"We were broken into and all the money was stolen" is a standard ruse to cover up fraudulent management.

The break-in may be real (by an accomplice), feigned with faked evidence, or totally imaginary.

With bitcoins it is even easier, of course.

That 2bitidiot story may be false in many ways. It may be "merely" false.  Or the reality may be much worse, and that story may be an attempt by the Brotherhood of Friends of Shrem to cover it up.

If clients can be made to believe that the coins were stolen, they will be mad at Mark but the incident will die there.  There will be no police investigation that could reveal wrongdoings, by Mark or other people.

(After all that happened in the last few years, paranoia should be the norm, shouldn't it?)

Something tells me that Satoshi has quietly sold his stash off-market and now he has only academic interest in bitcoin. He is no longer an owner, not a trader, and he is rather skeptical of its longterm success.

OK, I am watching the charts and reading the news... 

What, they did not consult the Health Ministry? Or the Army?

Or the Godzilla Watch and Fight Service?

Seriously, either those guys are very naive, or they were hoping to trick the Japanese government into implicitly recognizing Bitcoin as something that it is not -- a currency, financial instrument, securuty, etc..

Whatever bitcoin may become in the future, for the Japanese government (and most other governments, it seems) it is still a fantasy thing, that "exists" only as numbers in some database maintained by a non-official organization: just like videogame points and weapons, or real estate on the moon.  In the eyes of the law, MtGOX is just a company that lets customers play with those numbers for a (real) fee.

Therefore, it is no surprise that the institutes that regulate Japan's financial system have refused to intervene.  Would they bother with a videogame weapons exchange that refuses to deliver the Elfin Swords and Level 3 Magic Wands that clients have "bought" them with real money?

On the other hand, Japanese common justice can act on MtGOX, just like it can act on any business that fails to honor the contracts (even if implicit) that it made with its clients, or violates some general commerce law.   Common justice can force the company to honor the contracts, or declare bankruptcy if it can't.  It does not matter what the company does or trades, as long as the clients can define and prove their losses.

Lawsuits are the standard instruments that customers are expected to use when a company defaults on their contracts.  Why are MtGOX clients so reluctant do do the natural thing?

Warning: if you find the Chinese Slumber Stuff annoying, be sure to skip my last two posts. 

Chinese Slumber Method prediction for Tuesday Feb/25

Today Feb/24, Huobi's volume for 19:00 -- 19:59 UTC was only 197 BTC, which, by the criteria I have been using, makes it a True Slumber Point.  However, trading was officially interrupted for maintenance at 18:00 UTC (2:00 am China time) and was expected to resume at 23:00 UTC (07:00 China time), but there were a few small transactions in that interval.  So it may be more prudent to consider it a False Slumber Point.

This was the fifth consecutive day in a period of hectic trading at Huobi, that started on Feb/20. It is as if the Slumber Points of Feb/20, Feb/21, Feb/22 and today Feb/24 were all False.  That is, it is as if the five days Feb/20--24 had been one single "trading session" during which the price veered off the trend line, like Feb/11--12, Feb/13--14, and Feb/16--17.

There is no clear trend yet, so for the next prediction I will rather arbitrarily use the "bullish" trendline defined by the True Slumber Points of Feb/18, Feb/19 and Feb/23, ignoring Feb/21.  That trend line has the equation p = 3871.10 - 2.57*d, where p is the price and d is the day number in February.   For Bitstamp, as usual, I will use Huobi's prediction divided by R = 6.12.

Therefore:

Prediction valid for: Tuesday 2014-02-25, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 3807 CNY.
Bitstamp's predicted price: 622 USD.



NOTE: This is not trade advice.  If you are looking for that, I advise you to trust Piet Hein:

    Shun advice
    at any price -
    that's what I call
    good advice.

Checking the Chinese Slumber Method predictions for Feb/24
or
Have some good laughs watching Jorge chase the Chinese Chicken

Prediction posted on: Sunday 2014-02-2223, 22:24 UTC
Prediction valid for: Monday 2014-02-24, 19:00--19:59 UTC

The prediction for today (Monday Feb/24) again failed.  The actual price fell halfway between the "bullish" trend line defined by the Slumber Points of Feb/18, Feb/19 and Feb/23; and the "bearish" trendline, parallel to it, defined by the Feb/22 Slumber Point.

Huobi's predicted price: 3809 CNY
Huobi's actual price (L+H)/2: 3615 CNY
Error: 194 CNY

Bitstamp's predicted price: 622 USD
Bitstamp's actual price (L+H)/2: 545 USD
Error: 77 USD

The Huobi prediction in question is the rightmost blue rectangle on the chart below.  The light blue-gray rectangles are the previous predictions.  The orange and grey dots are the True and False Slumber Points, the mean prices at 19:00 UTC every day.  The orange line is the trend that was assumed for the prediction.


The following chart shows the Bitstamp prices and predictions. The orange and grey dots are Huobi's prices at 19:00 UTC every day, divided by R = 6.12.  The orange line is the trend used in the prediction, which is Huobi's trend divided by R.  Note that this computation was quite off the actual Bitstamp price for Feb/24, due to a 10 kBTC sale that was in progress at the time.


EDIT: Snday was Feb/23 not Feb/22

Thanks! 

This was posted to the Bitcoinwisdom users thread:


TPTB = "The Powers That Be", I suppose.  Why wouldn't those DDOSers be just sleazy traders looking for profits?  Or perhaps disgruntled bitcoin investors? Or altcoin investors/creators?

 

The fees are only a small fraction of their daily volume, which must be only a small fraction of all the dollars and bitcoins in their client account balances.  These "goxUSD" and "goxBTC" balances are liabilities, not assets -- they are real coins and dollars that MtGOX owes to their clients.

Those takeover project guys estimate that these balances (debts) add to 1 billion dollars or more.   Considering the amount of stalled withdrawals, the theft must have cost them 50 million dollars at least.  Whatever their situation is, the revenue from fees probably will not make much difference. 

Moreover, whatever is left of their feee revenue after paying salaries and other expenses is surely pocketed by the owners as profits --- and not left in MtGOX corporate accounts. 

MtGOX decides to bill all their clients for a mandatory non-negotiable pre-withdrawal withdrawal fee, while postponing the withdrawals for an indeterminate time plus three months.

Other markets panic and do the same to their clients.

(Hm... Stupid question: does arbitrage equalize insolvency, as well as price, over all markets?  )

I don't think we will ever know what was the lasting effect on BTC price of that 10,000 BTC sale on Bitstamp. for almost 6 million dollars.

As I understand it, the effect mostly depends on how much money and how many coins entered or left the "active bitcoin market", the sum of the working budgets of all day traders and other short and medium-term speculators.  That excludes money in the bank, and coins in private wallets, whose owners do not intend to use for frequent bitcoin trading.

From the way the sale happened, I would guess that the seller of those 10 kBTC will not be using those 6 M$ for further bitcoin trading.  On the other hand, at least some of the buyers must have been speculators who bought off their working budgets. Therefore, there must have been a net loss of money from the active bitcoin market, amounting to some fraction of those 6 M$.  By itself, that would tend to bring the price down.  However, the opposite conclusion would hold if the seller were to put all that money into active trading, and some of the buyers were new investors lured by his offer.

I would also think that those 10 kBTC probably were not in the active market before, and now some of them are.  (That round number points to a cold stash, rather than someone's working BTC budget; and It seems unlikely that all the buyers were "hodlers".) Thus the number of BTC in the active market probably increased, and this too would tend to bring the price down.  However, the opposite conclusion would hold if the seller was an active speculator, and at least some of the buyers were "hodlers".

As we saw, the sale had a large effect on the price while it was going on; but that immediate damage was quickly repaired by the market in few minutes (as it usually is).

However the sale probably will have more persistent negative effect, as discussed above.  This effect will not be visible in the price charts; the price will just increase more slowly or decrease faster than it would have done if the sale had not taken place.

The way to grow grand
is not: to demand.
In life's every field
you are what you yield.

  --Piet Hein

Yeah, he made only a 5,850,000 dollar profit on a 100 dollar investment, instead of a 5,999,900 dollar profit.  But he had an appointment with his dog's vet.

About that 10 kBTC @ 600 offer on Bitstamp: the round numbers suggest someone who bought those BTC when they were cheap, and decided to cash them out at about the current market price; but did not mind if it took a day or two, and did not care much about getting the best possible price.

However other traders had blocked the way with smaller offers at slightly lower prices.  So he lowered the price twice by a few cents, just to see some action and make sure that his offer was "working".  When he saw that people had started to buy into his offer, he left it there and went to bed.

Does this make sense?

You all saw Charlie's reply "A small amount of BTC", right?

From http://www.reddit.com/r/Bitcoin/comments/1yre42/mt_gox_ceo_resigns_from_bitcoin_foundation/cfn38sq

Weren't there other signs:

* The price 10% over other exchanges

* The replaying of transactions during the December/2013 crash

So Charlie Shrem is still the Gandalf of the bitcoin world? 

From http://www.reddit.com/r/Bitcoin/comments/1yre42/mt_gox_ceo_resigns_from_bitcoin_foundation/cfn38sq