all the real coins for
themselves. If any real coins go to others at low prices then Gox becomes
relatively more insolvent, not less.

And for as long as the arbitrage opportunity exists – phantom Goxcoins are
selling for way less than real coins – who would be foolish enough to transfer
new real coins in?

------
llamataboot
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?

------
apaprocki
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

------
agorabinary
(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.

------
EvanMiller
And this, children, is why markets are regulated.

------
tlrobinson
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?

~~~
gojomo
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.

------
_pmf_
> 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".

------
maaku
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?

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

~~~
ars
So uncensor it and post it for us here.

~~~
sylvinus
There you go: [http://imgur.com/MwPTktl](http://imgur.com/MwPTktl)

------
knodi
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
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.

------
fiatpandas
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
Would you mind posting the figure for those of us who don't have illustrator?
I'm curious.

~~~
petsounds
[https://news.ycombinator.com/item?id=7294888](https://news.ycombinator.com/item?id=7294888)

~~~
teawithcarl
Page 8, nonredacted: "MtGox business is healthy and profitable", "Projection
Draft": [http://i.imgur.com/u9aP9Hg.png](http://i.imgur.com/u9aP9Hg.png)

------
smtddr
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.

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

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

~~~
MarkTee
What laws have they broken?

~~~
foobarqux
Gross negligence

------
ubi
Clearly MT Gox is too big to fail.

~~~
bronson
Ha, right. And they're asking for a bailout.

Wasn't Bitcoin supposed to be different?

~~~
knodi
People will be people.

------
arasmussen
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.

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

~~~
thrill
Whoever created this PDF knew that.

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

------
bdc
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!

------
spiralpolitik
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.

------
mschuster91
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
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.

------
ChristianMarks
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.

------
RRRA
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!

------
fsk
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.

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

------
pjan
For those interested: page 8 unredacted...
[http://imgur.com/aU5mCVP](http://imgur.com/aU5mCVP)

------
fredgrott
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.

------
lazyloop
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
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
Wouldn't that make it a Ponzi scheme then?

~~~
colinbartlett
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".

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

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

------
halfdeadcat
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-
bi...](http://money.cnn.com/2014/02/24/technology/security/mtgox-bitcoin/)

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

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

------
dokkles
yeah the uncensored doc on page
7...[http://cl.ly/image/2L043C464030](http://cl.ly/image/2L043C464030). This
just stinks of a hoax

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

~~~
jondtaylor
What would the omlette be in this analogy?

~~~
Tycho
A stable market with trusted financial intermediaries etc.

------
moeedm
Currency of the future guys!!!!!!11

------
MWil
why Singapore?

~~~
jpatokal
Because it's Bitcoin-friendly and a great place to run a company?

[http://gyrovague.com/2013/10/30/half-the-donut-why-an-
entrep...](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/)

