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...
and details on what may be the actual bug w/ their bitcoin_tx implementation:
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.
MtGox has been building up failed transactions for over a week: http://falkvinge.net/2014/02/04/major-bitcoin-exchange-not-e...
Relatively realtime tx data: http://coinsight.org/mtgox.html via http://thegoxreport.com/
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.
My guess is that he was finally convinced to do so by the "early adopter" described at the bottom of this post:
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.
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.
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.
So many investors held out much longer that many might have expected, clinging to the belief that pirateat40 was true to his word, and that the Ponzi stench existed only in the minds of cynical observers.
In the end though, the last groups of investors lost almost everything.
The regulators will also keep track of their reserves, particularly if there seems to be a problem.
None of this applies to MtGox; it's an unregulated company running in a country with very different law to that of the countries most of its customers live in.
But he did also accidentally push a bad tx one time (6k BTC iirc), to an unspendable output.
I know plenty of people who have BTC and fiat stuck in MtGox. Congrats on getting at least a third of your holdings out. A bunch of people are looking forward to the MtGox update on Monday.
It's a fascinating study in brand loyalty, but is also ultimately hurtful to the Bitcoin community. Customer acceptance of Gox's mediocrity will only ensure that these and even more egregious issues continue to occur.
To be honest, I wouldn't mind another big crash if it finally woke people up to the incompetence, greed, and customer contempt that is Mt. Gox.
Yet somehow, it never does...
Comes at a bad time though, with the latest $200 crash due to the war on Bitcoin apps.
Yes, all that's happened is a bug that completely halted trading at a financial service managing millions and millions of dollars worth of assets.
At every point in the sad journey of Mt Gox -- from expertly storing passwords in plaintext (EDIT: actually it was unsalted MD5 hashes, but still, jesus christ) to this awful business of freezing the entire exchange -- the bitcoin community has fallen all over itself to forgive and excuse them.
How much is too much? You people should be calling for someone's head on a damn platter.
It makes you wonder if it's really a bug if they are just using this an excuse to hide a more significant issue.
I laughed it off at first, but over the years, it's repeatedly proven true. These exchanges are a weak point.
Fairly high, I'd say.
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.
Or unless they were hacked, and simply don't have the BTC anymore.
I'm seriously not defending MtGox. I'm affected by this. But if we're speculating, at least speculate credibly. :)
That's the problem with unregulated "banks", they don't have to say anything and they can for example pay all the money for themselves as for example "bonuses" or salaries and then go bankrupt. There is no protection for assets at "banks" like mt. gox.
This is kind of the central point of why we no longer experience bank runs in the broader economy, and why Bitcoin will always be vulnerable to them.
In a somewhat similar situation-- online poker, where poker sites took deposits in a wildly unregulated space-- Full Tilt Poker only kept a small amount of deposits on hand and paid out much of it to insiders.
All your users by BTC at i.e. $10 and store them on your (Gox) exchange. Price jumps to +600 and you subsequently get 50k fiat withdrawal requests. Am I a total cluebie to wonder how they can fund such withdrawals? Maybe there isn't sufficient capital reserve or liquidity between BTC and fiat to withstand such demand?
* User deposits USD/EUR/etc into an exchange (such as MtGox)
* User places a "bid" to buy BTC at a certain price (USD/EUR/etc per BTC)
* User waits for their "bid" to be matched by the exchange to another user who has placed an "ask" to sell their BTC for USD/EUR/etc
So, the USD/EUR/etc being exchanged between users in an exchange is put there first by the users. The exchange itself does not front USD/EUR/etc; or at least it shouldn't.