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Mt. Gox Files for Bankruptcy Protection

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Re: Mt. Gox Files for Bankruptcy Protection

#161

Post by wtvanhest »

ryanjshaw wrote: post #126
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…

It's a pity your post isn't at the top of the thread. It is sound advice. I find it fascinating that there are (apparently) people in this thread who lost $500k at MtGox and despite the loss would still have no problem paying $250k in taxes on it if they were required to do so. I would hope if you're making that kind of money you'd either have a sound sense of financial risk management, or the wisdom to hire somebody…

My comment below highlights the clawback risk for those that were successful at pulling money out. If this turns out to be a Ponzi scheme there is a real chance that people who profited and were able to get their USD out may actually be forced to forfeit all of their profits depending on the jurisdiction.

Re: Mt. Gox Files for Bankruptcy Protection

#162

Post by mikro2nd »

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.

Given their behaviour to date there's absolutely no rational basis for "faith that they will do the right thing".

Re: Mt. Gox Files for Bankruptcy Protection

#163

Post by thenmar »

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.

In the article they confirm that they lost 850,000 BTC. What assets do they have that they could give back?

Re: Mt. Gox Files for Bankruptcy Protection

#164

Post by michaelt »

Tenoke wrote: post #141
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…

>(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 at any given time at a manageable level. The downside is it increases exposure to BTC/USD volatility. This is an old anti-scamming solution and is very useful in some settings but this isn't really one of them. The m…

Assume, a deposit-trade-withdraw transaction takes 1 hour, and the chance of an exchange failing in a given hour is 0.01%.

If you perform a single $100,000 transaction, there is a 0.01% chance you will lose $100,000. So on average your loss is $10 but in the worst case your loss is $100,000.

If you perform 100 transactions of $1,000 (taking 100 hours) there's (roughly) a 1% chance you'll lose $1,000 so your average loss is still $10 but in the worst case your loss is only $1,000.

I agree that performing 100 transactions over 4+ days sounds like a right hassle, and prices might change by the time your trade finishes - whether this precaution is worthwhile depends on your taste for risk and whether you're trading $100 or your entire life savings in bitcoins :)

Personally if I had a million dollars of bitcoins, the last person I'd trust with it would be a bitcoin exchange :)

Re: Mt. Gox Files for Bankruptcy Protection

#165

Post by danielweber »

btcfn wrote: post #118
mtgoxloser wrote: post #37

In this incident I lost a bit more than $500,000 USD that was in my MtGox account. I sold my Bitcoins a few months back, but the USD have been sitting in my account waiting to be withdrawn. This was a massive fuck up by MtGox, but I really do feel sorry for Mark Karpeles. He seemed really enthusiastic about Bitcoin. Right by MtGox's offices in Japan was a Bitcoin Cafe being built. You can [see here]( http://si.wsj.ne…

I have little sympathy for Mark. Assuming he didn't straight up stole the money, it all happened because of his incompetence. How do you not notice a leak of 850,000 BTC? How do you not have most of it in cold storage? How do you not have all kinds of alert systems warning you about even a 500 BTC discrepancy, let alone hundreds of thousands?

You have to get bookkeeping exactly right.

You have to get crypto exactly right.

Bitcoin sits on top of both of those sharp pyramids.

Yesterday someone on HackerNews compared a Bitcoin account to a pressurized system where the slightest failure means you lose everything irretrievably and instantly which is a great analogy.

You don't need Good Enough for this. You need Perfect for this.

Re: Mt. Gox Files for Bankruptcy Protection

#166

Post by eterm »

ryanjshaw wrote: post #126
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…

It's a pity your post isn't at the top of the thread. It is sound advice. I find it fascinating that there are (apparently) people in this thread who lost $500k at MtGox and despite the loss would still have no problem paying $250k in taxes on it if they were required to do so. I would hope if you're making that kind of money you'd either have a sound sense of financial risk management, or the wisdom to hire somebody…

I find it fascinating that people take at face value the words of a throwaway account who is quite likely making the whole thing up, given that you'd want wealth of 100m to just shrug off 250k like that. (Based on the fact that someone worth 100k can just about shrug off 250 like its nothing).

Re: Mt. Gox Files for Bankruptcy Protection

#167

Post by TheCoelacanth »

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.

It seems highly unlikely that anyone will get all of their money back. They announced that they have debts of 6.5 billion yen and assets of only 3.84 billion yen. If they can liquidate 100% of their assets that's only enough to pay back 59% of their debts.

Re: Mt. Gox Files for Bankruptcy Protection

#168

Post by streptomycin »

enscr wrote: post #115

I feel bad for Mark Karpeles but the way MtGox communicated & lied to its users makes me sad. It's those nameless individuals who believed in him, whose trust was betrayed - those are the ones that deserve the affection of the community. I've been following the news and I think MtGox was handling so much money that they should have focused on better security practices and audits. Few examples of their lackadaisical a…

FWIW, #3 is from the original owner who sold the site to Karpeles in 2011. Doesn't excuse #1, #2, and many other things, though.

Re: Mt. Gox Files for Bankruptcy Protection

#169

Post by jeremyjh »

danielweber wrote: post #165
btcfn wrote: post #118

Earlier quoted context omitted.

I have little sympathy for Mark. Assuming he didn't straight up stole the money, it all happened because of his incompetence. How do you not notice a leak of 850,000 BTC? How do you not have most of it in cold storage? How do you not have all kinds of alert systems warning you about even a 500 BTC discrepancy, let alone hundreds of thousands?

You have to get bookkeeping exactly right . You have to get crypto exactly right . Bitcoin sits on top of both of those sharp pyramids. Yesterday someone on HackerNews compared a Bitcoin account to a pressurized system where the slightest failure means you lose everything irretrievably and instantly which is a great analogy. You don't need Good Enough for this. You need Perfect for this.

No you don't need perfection to add some basic controls that would have prevented most of the damage here.

Re: Mt. Gox Files for Bankruptcy Protection

#170

Post by Tenoke »

michaelt wrote: post #164
Tenoke wrote: post #141

Earlier quoted context omitted.

>(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 at any given time at a manageable level. The downside is it increases exposure to BTC/USD volatility. This is an old anti-scamming solution and is very useful in some settings but this isn't really one of them. The m…

Assume, a deposit-trade-withdraw transaction takes 1 hour, and the chance of an exchange failing in a given hour is 0.01%. If you perform a single $100,000 transaction, there is a 0.01% chance you will lose $100,000. So on average your loss is $10 but in the worst case your loss is $100,000. If you perform 100 transactions of $1,000 (taking 100 hours) there's (roughly) a 1% chance you'll lose $1,000 so your average l…

You are forgetting the extra fees.

(Also the 'a deposit-trade-withdraw transaction takes 1 hour' assumption is nowhere near accurate, especially for Mtgox.)

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