Is that a cow or a goat?

Is that a bovine version of the libertarian manifesto?

PS.  My favorite theory of what happened at MtGOX is that the missing coins were bought at MtGOX by one or more people, through normal trading but with non-existing money (that is, with credit created by the exchange from thin air) and sold in China, during or after the April 2013 bubble.  But those people then defaulted on the credit, by accident or by plan; the proceeds of the sales in China were somehow lost or pocketed, and MtGOX was left without coins and without money. 

If this theory is correct, the scam probably was known and/or helped by many people besides MtGOX's management -- perhaps some of the largest clients, some friends of the management, some Chinese exchange owners, some intermediaries with business connections in China and/or Japan, ...  And those people would naturally try by all means to stop the liquidation and any investigation of the theft ...

Please folks, what you think is fair and what you would like to happen is TOTALLY IRRELEVANT at this point.  You should GET A LAWYER competent in Japanese bankruptcy law and ask him what is likely to happen and what choices you have, if any.

I don't understand you folks.  You were royally screwed by a couple of sleazy bitcoin entrepreneurs.  Now you want to take the little that is left of your money from the hands of the law -- which WILL return most of it to you, as fairly as possible -- and give it to other sleazy bitcoin entrepreneurs -- which will probably be the same guys who scammed you, actually.

You mean, let Sunlot get possession of the coins and money, instead of the liquidator? 

I give up, I don't know what else to say...

Imagine that a gold exchange has got only two customers, George who deposited a chunk of gold worth 990'000 dollars, and Dick who deposited only 10'000 dollars, at the same time.  The same day the exchange goes bankrupt, and the liquidator finds only 5'000 dollars worth of gold and 5'000 dollars in cash, that is, 1% of what it was supposed to have.  How will they be split?

If the liquidator were to compute gold and dollar claims separately, Dick would get all the 5'000 dollars (50% of his deposit), while George would get all the gold (about 0.5% of his deposit).

That is why I think that the MtGOX liquidator must convert all claims to yen, so that he can establish the ONE fraction of the assets that each customer should get. EDIT: Not for moral reasons, but to avoid legal claims of unfair division of the spoils.

In the example above, George's claim would be 99% of total claims while Dick's would be 1%, so they would get 9'900$ and 100$, respectively (for both, 1% of their deposit).

Once the MtGOX liquidator has established the fractions, he may let each client choose whether he wants to get his slice of the total assets as BTC or as yen.  But, even in this case, he will have to compute the total worth of the assets using the current JPY/BTC price, irrespective of the criterion used to compute the claim values. But then he will have to administer the conflict between the disparate wishes and the amount of BTC actually remaining.

In the example above, what should the liquidator do if George wanted to get his part in cash (as the law entitles him to) and Dick asked to have his in gold?

I suspect that he will choose to auction the BTC and divide the yen, to avoid that messy situation.

I don't know whether the court will accept that.  However, the source of the deposits noes not prove account ownership.  Consider deposits in yen: what would have prevented person X from sending a bank transfer to MtGOX, to be deposited in the account of person Y?

Moreover, suppose that the real owner Y of the account is someone who cannot claim it because he is a criminal at large, a tax evader, a MtGOX manger, etc..  He could ask his "clean" proxy Y to claim the account, and sign the message himself.  Or even give Y the private key. 

The basic problem here is that knowledge of the private key gives possession of the coins in some address, but does not establish whose property they are.

Japanese law gives priority to certain classes of creditors (IIRC, employee salaries first, then secured creditors, then unsecured creditors, then investors, and management for last).

In this case the bulk of creditors are the former clients, which are all in the same bag.  On the average, they will get no more than 1/5 of their account balances, courts or no courts.  Thee is no "win" possible for them.

One big difference between bankruptcy and the Sunlot proposal is that the latter would NOT exclude management from the division; and in fact has "absolved" McCaleb and Gay-Bouchery from any wrongdoing even before any investigation, and would not say what they will do about Mark.

I don't think that the Japanese courts will take Star Trek jurisprudence into account.  Ultraman's , perhaps. 

I am not trying to defend morally what the liquidator and the courts will do, only predict what, in my understanding, they are likely to think and do.

Bank accounts are legally different than safe deposit boxes.  The contents of the boxes are always your property, the bank is only renting you a space in their safe room.  On the other hand, the money that you deposit in you account, for all I know, becomes legally the property of the bank, and in return you get the legally binding promise of the bank to give you the same amount of money when you want to withdraw, under the applicable conditions and procedures.

AFAIK, the criterion of deposits minus withdrawals is what was used in Madoff's case and is the standard in US and Japanese law. I can even understand why it makes sense in legal logic; it is irrelevant for this thread whether it is morally justified or not.

I don't know how MtGOX was registered, and how the deposits were classified for Japanese tax purposes.  (In the US, AFAIK an exchange would have to register as some sort of bank or money transmitting service, and that is why there are still no exchanges in the US.)

MtGOX customers cannot just ignore what the law says.  The coins and cash are now legally in Kobayashi''s custody, and will be released only with the court's approval.


Sure, if you identify yourself and can prove to the court's satisfaction that you were the owner of a certain account, I suppose that will be treated like any verified account.  I assumed that the original question was not in that spirit.

I am afraid that proving ownership of unverified accounts will be difficult, however. Since Mark claims that he was hacked, and the database was ostensibly leaked against his will, hackers could also have stolen passwords and whatever other means was used to access the accounts -- unless it used sound crypto techniques that could not be broken by malware on MtGOX's servers.  Is that the case?

Bankruptcy liquidations take a long time.  Creditors should not count on the outcome to pay their monthly bills. 

This one is extra complicated for several reasons.

On the other hand, liquidations are routine procedures and Mr. Kobayashi, I understand, is quite used to overseeing them. 

Good question, but... are we supposed to quote all that?

How does it compare with Trezor?  (The price is WAY less than Trezor's .)

Trezor uses its display to foil keyloggers that try to steal your PIN, and to display the destination address to prevent address substitution by malicious software on the computer.

I would be very surprised if the court agrees to let some of the creditors negotiate the distribution of some of the assets.  The whole point of the bankruptcy process is to make sure that all creditors get their fair share of the spoils.  So all the depositors would have to be contacted and agree on the settlement plan.

Mining equipment generates lots of waste heat, I know... but this is ridiculous:

[ Courtesy of Google Translate from a random Chinese article  ]

Actually I got the wrong drop.  The SilkRoad bust news on Oct/02 caused the price to drop sharply from ~125$ to ~85$, but it mostly recovered within 2 days.  Presumably there was fear of bitcoin itself being banned, or some such.

The price increased only by 7$ from Oct/4 to Oct/13, when the October pre-bubble suddenly started.  It is not obvious that there was a connection between the bust and the bubble.

Oops, I got the date of the SilkRoad bust wrong, sorry.

What is the current explanation for the July 2013 drop?

Perhaps "the question mark on my keyboard does not work, does anyone know how to fix it" could be an example?

Well, buying illegal drugs is certainly one of the things that attract some people to bitcoin.

I would even guess that the July 2012 price bubble was due to drug users and dealers adopting bitcoin.  The price drop after the SilkRoad seizure shows that hat such use contributed significantly to the demand.

Someone noted that the LocalBitcoins BTC:USD volume has been increasing:


Looking closely, the volume was actually flat from January to late May, then jumped up by 30%, and remained flat until twoo weeks ago, when it had another large jump.

That rise in LocalBitcoins traffic in late May coincided with the still-unexplained sudden price rise from ~450$ to ~650$. 

I understand that one advantage of buying through LocalBitcoins, rather than at an exchange or Coinbase, is to avoid the KYC/AML controls of the latter.  So, could it be that the late May mini-bubble was due to a surge in demand for illegal drug traffic?  The opening of OpenBazaar perhaps?

But then why didn't we see another price increase over the last two weeks, to match the the sharp rise in LocalBitcoins volume?

Or is it the other way around?  Wasn't PayPal holding over 1 M$ payments to them because of non-delivery?  Or was it AMT?

Including the question mark?