MtGox Files For Bankruptcy Protection 465
Sockatume writes "The beleaguered MtGox bitcoin exchange has officially filed for bankruptcy protection in Tokyo. According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors. They state that they have over $60m in liabilities against just $30m in assets, and confirm the loss of over $500m worth of Bitcoins, split between customers' balances (750,000 BTC) and company assets (100,000 BTC). Owner Mark Karpeles said, 'There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble.'"
Ha ha (Score:5, Insightful)
And so the libertarian unregulated money dream dies.
Bitcoin did what? (Score:5, Insightful)
According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors.
Bitcoin held an impromptu press conference? Did the Dollar and the Peso attend as well?
Oh, you mean Mt. Gox held an impromptu press conference. Yeah, well, whoever trusted an online card trading portal as if it were a bank deserves whatever they got, IMO.
Re:Ha ha (Score:4, Insightful)
I recently checked Reddit's /r/bitcoin, to see how the True Believers were taking the latest developments. To hear them say it, Bitcoin has already recovered off its lows, which mean everything is fine and all this bad news is just FUD spread by haters. Bitcoin believers truly live in their own universe.
------RM
Re:Ha ha (Score:5, Insightful)
To be fair there is a lot of FUD in the story. How did "bitcoin", a distributed crypto-currency, do a press conference? They mean someone claiming to speak for it did.
I'm not sure how they calculate their liabilities are only $60m either, if they own depositors $700m worth of BTC. Maybe they are hoping that their own collapse will devalue the currency so much their liabilities will fall that far.
Re:"...and the bitcoins have disappeared." (Score:3, Insightful)
Fail for who, lets face it - people who were in prime position to steal all bitcoins from mtgox were mtgox owners/employees. If you had half a billion dollars in cash sitting in front of you, wouldn't you make off with it? I know i would.
This is actually good news (Score:5, Insightful)
Re: Falkvinge et all investigaton suggests inside (Score:2, Insightful)
Indeed they do. And some 400000 coins Karpeles publicly moved two years ago to prove ownership, still sit where he put them.
So it seems someone forgot their wallet password. Probably they didn't notice until people rushed to get out and they tried to dip into cold storage.
Re:"some weakness" (Score:4, Insightful)
Making a mistake is one thing. Not realising that something is wrong when over $500000000 slowly disappears from your accounts is the criminal thing. I mean, in practice this must mean that they constantly noticed their hot wallet is empty (when it should not be) and filled it from the cold wallet without investigating anything. Over and over and over again.
Amazing.
Re:Ha ha (Score:3, Insightful)
Why, because a private organization failed to centralize a decentralized currency? If you think about, this is a success of Bitcoin: it will be extremely hard to centrally regulate or control this product. The lesson here is the one the crypto-anarchist always wanted you to learn: in a digital society, only you are able to provide your own security, and only you are trust worthy.
These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.
-- The Crypto Anarchist Manifesto [mit.edu]
-- Timothy C. May
-- tcmay@netcom.com
Re:Ha ha (Score:3, Insightful)
I recently checked Reddit's /r/bitcoin, to see how the True Believers were taking the latest developments. To hear them say it, Bitcoin has already recovered off its lows, which mean everything is fine and all this bad news is just FUD spread by haters. Bitcoin believers truly live in their own universe.
MtGox != Bitcoin
I hope it will come to you eventually.
Re:Bitcoin did what? (Score:2, Insightful)
This is a bitcoin issue, you just don't want it to be.
Half a billion dollars worth of bit coins just disappeared, well, was just publicly announced as disappeared.
And there isn't shit that anyone can do about it.
Thats a problem, and its a problem that exists BY DESIGN.
Your currency is one for criminals. There will be a few innocents who could benefit from such a currency outside of the governments watchful eye, but your currency isn't outside the governments watchful eye. They still see everything that happens, and that too is BY DESIGN. They just don't help when something like this happens.
You have your advantages and ideals twisted into ways to commit theft without fear of repercussion and you haven't solved any of the tracking issues really, you're just ignoring them because the bit coin network can magically track all transactions as needed but no one else can syphon that data off for their own correlation ...
Seriously dude, open your eyes.
The fact that this happened AT ALL is a direct reflection on the very core design of BitCoin, and its not a bug, its intentional. Short sighted, but intentional.
Its a good experiment to use as a reference in the future, but for fucks sake man, read the writing on the wall.
Re:This is actually good news (Score:5, Insightful)
So what you're saying is that everyone is supposed to magically learn from this how to defend against the next exchange which does a better job of handling its theft so no one gets any red flags until its too late and they've take ALL of the money rather than just half of it? Is that what you're saying?
This job was sloppy. The next one will be bigger (assuming a collapse doesn't occur this time, which I don't think it will, probably 1 or 2 more first) and probably not show any signs that its happening in advance.
Re: "...and the bitcoins have disappeared." (Score:4, Insightful)
Re:Ha ha (Score:4, Insightful)
Obviously some of the libertarian unregulated money dreamers have mod points today.
Re:gambling (Score:5, Insightful)
Real Bitcoin users don't keep their bitcoins in an exchange but on their device.
No True Scotsman lost money on Bitcoin.
Comment removed (Score:4, Insightful)
Re:"some weakness" (Score:5, Insightful)
It tells me they were not following accounting principals and balancing the books at the end of the month. (Which I suspected long ago when I closed my account with them)
Any company that I question the accounting practices on is one that I run from screaming. Stocks, jobs, bitcoins, does not matter.
Re:Ha ha (Score:5, Insightful)
And as soon as someone dares to sell oil for anything but USDs, it will become obvious.
The irony about it all is that it's probably going to be China that props the US up, considering that they have maybe the most to lose (right after the US themselves, of course) if the USD bubble pops.
Re:Ha ha (Score:5, Insightful)
My toaster isn't worth as much as it was when I bought it, either.
Money is supposed to be a medium of exchange, not an investment. If you believe that a zero inflation rate is a good thing, I suggest you take an introductory course in economics.
Re:Who are they? (Score:2, Insightful)
"Well, there’s a fair amount of privilege built directly into the currency: In order to buy the sometimes wildly expensive currency, Bitcoin users need to be wealthy."
It was hard to pick the stupidest sentence from that article, but I think I managed.
Re:"some weakness" (Score:5, Insightful)
Actually, no money today "just works". Yes, the old coins did. They were minted out of precious metals and because of that they had some value. You could essentially cut off parts of it and sell those parts if you felt like it. That actually did happen.
Roman coins are actually a rather bad example because they, at least for some of them, already had the same effect money has today. The value is less the intrinsic value of the coin itself (made of bronze they were not that valuable), but because of the trust people had into the issuing entity (the Roman senate, or later the emperor). In early medieval times, people returned to the system of intrinsic value because there was no entity that you could (or rather would) really rely on that could say that copper in your bag is worth more than the metal is worth. That only came into existence again when countries were strong enough to give money its symbolic value again. And that's where we are today.
The coin (or bill, for that matter) itself isn't that valuable, but its symbolic value is what gives it its value. It represents something. When I hand you a dollar bill, it's worth one dollar. Why? Certainly not because the paper with the funny print on it is worth a buck. The material value of a dollar is negligible. And it gets even more absurd with a 100 dollar bill.
The value of modern currency is in the trust the person receiving it has in it. If you allow me to buy something worth 100 bucks with a 100 dollar bill, you trust that bill to be worth those 100 dollars (ok, you might want to check whether it's genuine because you do not trust me, but if it's genuine and the Fed printed it, you trust that bill), you rely on getting something worth 100 dollars again with that bill.
Why do you do that? Because you trust the entity issuing the bill that they can back it up with something. In case of the US, probably you trust it because you rely on the US' economy to produce enough to prop up the bill's value.
That our current currency has zero intrinsic value can easily be seen when states start to fail. Take most of the European countries after the war. The money bills were essentially worthless. They printed insane denominations on them (up to a billion, and with a hint of luck you could probably get a loaf of bread with it), but they still lost value pretty much by the second simply because nobody trusted the money anymore.
So essentially, the value of contemporary currency is in the trust people put into it. The trust that they will get something in exchange for it. As long as that trust applies universally, a currency will continue to work. When that trust is lost, the currency becomes pretty much worthless.
Re:so you can predict performance then? (Score:4, Insightful)
2) Joe Public now knows about BitCoin ("no such thing as bad PR" and all that); and
There is such a thing as bad PR. It is when the first impression is negative. Joe Public is learning about BitCoin in the context of "million of dollars have been lost because BitCoins have been stolen". The general public now knows about BitCoin as "That thing that people keep losing their money in because it is always getting stolen". People don't want to lose money.
Re:Who are they? (Score:5, Insightful)
Is there some script or something that we could run that would scan for commenters that reference pyramid or ponzi in a bitcoin article and just automatically band them from future comments on bitcoin?
No. Slashdot infrastructure isn't here to respond to your personal belief that Bitcoin isn't a pyramid scheme.
Re:Ha ha (Score:5, Insightful)
Re:This is actually good news (Score:4, Insightful)
cry for more government, more regulation and more fascism.
Measured amounts of government regulation is what separates us from Lord of the Flies scenarios. There is simply no basis in fact to equate reasonable bank regulation meant to prevent outright fraud with fascism.
Re:How can they have only $60M of liabilities? (Score:4, Insightful)
No, client funds are not company funds. If you run a parking lot and a car gets stolen from the lot you're not liable for replacing the car. You might get that liabilty if your valet wrecked the car, but not in general. Same with deposit boxes, storage lockers, mail packages and so on if you want to get your money back in case of theft you need insurance. Which is what FDIC is for bank accounts. No insurance, then you might not even have a claim against MtGox. First you'd have to take them to court and win to make them liable for damages. And even if you do, well there won't be any money to collect there anyway.
In accounting, generally deposit accounts with customer money are considered liabilities. If a depositor shows up and asks for their money, you are obligated to give it to them. You seem to be confusing legal liability (a "duty of care" to do or not do something) with financial liability (an obligation which must be paid back).
Mt. Gox didn't have storage boxes without knowledge of what was inside them (safe deposit box analogy). They had computerized accounts for each customer, with money in each account. Regardless of whether they were a "bank" they were holding money for other people and that money is a liability in the financial sense.