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Mt. Gox Files for Bankruptcy Protection

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Re: Mt. Gox Files for Bankruptcy Protection

#151

Post by steven2012 »

arethuza wrote: post #109
steven2012 wrote: post #84

Earlier quoted context omitted.

I believe your understanding if the situation is flawed, if you are a US citizen. The $3000 per year applies to capital losses. You did not suffer a capital loss. You suffered a loss due to bank insolvency. If you realized your gains in 2013, you actually owe taxes on $500,000 for your 2013 taxes, which is roughly $250k. I believe your losses due to bank insolvency will apply to your income for 2014. But you may be o…

Lets see if I understand this (I am not in the US) - the bitcoins count as an asset, you sell these bitcoins for dollars at MtGox and at this point the tax is due regardless of whether you actually get the dollars out of MtGox? So any time between you selling bitcoins and actually getting the cleared funds out of an exchange leaves you with the risk of a fairly serious tax liability if the exchange can't actually giv…

It's not just that.

During the dotcom boom, many, many people faced tremendous tax liabilities because of ill-timed tax strategies. For example, they had stock options that were worth millions, but instead of selling them, they exercised them in order to hold them to get long term capital gains. So for example, they had options worth $10M, and they exercised them. They faced an immediate tax liability for $10M, but then the dotcom bust hit, and they lost all $10M, leaving them with $10M in taxes but nothing to pay it back with. I personally knew several coworkers that suffered this.

I believe it was only recently, over 10 years after the fact, that the IRS changed how they treated this so that people didn't go bankrupt from this.

Re: Mt. Gox Files for Bankruptcy Protection

#152

Post by bushido »

pakitan wrote: post #6
JumpCrisscross wrote: post #5

> The company's lawyer also said at a news conference at the Tokyo District Court that Mt. Gox had outstanding debt of about ¥6.5 billion ($63.6 million) with assets worth ¥3.84 billion. This implies a debt ratio of 170%. Assume: (1) no outside debt (only customer deposits) and (2) only 100% liquid assets (only currency). Even in that case, a depositor would recover no more than 59 cents to the dollar (the maximum re…

> a depositor could expect to recover no more than fifty-nine cents to the dollar 59% is a wet-dream scenario. Apparently they are trying really hard to value the lost 750K BTC at the closing MtGox price which was around $100. And Bitcoin is actually $566 now. It looks more and more that if anyone gets anything at all it will be under 10 cents to the dollar.

Recovery in this case will most likely be in the underlying asset i.e. BTC.

Having knowledge of a ton of these situations what will actually reduce the payout/recovery substantially are:

a. The time it will take to recover => 2-5 years

b. The customers will be on the hook for all accountant and legal fees, which will easily erode 40-80% of the recovery amount

So the expected recovery would be in the range of 0.118btc - 0.354btc per 1btc.

The only saving grace to recover the USD value would be if at time of recovery BTC was trading at $1600 - $4796 USD/BTC.

Re: Mt. Gox Files for Bankruptcy Protection

#153

Post by jellicle »

scottcanoni wrote: post #138
Oculus wrote: post #48

To all the HN members who lost a lot of money in this closing, remember the community is here for you. Don't do anything too rash and if you need someone to talk to, myself and most other people would be happy to lend an ear.

Until Mt. Gox publicly confirms that no one will be getting their BTC and/or fiat money back, I think it's wrong to assume money owed to the users has been lost. Please have faith that they will do the right thing.

You're in stage 1, denial.

Re: Mt. Gox Files for Bankruptcy Protection

#154

Post by gnaritas »

danmaz74 wrote: post #91
gnaritas wrote: post #77

Earlier quoted context omitted.

> I mean honestly most people who buy bitcoin aren't looking to spend it or use it because of convenience, they are looking to hold it in the hopes that the price continues to go up and on the way encouraging everyone they know to buy in to drive up the price. Even if that's true, that doesn't make it a Ponzi scheme. A Ponzi scheme is an investment in a phony entity run by a fraudster (the Ponzi) who's promising guar…

Bitcoin is much more like a speculative bubble than a Ponzi scheme.

Correct.

Re: Mt. Gox Files for Bankruptcy Protection

#155

Post by steven2012 »

JumpCrisscross wrote: post #71

When you make a deposit you are extending credit. In the case of Mt. Gox, or any other Bitcoin exchange, that credit is secured by nothing and insured by noöne. Advice, going forward, for managing counterparty risk: (1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the next $10 of BTC over). This keeps exposure a…

I believe MtGox users have unfortunately learned the definition of "counterparty risk". This is one of the major overlooked risks that almost took down the global financial system in 2008. People would hedge their worthless bonds using AIG as a counterparty, and once things blew up, these people realized their insurance policies were completely worthless because AIG was about to go under itself, causing them to almost go bankrupt as a result.

Unfortunately, in a world where none of the bitcoin exchanges have any sort of regulation, there's no way that BTC use can expand via BTC financial institutions until people have full confidence they can get their money back in the case of another collapse like mtgox.

Re: Mt. Gox Files for Bankruptcy Protection

#156

Post by jellicle »

ck2 wrote: post #9

It's easy to be angry at them and/or see how stupid they were about accounting, security, etc. But I guess on the other hand we do have to realize they are victims of massive theft, as far as we know this massive loss was not due to their own profiteering or internal theft, it was an organized outside force targeting them. It occurs to me it is like blaming someone for getting mugged, although they were stupid enough…

Almost all theft at financial institutions is internal theft.

There is not one single official statement from anyone to the effect that there has been an external theft from Mt. Gox. No one has reported a theft to police.

There is zero basis to believe an external theft has occurred.

If Mt. Gox does file a police report, at least then someone has done something (with official penalty for false statement) indicating that they believe a theft has occurred, and some possibly-accurate information would be available. But for now, there is nothing to stand behind a claim of external theft.

Re: Mt. Gox Files for Bankruptcy Protection

#158

Post by danielweber »

pistle wrote: post #140
celticninja wrote: post #116

Earlier quoted context omitted.

to be fair, with the funds in $ you probably have a better chance of getting some of that back than if it was BTC.

Yeah, call in the regulators to get some back. Thank a US fiat tax payer. You're welcome. It's the biggest load of hypocrisy that people who enthusiastically wanted to play in the libertarian paradise of an unregulated currency think they should be able to turn around and request the help of the regular, regulated, tax-supported economy to make them partial or whole. First, we'll crap a bunch of processing resources…

I know why you are annoyed, but many libertarians (of the non-anarchist variety) still believe in the court system to recover damages. If they use the courts to recover part of their losses from MtGox's assets there's nothing hypocritical there.

If they want a bailout, ie a cash injection, then I'm with you.

Re: Mt. Gox Files for Bankruptcy Protection

#159

Post by [deleted] »

scottcanoni wrote: post #138
Oculus wrote: post #48

To all the HN members who lost a lot of money in this closing, remember the community is here for you. Don't do anything too rash and if you need someone to talk to, myself and most other people would be happy to lend an ear.

Until Mt. Gox publicly confirms that no one will be getting their BTC and/or fiat money back, I think it's wrong to assume money owed to the users has been lost. Please have faith that they will do the right thing.

[deleted]

Re: Mt. Gox Files for Bankruptcy Protection

#160

Post by steveklabnik »

rondon2 wrote: post #139

Sorry if this is a stupid question, but did Mt. Gox have their wallets? Why didn't these people keep their wallets with them?

The way that exchanges work is that they hold a wallet for you, you deposit money into it, and then you do off-blockchain trades with other users. At some point, you ask to withdraw, and give them your local wallet address, and then they send you the coins.
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