
Mt.Gox Withdrawals - brokenmusic
http://coinsight.org/mtgox.html
======
Lerc
I have heard multiple explanations for the delays, and I think there are
multiple issues at play.

Firstly it has been claimed that they have freshly mined coins stored
undistinguished from others. If someone withdraws an amount that draws from an
address with new coins, that withdrawal will be delayed.

I'm not sure how those freshly minted coins get to MtGox in the first place
(any such transfer would presumably be delayed). Assuming they do have freshly
minted coins in their pools, That would be consistent of some short term
delays. I have experienced delays that fit this model where a Hash for the
transaction has been provided but the transfer does not arrive at the other
end for a few hours. Anything affected by this mechanism shouldn't be delayed
beyond 17ish hours.

There are transactions not going though for longer periods, The transaction
hash is being provided. I have seen claims suggesting that transactions are
failing because of a subtle protocol incompatibility, which would explain the
fairly random nature of the failed transactions.

Lots of people are saying MtGox is out of funds and the sky is falling. The
biggest problem with those claims is that people have been predicting the
imminent demise of MtGox for quite some time. MtGox may be failing, but
everything that happens cannot be a sign of imminent collapse if it keeps on
going.

I'm not sure if the claims of MtGox running a fractional reserve on the sly
are very valid. I think it's more likely that they have technical issues, but
the very nature of Bitcoin means that they could potentially lose all their
bitcoin through technical issues alone. If you lose a private key or transfer
bitcoin to an address with a lost key, those coins are effectively gone. If
your software isn't behaving it's quite possible to make an automated money
shredder.

It's fairly obvious that at this point they need to do some fairly significant
steps to demonstrate that they are in control of enough bitcoin. If they want
to restore confidence in their ability to pay out, they should use Bitcoin's
ability to demonstrate ownership to do just that. Restoring confidence in
their ability to operate is going to be a longer road.

~~~
nkuttler
Freshly mined coins don't make any sense to me.

If MtGox needs frehsly mined coins to keep their exchange alive, they are
probably dead. When and at which price did they spend their client's bitcoins
so that now they have to rely on mining new ones?

~~~
Anderkent
A client sets his mining address directly to their MtGox deposit address.
Different client tries to withdraw the funds. MtGox grabs a couple output it
owns without regard to its age and tries to send it to the withdrawing client.
The transaction is delayed because some of these outputs are fresh.

~~~
im3w1l
But "everyone" is poolmining. And the pools are surely professional enough not
to mine directly into mtgox?

~~~
Anderkent
Not sure if serious. First of all, 'professional'? In bitcoin?

Anyway, how does the pool know the address you gave it is a mtgox deposit
address rather than a personal address of yours?

------
pyalot2
The second it became apparent that Fiat withdrawal from Gox turned out to be
problematic, it was clear nobody should have his assets on that exchange (that
was over a year ago).

Why? Well, according to Gox the Fiat withdrawal issues where caused by "ye
olde banking system". But, you only had Goxes word for that. So considering
all possibilities, including that they simply might not have the money, one
needs to make a risk analysis, what would it mean if they didn't have the
money?

Well, if Gox doesn't have the Fiat to process Fiat withdrawals, it stands to
reason that in an effort mitigate issues, they would exchange (themselves)
customer funds between fiat <-> coins in order to try to weasel themselves out
of the hole. So this means that any liquidity problem on either side (coins or
fiat) would manifest itself on both sides (coins AND fiat).

Once you can recognize that there's a risk that Gox might have liquidity
problems, and that those problems can mean that you will not be able to
withdraw your coins, there's only one logical conclusion. This conclusion you
could have reached over a year ago, withdraw all funds in any way possible
from Gox.

And if you didn't do that, well, it sucks, a lot, been there, done that,
consider it to be a valuable lesson about dealing with banks in general.

~~~
tlrobinson
_" But, you only had Goxes word for that."_

Roger Ver, who is well respected in the Bitcoin world, also posted this video:
[https://www.youtube.com/watch?v=UP1YsMlrfF0](https://www.youtube.com/watch?v=UP1YsMlrfF0)

It's a little creepy though, like he's being held at gunpoint, forced to read
a statement...

I agree it's risky to keep money in a Bitcoin exchange that's showing signs of
trouble.

~~~
pyalot2
You know, I saw that video when it came out (also known as the Roger hostage
video). And somehow, strangely, it didn't give any more confidence in Gox.

Yes, that video looks like Roger is held at gunpoint by his captors forced to
read a statement. Obviously, that's not what happened. However I believe that
Roger had a choice of how to deliver his statement. And obviously, if he had
seen something to suggest that there would be liquidity problems, or if he was
unconvinced, he couldn't have said so. Gox would've probably sued him in the
ensuing bank run.

Still, he went there, looked at it, and had to get the news out. So how to do
it in a way, that doesn't make Gox sue him? Pretty much exactly how Linus did
admit that NSA has approached him. Do it in a way to leave you least open to
being sued, while still getting the message across.

And that's exactly how many interpreted this statement of Roger.

~~~
tlrobinson
If he was unconvinced why would he have had to make a statement at all?

~~~
pyalot2
Because it was known he was there. It would have looked very bad indeed if
Roger went to Gox and didn't release a statement.

------
brokenmusic
In short what MtGox should've done if this was really just a technical issue:

1\. Stop all deposits until the issue is resolved.

2\. Stop all withdrawals and then process all those that were already made -
manually.

3\. Only then try and fix the bug.

4\. Reopen with no fees and some other nice things for customers.

All steps should be accompanied by a statement explaining everything
thoroughly. Even that course of action wouldn't necessarily restore
confidence, but it wouldn't destroy their business.

If they're not doing this, it means something else is up and they are not to
be trusted. At this point, their business is done anyway (unless they do the
steps above like right now). The question is, will people see their BTC. My
bet is not. But who knows.

~~~
Anderkent
1\. How do you stop bitcoin deposits? You can't stop people from sending
transactions to their deposit wallets. You can maybe stop processing them, but
imagine the outrage that'd cause

2\. I don't think they can undo the already sent coins. If it really is
because of using coinbase outputs, the transactions will confirm eventually
(100 generations = ~17 hours?). Sending the money again would cause a double
withdrawal.

3\. Why? The faster it's fixed the less issues for them

~~~
brokenmusic
1\. At the very least take down the option from the website.

2\. There are no transactions on the blockchain. All withdrawals are stuck
within MtGox.

3\. People who withdrew money don't care about the fix, they care about
getting their money back. Start paying now or say goodbye to your business.
This is no game.

~~~
Anderkent
Oh, I thought the transactions were already broadcasted, just weren't being
confirmed?

edit: not on a blockchain means not confirmed. A transaction that's been
broadcast but not confirmed yet is probably still in the transaction pool of
some miners - as soon as it becomes valid, it might get confirmed even without
the original sender rebroadcasting.

~~~
brokenmusic
Sorry, I meant they're not even being broadcasted. It's all inside gox.

~~~
kylebrown
They are all broadcasted, mtgox even had a data URL[1] of all withdrawal tx's
which aren't confirmed after 2 hours. That's how people are tracking the total
stuck. The problem is that the transactions don't confirm because they are
malformed, most common errors being already spent outputs or tx too large.

1\.
[https://data.mtgox.com/api/0/bitcoin_tx.php](https://data.mtgox.com/api/0/bitcoin_tx.php)
(This URL is now defunct, supposedly replaced by a new API).

------
laichzeit0
This isn't the first time this happened. Three months ago I had BTC withdraw
problems [1] with MtGox. It took them about 5 days to send my money. That's
when I decided "fuck this shit" and moved to BitStamp. The difference between
how the two exchanges operate is night/day. Even if they have legitimate
technical problems, it's just not worth using them.

Don't get Gox'd, use a better exchange.

[1]
[https://news.ycombinator.com/item?id=6688659](https://news.ycombinator.com/item?id=6688659)

~~~
jschmitz28
> Don't get Gox'd, use a better exchange.

Interestingly, a bug (and maybe margin trading exploit) took down trading on
Bitfinex earlier tonight and withdrawals are currently halted. Before this
I've never had any issues with the exchange.

The last few months dealing with bitcoins have made me realize how important
it is to have your money insured.

------
marxdeveloper
My account and all the funds seem to be frozen, I kept them in $. When I log
in it shows me:

Your account has been restricted from accessing funding options. Please
contact support@mtgox.com for additional information on why your account has
been restricted.

I've tried contacting their support, but no luck so far. I have never used
BitInstant and I was verified before.

Anyone else having similar issues?

~~~
wfn
Try hopping onto the official #mtgox support channel on freenode and asking
ne0futur and/or others.

~~~
haakon
Just be _very_ careful not to sound frustrated or impolite, or they'll kickban
you immediately. It's getting pretty tense in there.

~~~
FireBeyond
No kidding. I own no BTC, but jumped in there just to have a look, and it's
testy and tense. Staff jumping on anything that sounds vaguely negative, even
if not directly related:

[09:19:42] <Asmiran> if the bug is caused by known reason

[09:19:55] <Asmiran> it should take not that long time to solve the problem

[09:21:36] <@SarahCoinBit> Asmiran that is your opion, don't pass it off as
fact

(even though the logic was flawed, admittedly)

------
fragsworth
Mt.Gox needs to calm everyone down by signing a message from an address (or
multiple addresses) that contain enough bitcoins to prove that they can handle
the withdrawals.

If they do not do this, we must assume that they are insolvent and have lost
their customers' coins.

~~~
robzyb
How would we know that they haven't just paid someone (with a lot of bitcoins)
$20k to sign that message?

~~~
brokenmusic
Why would that anyone holding a lot of coins need some incomparably small sum
from MtGox while he can clearly make more selling it before the meltdown on
other exchanges?

~~~
kalleboo
By propping up MtGox he'd be keeping the value of his Bitcoins up. If MtGox
fails, there'll be a huge dip in the price of BTC across all the exchanges.

~~~
brokenmusic
He can also be the first to sell on another exchange and buy at the bottom.
More profit, less risk.

------
levosmetalo
I still don't understand why are people keeping bitcoins on MtGox in the first
place? It's not like they are going to get any interest from MtGox from doing
so. If you need to buy/sell bitcoins then just send them to MtGox and retrieve
immediately after transactions. Just keeping money, either virtual or real in
someone elses wallet is not a good idea, especially if you don't get any
benefit, only potential risk.

I'm not blaming the victims here, just can't understand the reasoning behind.
Then again, I have never used MtGox, so I might have been missing something.

~~~
brokenmusic
Trading. Some people trade.

~~~
levosmetalo
I said "except for trading". As "money/coins in", "buy/sell", "coins/money
out". Still not understand why keeping it there.

------
simcop2387
My bet is that a lot of these are from users that are trying to leave mtgox
for other exchanges since mtgox isn't paying out fiat.

~~~
brokenmusic
Yes, and now they're not paying BTC either. 50k BTC (over 4k withdrawal
attempts) are now stuck in limbo. MtGox claims it's a purely technical issue
due to their custom implementation of Bitcoin protocol. People don't really
believe that anymore, most (at this point) on IRC and Bitcointalk and Reddit
think Gox doesn't have the money. Some haven't received their BTC after 13
days of waiting.

MtGox hasn't released any official statement except this one:
[https://support.mtgox.com/entries/26128504-Update-
Statement-...](https://support.mtgox.com/entries/26128504-Update-Statement-
Regarding-BTC-Withdrawal-Delays)

No proof of having enough funds, no explanation.

~~~
cantbecool
Where is everyone going, coinbase?

~~~
contingencies
Kraken.com

~~~
siculars
Is kraken taking money in all States? Or just South Carolina which, I believe,
is the only State they have a license in.

~~~
contingencies
There are regulatory limits on fiat transactions in some US states. The list
of approved states has _never_ been one state long, and the expensive and time
consuming, US-specific process of acquiring state-by-state licenses for the
remainder is well underway. Overseas, in more logically regulated places such
as Europe and parts of East Asia, there's no such barrier.

------
paulpw
From:
[https://bitcoinfoundation.org/forum/index.php?/topic/700-mtg...](https://bitcoinfoundation.org/forum/index.php?/topic/700-mtgox-
insolvency/page__hl__mtgox) " Mt Gox has a custom reimplementation of Bitcoin
that is known to be quirky and non-compliant in a bunch of ways, for example,
it used to overlook the coinbase maturity rule. That means miners who use
custom software to send money to MtGox immediately, without waiting for
confirmation, didn't get spotted by the MtGox software. When they tried to
respend the newly mined money, the transactions failed to propagate.

I don't know if that specifically is still an issue, but the MtGox scanner
site suggests that their implementation fails to implement a bunch of other
edge case rules around fees, sizes, and canonical signatures.

It seems very likely to me that for some reason Mark K is not able to work on
his codebase anymore, and isn't able to resolve bugs in a timely manner,
leaving his support staff to try and clean up the mess by making horrible
hacks like "throw away and retry later". The question in my mind then becomes
- where is Mark and what is he doing? "

------
TomGullen
Why anyone was using Gox in the first place confuses me. It's been having
trouble for over a year now I think? Lots of warning signs, yet people
continued to use them. If anyone had done cursory research before buying
Bitcoin (and they should of) they would of read a wealth of horror stories and
bad signs about MtGox.

It didn't even make sense to use them as a new user, the price of BTC was
considerably more expensive than other exchanges!

I think in part it's caused by the media always refering to MtGox for price
information as they have the longest historical data and inadvertently
providing MtGox with a lot of free promotion.

I wonder how sites like eToro who allow you to trade Bitcoin pegged on MtGox
price will be impacted if MtGox really is insolvent.

To me the simplest explanation for all the problems MtGox is suffering is that
they are insolvent.

~~~
peteretep
> Why anyone was using Gox in the first place confuses me

Sell price was ~$100 more on MtGOX than on other exchanges. If you have ten
bitcoins you want to sell, that's $1,000 more if you're willing to wait 6
weeks for MtGOX to send you your money.

~~~
Mtinie
I don't know anyone who has been able to pull USD out of Mt. Gox for months.
The reason it was +$100/BTC on Gox vs. other exchanges was the people were
paying a premium to get their current fiat holdings converted into something
that they could pull out.

Now that avenue is apparently closed, too, so it will be _interesting_ (to say
the least) to see how this plays out.

------
dash_riprock
And I wondered why my fiat withdrawal has not reached my bank account for
almost 2 months :-( Bugger.

~~~
patio11
Gox's explanation is that the 2nd largest bank in Japan was so inundated by
Gox's wire transfer volume that it could not possibly cope with it.

An alternative hypothesis very popular in the community: Mt. Gox has been
functionally insolvent since the US froze about $6 million in their accounts
when they closed the US subsidiary for being a money laundering operation, and
Mt. Gox has been delaying hard-currency withdraws to the majority of their
customer base to buy time until their transaction fees make them solvent
again.

A point in favor of the alternative hypothesis: I don't have to be an idiot to
believe it is true.

Another hypothesis I'd grant greater than zero credence to: Bank: "We think
you're a money transmitter." Gox: "Really!?" Bank: "Certainly looks like
that." Gox: "We prefer to think of ourselves as a technical firm which is
compliant with all the laws of Japan as long as nobody asks any pointed
questions." Bank: "No technical firm requires more than, say, 10 outgoing
wires per day. If you need more than that, we need to ask some pointed
questions."

~~~
kalleboo
> Gox's explanation is that the 2nd largest bank in Japan was so inundated by
> Gox's wire transfer volume that it could not possibly cope with it.

Anyone who's banked in Japan wouldn't be surprised at all to hear that.

This is a country where the only ATMs that take foreign cards are the ones at
7-11. All international transfers are performed by hand, on paper. They'll
call you at home to ask you the reason for your transfer. What company other
than Mt Gox sends out thousands of international wires per day? Everyone else
has foreign subsidiaries to deal with that. And we all saw what happened when
Mt Gox tried that...

That said, that's no excuse for people to attempt to use them as a customer.
The lack of transparency this far along into the problem has made me lose any
faith in them as well. They seriously can't even give you a queue number and
ETA on your transfer?

~~~
patio11
Having lived in Japan for the past decade, worked on systems which interact
with the Japanese banking system, and having a few hundred international wire
transfers under my belt, I feel like I have to comment here. I could just say
that "Every falsifiable representation you made about the Japanese banking
system is, in fact, false." That would be true, but then I'd have to get into
an argument about the density of post offices in Ogaki or differences in
individual bank's interpretations of Japan's AML laws or their internal risk
controls.

International wire transfers are not some wildly innovative technology which
this backward island nation with a multi-trillion dollar economy built on
exports and financial services had never heard of before. You can, in fact,
make a person-to-person international wire transfer which is, from the user's
perspective, totally automated, by typing into an ATM machine. Somebody at the
bank will end up typing into a different machine, exactly like happens if you
do a wire transfer through e.g. Bank of America, at either a branch or through
their web site. The larger remittance firms each individually process far,
far, _far_ more than 1,000 transactions per day. I was a monthly customer of
one, and can assure you that yen can leave Ogaki and show on a Bank of America
bank statement within 45 minutes. You will claim that this is because they
have foreign subsidiaries, but it is, in fact, because they have no difficulty
proving to US banks that they are not engaged in money laundering. I lack the
intellectual resources to even attempt to engage with the claim that the Magic
the Gathering Online Exchange has international payment processing challenges
in excess of those experienced by Toyota.

~~~
kalleboo
I'll have to take your word that the business end is better, because the
private banking part I've dealt with has been a massive shitshow.

> You can, in fact, make a person-to-person international wire transfer which
> is, from the user's perspective, totally automated, by typing into an ATM
> machine.

Which bank? I want to know so I can switch to them. All the ones I've
researched only do them with paper forms or over the phone. Only one that can
even do it online was Mizuho if you have a business account.

~~~
patio11
[https://www.goremit.jp/exchange/en](https://www.goremit.jp/exchange/en)

Keep your existing bank account, get an account with these guys (it requires a
paper application the first time, nothing thereafter unless your situation
materially changes), go to any bank/atm in Japan and do an interbank transfer
(振込み) to the number they give you. They'll process an international wire for
you on the back end to the beneficiary account you identify in advance. Costs
about as much as a wire transfer generally costs (about $50 all-in to US,
after you add your bank's fee, Lloyd's, the intermediary's, and your bank in
the US).

If you're primarily concerned about a beneficiary which isn't the US/UK/etc,
tell me the country and I may be able to make a better recommendation.

------
lucaspiller
As a commenter on Reddit said "MtGox is not only a joke it's detrimental to
Bitcoin's ecosystem.". How are people expected to take Bitcoin seriously when
issues like this happen all the time?

~~~
brokenmusic
I don't believe it's just "an issue" anymore. Not to spread FUD, as my coins
are also stuck there, but MtGox is likely to go down now.

~~~
lucaspiller
My point isn't whether it's an issue or something more in this case, but
things like this don't happen with banks (at least not all the time [0][1]).
With a bank you can be pretty confident you can go to an ATM and get your
money out. If something does go wrong they will eventually sort it out. If
something major goes wrong like them going bust your savings will be covered
(at least in the EU, up to a point). Bitcoin services don't have any of these
securities - it's akin to asking a bloke down the pub to hold on to £50 for
you.

[0] -
[http://www.dailymail.co.uk/money/saving/article-2168701/RBS-...](http://www.dailymail.co.uk/money/saving/article-2168701/RBS-
admits-Ulster-Bank-fiasco-fixed-mid-July.html)

[1] - [http://www.dailymail.co.uk/news/article-2517106/NatWest-
RBS-...](http://www.dailymail.co.uk/news/article-2517106/NatWest-RBS-Cyber-
Monday-meltdown-EMPTIES-customers-bank-accounts.html)

~~~
makomk
With a bank, you can be pretty confident you can go to an ATM and get small
amounts of money out, but even there we've seen system failures block
withdrawals for longer than this one. Also, there's small daily ATM limits and
at least one major British bank has a policy of refusing large cash
withdrawals (several thousand pounds or more) full stop through any means
unless you can prove to their satisfaction why you need that much cash:
[http://www.bbc.co.uk/news/business-25861717](http://www.bbc.co.uk/news/business-25861717)

------
pjc50
Just as "all political careers end in failure", so all Bitcoin exchanges end
in collapse _.

You have all the problems of a normal bank run, _and* the problems of being a
regulatory gray area, _and_ no political or regulatory bailout mechanism
available. There is also the constant risk of technical failure or criminal
activity losing all your assets beyond all possibility of recovery.

* Eventually. Not immediately, after a period of a few years.

------
jcfrei
Does anybody know what happens to funds on mtgox in case they go bust? Is
there some kind of deposit insurance? I sold all my bitcoins but I've still
got quite a lot of fiat on that account (USD) and losing it would really piss
me off.

~~~
patio11
I'm going to assume this question is being asked in good faith.

Mt. Gox is not covered by the formal or informal guarantees to make creditors
whole which the Japanese government customarily extends to regulated
depository institutions. Mt. Gox has been, let me be delicate, cagey about
their extent of involvement with Japanese regulators.

Should Mt. Gox abscond with your money, you will certainly have civil torts
available. You can pursue them in any court of competent jurisdiction in
Tokyo. This will take 3 to 5 years and cost you several hundred thousand
dollars. I'll save your competent legal representative some time and cut to
the chase: vindication in court will not enable you to recoup a single yen.

------
chmike
Possible insider information on close to come hit on BTC. Or big players want
to secure their money after a good profit from BTC value raise and move to
avoid a burst on the BTC speculation bubble.

------
captaincrunch
Seeing customers get this treatment is exactly why I created my own exchange,
in fact there are so many alternatives nobody should be using Mt. Gox anymore.

So many good alternatives:

VaultOfSatoshi.com, Bitstamp.com, Kraken.com, etc..

------
infruset
I have just been able to withdraw 0.3 BTC.

