

Statement Regarding Bitcoin Withdrawal Delays - sillysaurus2
https://www.mtgox.com/press_release_20140207.html

======
lhl
I've stayed away from MtGox due to their issues w/ fiat transfers from last
year (which seem to be ongoing), however, technical problems aren't a new
thing for them over the years. I've heard not so great things about the
technical underpinnings of their custom Bitcoin protocol implementation.

Here's a discussion from r/bitcoin that talks about how their implementation
is out of spec, as well as some of the long-running bugs they have w/
unconfirmed coins, etc:
[http://www.reddit.com/r/Bitcoin/comments/1x91xq/mtgox_announ...](http://www.reddit.com/r/Bitcoin/comments/1x91xq/mtgox_announcement_to_stop_btc_withdrawals/cf990ey)

and details on what may be the actual bug w/ their bitcoin_tx implementation:
[http://www.reddit.com/r/Bitcoin/comments/1x91xq/mtgox_announ...](http://www.reddit.com/r/Bitcoin/comments/1x91xq/mtgox_announcement_to_stop_btc_withdrawals/cf99ugh)

When I got back into bitcoin recently, I tried signing up w/ a bunch of
exchanges, but ended up using Coinbase and have been pretty happy with them.
I've still been transferring coins into my own cold wallets though. The whole
point of Bitcoin is that you don't need to introduce counterparty risk by
having someone else hold your money.

~~~
lhl
As a followup, someone apparently flew from Australia to Japan to try to get
his BTC and has just posted an interesting writeup:
[http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_a...](http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_at_mtgox_offices_5_to_7th_february/)

MtGox has been building up failed transactions for over a week:
[http://falkvinge.net/2014/02/04/major-bitcoin-exchange-
not-e...](http://falkvinge.net/2014/02/04/major-bitcoin-exchange-not-
executing-withdrawals-now-owes-clients-38m-in-disappeared-money/)

Relatively realtime tx data:
[http://coinsight.org/mtgox.html](http://coinsight.org/mtgox.html) via
[http://thegoxreport.com/](http://thegoxreport.com/)

------
jnbiche
I think there's a lot of circumstantial evidence that the transaction that
caused the huge spike in Bitcoin Days Destroyed yesterday was caused by
Karpeles bringing some old coins out of cold storage:

[https://blockchain.info/charts/bitcoin-days-
destroyed](https://blockchain.info/charts/bitcoin-days-destroyed)

My guess is that he was finally convinced to do so by the "early adopter"
described at the bottom of this post:

[http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_a...](http://www.reddit.com/r/Bitcoin/comments/1x9gue/my_protest_at_mtgox_offices_5_to_7th_february/)

I'd bet that this early adopter had some information or leverage that forced
Karpeles's hand. This balance may be from an old Mt. Gox cold storage address,
but it's equally possible that Karpeles is using some of his personal holdings
to cover the amount owed for one big customer, or perhaps more.

Furthermore, I actually now believe that Mt. Gox _is_ having technical
problems with Bitcoin withdrawals. Their poorly-designed custom Bitcoin node
is evidently having problems coping with the newly-mined inputs a lot of
people were directing straight into their Mt. Gox account.

Before, I was thinking that people should just write off their Gox holdings,
or prepare for a lawsuit if the holdings are big enough, but I now believe
that there's a decent chance that people will be able to eventually withdraw
their balance in Bitcoins (USD transfers still look impossible for most
people).

Finally, a personal note to those with coins stuck at Gox:

 _Please, even if you are able to eventually recover your coins, and even if
future trading opportunities on Mt. Gox are incredibly profitable, please,
please don 't do any further business at Gox. Gox has been harming the Bitcoin
ecosystem since back in 2011, when their incompetence, greed, and contempt for
customers first reared its ugly head. Since then, the same problems have
repeated themselves, time after time. Please don't go back. Remember this
pain._

------
chrisBob
Everyone says they want BTC because they don't trust the government, then puts
their money into MtGox.

I trust my government a lot more than I trust MtGox. Bitcoin might be the
solution to a problem, but I am not sure exchanges like this are.

~~~
hammock
There is some risk with early adoption. Reliability will be lower. That's why
NASA built the space shuttles uses decades-old computers in its spacecraft.
But that doesn't mean it's not the solution to a problem

------
otoburb
I really wish you had put in the word "temporarily" in your HN title.

Thankfully, fiat withdrawals aren't affected, although there still remains the
issue that fiat takes a while (more than 4 weeks) to get out of MtGox.

EDIT: Thanks for updating the title appropriately.

~~~
sillysaurus2
Sorry... I should have used the original title.

I'm still sort of in shock. I allowed myself to believe it was a good idea to
store all of my bitcoin in mtgox, due to their One Time Password protection
features.

Once I realized something was up, and realized that only small withdraws of
<0.05 BTC were being processed, I spent the last 24 hours salvaging as much as
I could. I was able to withdraw 3.4 BTC of my 9.2 total. There are still 0.65
in my MtGox account. The remaining 5.15 are stuck in "withdraw limbo" due to
the technical problems. MtGox has set up a system to automatically refund all
stuck withdraws exactly 7 days after they get stuck. So, hopefully 7 days from
now I'll be able to withdraw the rest, if MtGox allows it.

I hope their Monday update will bring good news...

Once again, sorry about the original title.

~~~
nwh
Before you get too worried, it's likely more a technical problem with their
wallet software than them not having the funds to spend. It seems to be that
they are losing track of which inputs they have spent and which ones haven't,
and everything is getting backed up behind a mound of transactions with unmet
dependancies. No doubt they'll sort it out and be back to processing
withdrawals again in no time.

~~~
ekianjo
Not sure how you can be so confident there's no other issue. I certainly hope
you are right, though...

~~~
Daniel_Newby
Historically, collapsing banks simply collapse all at once. There is no
incentive to slowly unveil a fraud. The depositors might kill you.

~~~
hueving
Well if it were a ponzi scheme and they didn't have the assets they were
supposed to, it would be in their best interest to convince people as long as
possible that everything is okay.

~~~
ekianjo
That's exactly what could be happening here.

------
bobjordan
My grandpa once told me there are two things you can't really trust anyone to
hold for you: #1) your lady #2) your money.

I laughed it off at first, but over the years, it's repeatedly proven true.
These exchanges are a weak point.

~~~
njloof
Tell us more about your #1 stories.

------
blueskin_
What are the odds they're waiting for the price to drop before paying out?

Fairly high, I'd say.

------
kaonashi
Bank runs, huh.

~~~
sounds
Okay, let's break down the theory here.

Traditional banks take deposits of USD, loan them out using fractional
reserve, and fail if depositors all simultaneously run to the bank and close
their account. Banks need loans to pay operating costs (I suppose) so any
economy (specifically, currency) with loans going on will need deposit
insurance, i.e. all banks will eventually end up subsidiaries of a single
enormous bank - the Federal Reserve.

MtGox does not do loans. In fact, BTC loans are so risky that no large scale
lending happens in BTC. Unless MtGox embezzled funds or shredded BTC (see
below), they will ultimately have the ability to honor all payment requests
and _still_ have their profits.

It is possible they've had some sort of error which has irretrievably sent BTC
to random addresses where it can't feasibly be recovered. If this is true,
they should say so.

On their USD side, they are struggling and may have chosen to use some BTC
deposits to generate USD funds to accelerate payouts. However, I find this
unlikely since their USD payout problem has only gotten worse. I may be wrong;
if MtGox is trying to play with their deposits, they should say so.

In other words, check your assumptions. And MtGox of course has always had a
problem with communication.

~~~
CamperBob2
_MtGox does not loan out currency. Unless they 've embezzled funds or shredded
BTC (see below), they will ultimately have the ability to honor all payment
requests and _still_ have their profits._

Or unless they were hacked, and simply don't have the BTC anymore.

~~~
sounds
They use wallets in cold storage. Perhaps an insider could make off with the
BTC.

I'm seriously not defending MtGox. I'm affected by this. But if we're
speculating, at least speculate credibly. :)

~~~
CamperBob2
All we have is their word on that.

------
tomcorrigan
The end of Mt Gox began a long time ago with delayed payouts of hard currency
but this is surely the first nail in the coffin.

------
brokenmusic
They should at least remove trading fees for a while, that's the least they
can do to please the customers.

------
jcfrei
I'm confused:
[http://coinsight.org/mtgox.html](http://coinsight.org/mtgox.html) currently
shows a sharp drop in stuck transactions. is that simply because they paused
any pending withdrawal requests? or are funds leaving gox?

~~~
mathrawka
They have been returning stuck transfers back to accounts. I'm not 100% sure
if the API marks those as un-stuck though.

------
dschiptsov
So, take your popcorn and watch the sell off.)

