

World’s Largest Bitcoin Exchange Out $10 Million - sk2code
http://www.wired.com/wiredenterprise/2013/09/mt-gox/

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ashray
MtGox has put a lot of bitcoin users at huge risk. I've had a huge USD
withdrawal from Mtgox pending for over 7+ weeks now (8 weeks on 21st
September).

Every single time I email them asking how much longer it's going to take they
just get back to me saying "We don't know, a few more weeks." It's incredibly
frustrating! They always offer to cancel my withdrawal and credit the funds
back to my Gox account (so I can buy BTC at their inflated rates ? Nu-uh!).

Another offer they made me after a lot of back and forth was a 5% fee on my
withdrawal (for a 7 day turn around time). That is ABSOLUTELY insane. Imagine
a $100k withdrawal - you'd be paying $5,000 as fees on that. OUCH!

So here I am (along with possibly tons of other bitcoin users) with my money
stuck in Gox. I already started using other trading platforms but I have to
somehow retrieve this cash... Maybe I'll just take a hit and convert back to
bitcoin and move my BTC out ? I don't know.. there's about a 10% price
difference between Gox and other exchanges. So I'd lose 10% if I were to
convert back to Bitcoin now, sell them on another exchange and cash out there.

Gox has lost a LOT of customers because of their behavior so far.. it's only a
matter of time before they lose all of them.

~~~
dragontamer
There's a reason why the SEC exists. These are the risks you have to put up
with when you work with unregulated markets. When the SEC finally starts
regulating BTC exchanges, that's when things will be safe enough for me to
use.

You can't expect me to dedicate any significant amount of money to an
unregulated exchange / market... when issues like this haven't been figured
out yet.

~~~
drcross
1\. There are other exchanges that don't have this restriction.

2\. Exchanges should only be used to buy and sell so if you deposit money, buy
your coins quickly and get them to a safe place and you don't to worry.

3\. By the time further regulation exists and bitcoin infrastructure is fully
developed (these are certainties) you will have missed the differential in
profits.

~~~
dragontamer
For #3, you can certainly waste your money on it. But I see plenty of cracks
in the BTC mechanism. We now know that BTC is not anonymous (Ron and Shamir
gained a lot of information from public analysis of the blockchain:
[http://eprint.iacr.org/2012/584.pdf](http://eprint.iacr.org/2012/584.pdf)),
we know that huge amounts of BTC are being horded (The paper tracked 90,000
BTC), and we also know that if BTC Guild weren't self-limiting themselves...
they'd have enough hashing power to perform the fabled 51% attack against the
BTC Network ([http://mineforeman.com/2013/04/06/btc-guild-voluntarily-
limi...](http://mineforeman.com/2013/04/06/btc-guild-voluntarily-limits-their-
hash-rate/))

So we know that the 51% attack is feasible within the BTC community...
specifically by BTC Guild. Many "benefits" of BTC are flat out false, and
simply the act of using BTCs often ends up getting your ISP's servers hacked
like no tomorrow. (Linode hack and OVH hack)

And yet you think BTC has a stable future ahead? Don't kid yourself, there are
major issues here that need to be resolved.

And if Mt.Gox falls, then the world's largest USD<->BTC conversion market will
have failed. Sure, BTC-e might be available now... but are there any
guarantees that BTC-e will survive the pressure in the long run?

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1053r
I had no idea that they were sitting on such a large stash of bitcoins (from
the article, 250K). This leads me to believe that they have been trading on
their own exchange to keep the USD / BTC price depressed.

For example, if the "market" decided that there was a 50% chance Mt. Gox was
never going to solve their banking problems and allow unlimited fiat
withdrawals, then you would expect there to be a 100% price premium for BTC on
Mt. Gox. However, that would send a VERY scary message in terms of their
viability, which would quickly become a self fulfilling prophecy, so Gox could
sell some of their stash to keep the price premium to say, 10%. If they tried
to push it all the way down to a 0% premium, though, they would quickly run
through all their BTC.

Since the price premium has been stable at almost exactly 10% for months, that
suggests SOMEONE is manipulating it, probably to keep it low. Does anyone care
to look in the blockchain and do the deobfuscation to see if my theory is
correct?

~~~
ihsw
There is value to BTC price stability, and it definitely isn't surprising
considering a stable BTC price supports MtGox's bottom line.

~~~
ISL
One could argue that efficient price discovery supports MtGox's bottom line.
If bitcoin ends as a currency, it looks like MtGox would be left holding the
bag. Healthy exchanges should make money by facilitating transactions, not
price support.

Of course, if MtGox wanted to underwrite a bitcoin community and then reap the
future benefits as a major exchange, this is an efficient way to do it.

~~~
drcross
|if MtGox wanted to underwrite a bitcoin community and then reap the future
benefits as a major exchange, this is an efficient way to do it.

wrong, the most efficient way would have been to offer discounts on their
rates. That's the main clue that MtGox are not partaking in price
manipulation.

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crazypyro
Sidenote on the writing: Its obnoxious to end sentences with "U.S.",
especially twice in two back-to-back sentences that don't clearly end.

What I'm talking about: "For months now, it’s been next to impossible for Mt.
Gox to get money into the U.S. Bitcoin discussion forums are filled with
complaints by Mt. Got customers, who have been unable to get their money into
the U.S. Banks don’t want to do business with the Japanese exchange —or
bitcoin companies in general — because they fear the glare of regulatory
scrutiny."

~~~
kbenson
That caught me too. Made me think of the discussion regarding singe vs double
spaces over the weekend... (this was a case put forward where double spacing
would make the end of the sentence less ambiguous).

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fvrghl
I keep reading about how the banking of bitcoins is unstable. It's bad for the
image of bitcoin because it seems like it can't be trusted, and lawsuits like
these damage the credibility of the currency and the companies.

~~~
TwoFactor
Except these issues are with companies that are using the currency not
properly understanding local regulations. This had nothing to do with bitcoin
as a currency or protocol.

~~~
ihsw
Measuring the stability of BTC requires more consideration than simply the
technological merits.

~~~
unclebucknasty
Unfortunately, this is true.

~~~
cube13
This is true of currency as a whole. Money only has value if people are
willing to exchange things for it.

~~~
unclebucknasty
> _Money only has value if people are willing to exchange things for it._

True, but, here we are talking about something different. That is, the value
of BTC is not simply defined by its technical merits, but can be devalued if
the ecosystem for managing/utilizing/exchanging it is unhealthy.

In other words, the value of money is also affected by whether people are
_able_ to exchange things for it.

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luscious
Oh man. I just got my employer to pay me in bitcoins instead of dollars. I'm
sure this will blow over and the good times will roll again. Just everyone be
cool and stuff.

~~~
mahyarm
Mt.Gox is not the one true exchange(tm).

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kalms
I have zero trust in Bitcoin, and I can't really figure out why, except that
it seems so utterly fragile. Like it's built on hopes and dreams - almost like
a ponzi scheme, like someone else suggested.

Sure, if you're feeling lucky, go right ahead. But color me conservative.

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warcode
I always thought of the bitcoin's purpose as being an independent currency.

All the problems started when people started wanting to exchange it for "real"
money instead of other services accepting bitcoins.

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alexanderRohde
How exactly did the US feds "Seize" 5 million in bitcoin? I thought the whole
point was that it wasn't seizable unless you got the encryption keys, which
would be weird since MTGOX is based in Japan, no?

~~~
dragonwriter
> How exactly did the US feds "Seize" 5 million in bitcoin?

Presumably, if they wanted to seize bitcoin, they'd produce a demand to turn
the bitcoin over along with stating the legal authority for the demand and the
legal consequences of failing to comply with it; lots of actual seizures work
that way.

But if you read the article, the $5+ million seized from Mt.Gox by the US
government was US dollars (not bitcoins) ($2.9 million from Mt.Gox's account
with Dwolla, and $2.1+ million from two Wells Fargo accounts), so "how can you
seize bitcoins" is irrelevant.

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Tichy
Running a business costs money? I am very disappointed.

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chstrcheeto4prz
I think most people are unaware that MtGOX is an acronym for "Magic the
Gathering Online Exchange."

