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Mt. Gox Files for Bankruptcy Protection

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Re: Mt. Gox Files for Bankruptcy Protection

#201

Post by bryogenic »

panarky wrote: post #171
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…

"There was some weakness in the system, and the bitcoins have disappeared." They've "disappeared". Curious choice of words. Karpeles didn't say they were stolen, or misplaced, or destroyed. And he didn't say when the mysterious disappearing act occurred. The most likely explanation is that Gox's crappy system lost the private keys to cold storage long ago, and they've been running fractional reserve since then, hopin…

Transaction malleability was probably just event that pushed the withdraws past where they could ever recover.

Re: Mt. Gox Files for Bankruptcy Protection

#202

Post by znowi »

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.

The only faith I have in this story is that, perhaps, people will learn from this example and will be able to spot a con man next time when they see one.

Re: Mt. Gox Files for Bankruptcy Protection

#203

Post by psykovsky »

eterm wrote: post #166
ryanjshaw wrote: post #126

Earlier quoted context omitted.

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).

Dude, I'm poor has hell and I'm not crying about the €30k I lost there. And those 30k are several multiples of what I got left with. Not everybody commits suicide for losing money, you know...

Re: Mt. Gox Files for Bankruptcy Protection

#204

Post by [deleted] »

steven2012 wrote: post #84
mtgoxloser wrote: post #65

Earlier quoted context omitted.

Losses can only be taken on your initial investment amount if you have Bitcoins in MtGox. This means that if you invested $10k a year back, and your Bitcoins are now worth $1000k, you can only take $10k in losses. Luckily I have realized my gains which means I can deduct $3k every year in losses with infinite rollover.

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…

[deleted]

Re: Mt. Gox Files for Bankruptcy Protection

#205

Post by gamblor956 »

zAy0LfpBZLC8mAC wrote: post #193
wtvanhest wrote: post #136

Earlier quoted context omitted.

It may depend on why the exchange went insolvent. If it is not a technical problem, and is rather a Ponzi Scheme, the tax implications may be much different since there are IRS rules that handle Ponzi Schemes. Additionally, those that gained profits in the exchange may be required to pay back those profits to victims through clawback lawsuits+. This IRS link below is a brief overview of how victims of Ponzi Schemes a…

Noone was promising any returns, so how could this possibly be a ponzi scheme?

A Ponzi Scheme is legally defined as a fraudulent investment operation that pays earlier investors returns out of the investments of subsequent investors. A promise of returns is not necessary.

Re: Mt. Gox Files for Bankruptcy Protection

#206

Post by runako »

drcode wrote: post #184
steven2012 wrote: post #179

Earlier quoted context omitted.

Not really. If the exchange says "We have 500,000 BTC" and they publish their wallet, but their actual customer liabilities are 2M BTC, everyone can still lose a lot of money. What they really need is to be externally audited and undergo consistent regulation.

I'm talking about a more sophisticated solution that addresses this- See https://github.com/olalonde/blind-solvency-proof

Disclaimer: I only skimmed this solution.

However, it looks like you don't/can't address all of the counterpart's liabilities. So salaries, tax dues, rents, loans, and other obligations denominated in fiat currency don't appear in the calculations. But any of these can destroy a counterparty as surely as insufficient reserves. Crucially, depositors don't really care where the risk is, they care that there is some external entity (like the SIPC or FDIC) that can insure that risk.

Re: Mt. Gox Files for Bankruptcy Protection

#207

Post by Havoc »

I just don't see how they missed it. Since they used a hot-wallet system this had to be over a pretty substantial period of time. Surely if you're running an operation with that much cash involved you've got some kind of rolling reconciliation between debt owed vs reserves available?

Who misses a 500MM hole in their assets? Or is reckless enough to hide it (trading whilst insolvent)?

Re: Mt. Gox Files for Bankruptcy Protection

#208

Post by wpietri »

danielweber wrote: post #158
pistle wrote: post #140

Earlier quoted context omitted.

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.

Given all of the rhetoric around the distributed, untraceable, unregulated nature of BitCoin, I think an initial assumption of hypocrisy is still not a bad place to start.

Re: Mt. Gox Files for Bankruptcy Protection

#209

Post by wpietri »

zAy0LfpBZLC8mAC wrote: post #193
wtvanhest wrote: post #136

Earlier quoted context omitted.

It may depend on why the exchange went insolvent. If it is not a technical problem, and is rather a Ponzi Scheme, the tax implications may be much different since there are IRS rules that handle Ponzi Schemes. Additionally, those that gained profits in the exchange may be required to pay back those profits to victims through clawback lawsuits+. This IRS link below is a brief overview of how victims of Ponzi Schemes a…

Noone was promising any returns, so how could this possibly be a ponzi scheme?

Must Ponzi schemes guarantee returns? Madoff, for example, pretended to be a normal financial trading operation, just one with unusually good returns.

Re: Mt. Gox Files for Bankruptcy Protection

#210

Post by hanswesterbeek »

panacea wrote: post #23
hanswesterbeek wrote: post #17

Hilarious. Can't wait to hear from the choir of libertarian crypto-currency-zealots, who will sing the praises of the Ponzi scheme that is Bitcoin. On a serious note: who benefits?

"who benefits?" Follow the money... erm... crypto bits.. um.

Some light: http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detecti...
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