Just to confuse the issue a bit more:

Consider my pet theory, namely that Mark sold those 750 kBTC of client deposits at (say) 15$ apiece off-market, when the market price was (say) 10$, without imagining that the price would increase so much, so fast.

The buyer of those coins would now be pressuring Mark to hide that deal, otherwise MtGOX clients may go to court to void the deal and recover those coins from him.  They may be floating all those rumors "I lost the keys", "the coins were stolen", "the coins were seized" --- to see which story the public will find more believable; or just to create confusion until people get bored and stop asking what really happened.

I don't think that the loss of those coins, per se, would have any effect.  

Think of the exchanges as water tanks where water represents bitcoins in the market, and the water level is the inverse price (how many BTC one can buy with one dollar).

The tanks are connected by pipes at the bottom (coin withdrawals and deposits) so the hydrostatic principle (arbitrage) keeps the water level about the same in all tanks. If one pours more water into any tank (brings more coins to the market) the level in all tanks goes up (meaning the price goes down).  The opposite happens if one takes water out of one tank (buys coins and puts them in cold storage).

If the MtGOX theft did happen, then at some point in the past, someone siphoned most of the water out of the MtGOX tank to a private barrel.  I the keys were lost, most of the water in that tank leaked out and was permanetly lost.  In either case, Mark put some bricks into the tank (hid the theft) so that people would not notice the loss, and the water level was not affected.   Then a few days ago the pipes out of that tank  were closed (withdrawals were blocked),  and the tank was disconnected and removed it from the system.   That would not affect the water level in the other tanks either.

If the theft happened, and the thief then dumped the water in other tanks (sold the coins in other markets), then there was indeed a net rise in the water level (a fall in market price); but that is past history.  

We may expect an effect only if the coins were stolen but have not been not sold yet EDIT: and are sold now.

(This analogy is imperfect because it does not model the money flows, but hopefully it is enough to argue the point.)

That would be epic..   

But I do not believe that statement, even if its indeed by Mark.  He may have written it only to buy time and hold off possible lawsuits.  Of course he could not promise to return the BTC because he has admitted that he does not have them.   I do not believe that he has the dollars either, but the world still has no information on that. 

And, characteristically, he does not give any numbers or firm dates.

The post could also be a way to manipulate markets, e. g. Bitcoinbuilder.

At this point I do not believe in any statement or revelation by anyone from the "bitcoin community", even if "proved" by PDFs or screenshots.   I do not know who is honest and who is spinning lies to cover up his own wrongdoings or moving the market.  Three months ago they were all good friends of Shrem and Karpeles...

I am afraid that the only way we may get minimally reliable information about what happened inside MtGOX is through liquidation and/or criminal investigation.

Are they? I believe that they are just different currencies that MtGOX Japan dealt with.

One must subtract the client accounts, a 400,000,000 dollar liability by prevailing rumors.

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):


             !    Tue !   Wed !    Thu !    Fri !    Sat !    Sun !    Mon !    Tue !    Wed !
  EXCHANGE   !  02/18 ! 02/19 !  02/20 !  02/21 !  02/22 !  02/23 !  02/24 !  02/25 !  02/26 ! Currencies considered

  BTC-e      |   8.08 |  5.84 |  23.37 |  23.64 |  18.68 |  14.24 |  20.78 |  73.86 |  33.61 | USD,EUR,RUR

  Bitstamp   |  14.83 | 20.76 |  34.97 |  29.61 |  18.08 |  20.87 |  51.84 | 115.76 |  49.11 | USD
  BitFinEx   |   8.47 |  4.71 |  25.27 |  28.46 |  14.73 |  15.80 |  27.16 |  94.55 |  37.71 | USD
  Kraken     |   0.51 |  0.38 |   1.60 |   1.15 |   1.08 |   1.06 |   1.06 |   2.23 |   1.87 | EUR
  Bitcoin.DE |   0.38 |  0.54 |   0.70 |   0.76 |   0.61 |   0.50 |   0.73 |   2.23 |   1.00 | EUR
  CaVirtEx   |   0.21 |  0.11 |   0.75 |   0.60 |   0.20 |   0.23 |   0.30 |   2.15 |   0.32 | CAD
  CampBX     |   0.10 |  0.14 |   0.73 |   0.24 |   0.26 |   0.22 |   0.37 |   0.42 |   0.36 | USD

  SUBTOTAL   |  32.58 | 32.48 |  87.39 |  84.46 |  53.64 |  52.92 | 102.24 | 291.20 | 123.98 |

  Huobi      |  74.04 | 34.12 | 131.14 | 187.12 | 154.12 | 185.15 | 163.47 | 352.76 | 250.64 | CNY
  OKCoin     |  51.46 | 26.29 |  53.49 | 140.75 |  87.71 | 141.90 |  84.03 | 275.68 | 150.41 | CNY
  BTC-China  |   3.86 |  2.04 |  10.97 |  15.23 |   9.29 |  10.42 |  13.12 |  27.72 |  14.72 | CNY
  Bter       |   0.35 |  0.37 |   0.77 |   0.63 |   0.48 |   0.62 |   0.53 |   1.10 |   0.53 | CNY

  SUBTOTAL   | 129.71 | 62.82 | 196.37 | 343.73 | 251.60 | 338.09 | 261.15 | 657.26 | 416.30 |

  TOTAL      | 162.29 | 95.30 | 283.76 | 428.19 | 305.24 | 391.01 | 363.39 | 948.46 | 540.28 |



All numbers were collected by hand from the site http://bitcoinwisdom.com. Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that Bitcoinwisdom uses your local time, so the date may appear to be off by 1 day.  For example, if you are 2 hours west of Greenwich, it may show "01/14 22:00" when the UTC time is "01/15 00:00".)

NOTE: MtGOX is now closed.

I have been department chairman.  That cannot possibly be worse.

Perhaps. But right now I am kinda ejoying it.  I did't have so much attention focused on my person since sixth grade, when I was the #1 target of all bullies in the school.  It makes me feel thirteen again.

No.  And I must confess to something much worse than pontificating on bitcoin without ever having used it:

        I have served jury duty five times, all murder cases, without having murdered anyone before.

So, before I buy some bitcoin, I must fill that gap in my experience, in case I am again called to serve.  Would you volunteer?

No one knows yet the situation of MtGOX.  

According to rumors, the account balances (debts) with no cover are at least 400 million dollars.

User @twobitidiot (at reddit?) says that he sold all his bitcoins after learning of the situation. Claims that Mark approached three investors but they ran away when they began to realize the extent of the damage:

http://two-bit-idiot.tumblr.com/post/77920927310/i-retract-nothing-i-have-written-so-far-regarding-mt
http://two-bit-idiot.tumblr.com/post/77967162725/breaking-full-mt-gox-story-coming

Do you have a source for that "20 million" of assets?

Chinese Slumber Method prediction for Thursday Feb/27

This was the seventh consecutive day in a period of hectic trading at Huobi, that started on Feb/20. It is as if the seven days Feb/20--26 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.

With these exceptionally high volumes, the volume V_h in the interval 19:00--19:59 UTC has been above 500 BTC almost every night.  By the criterion I have been using, those points should all be considered False Slumber Points and hence ignored; which would leave me with no data and hence no prediction.

Therefore I am experimenting with a different criterion, namely redefining a Slumber Point to be True if S = V_h/V_d < 0.005, where V_d is the total volume of the period 00:00--23:59 UTC of the same UTC date (08:00 am to 07:59 am local time).

This change only affects the classification of a few Slumber Points. In particular, Feb/24 and Feb/25, which I had classified as False before, now are classified as True.  For today Feb/26, Huobi's volume V_h was 1305 BTC, and the daily volume V_d was 250.64 kBTC, giving S = 5.21 --- hence a False Slumber Point.

Now there is a clear but strongly "bearish" trend defined by the last three True points, Feb/23--25, skipping Feb/26.  The equation is p = 9881.67 - 263*d, where p is the price and d is the day number in February  It seems too pessimistic, but rules are rules and traight lines are straight lines, so:

Prediction valid for: Thursday 2014-02-27, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 2781 CNY.
Bitstamp's predicted price: 454 USD.

For Bitstamp, as usual, I used Huobi's prediction divided by R = 6.12.

For those who prefer a bullish prediction, I can also ignore the Feb/24 and Feb/25 points, and instead extrapolate the old trendline (which began on Feb/10, and appears to be a shifted slowly decaying exponential):

Huobi's alternate predicted price: 3802 CNY.
Bitstamp's alternate predicted price: 621 USD.

In the following chart, the bearish trendline and prediction are in orange and strong blue, whereas the bullish one is in olive-gray and light blue.


NOTE: Don't get excited yet.  The value "20,000" next to the blue rectangle belongs to the scale of the volume plot, not of the price plot.

Checking the Chinese Slumber Method predictions for Feb/26

Prediction posted on: Wednesday 2014-02-26, 03:47 UTC
Prediction was valid for: Wednesday 2014-02-26, 19:00--19:59 UTC

Well, I am tired of being the only bull in this thread

Huobi's predicted price: 3804 CNY
Huobi's actual price (L+H)/2: 3543 CNY
Error: 261 CNY

Bitstamp's predicted price: 622 USD
Bitstamp's actual price (L+H)/2: 589 USD
Error:  33 USD

The price ratio between Huobi and Bitstamp returned to near the normal value R = 6.12 (actually a bit lower, closer to 6.00).  It seems that arbitrage trading has been restored.

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 Huobi 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.

Chinese Slumber stuff coming next.  Think of it as the nightly chamomille tea of this thread, it will bore you to sleep.

Oops, sorry, my apologies.


Well, OK, then.  That is why I put that in my signature.

I did not bring up the topic of my personal life here, others did.   For some reason, that topic seems to absolutely fascinate some people here, far more than photos of triple bottoms and dead bulls.   

But if you must know, like most Brazilian computer scientists (and many other scientists) of my generation, I got my PhD overseas, paid by a grant from the Brazilian Government; and I was lucky to be acepted at Stanford.  So?

No need to gamble; Stanford U. has its own coal-fueled power generation plant in the middle of campus.  But the only coal I ever put my hands on was a small chunk that I found on the sidewalk next to that plant, once.

Before I do that I must create that "jorgeology" thread, so that you can all share my experiences and feelings at using bitcoin and watch my conversion to the cult concept.  Wow, it will be so Californian, will bring back some sweet memories... 

Seriously, what do you expect that I will learn, what opinons you think I will recant,  if I tried using some bitcoin?

Surely I am entitled to have an opinion on global warming and energy sufficiency, even though I have not burned a single poud of coal in my life?

Sounds more like "when they have never sung at the opera." 

Seriously, how many times do I have to write that I believe that cryptocoins can be great payment methods, and wish them all the success at that?  My skepticism has nothing to do with those aspects of cryptocoins, and me using bitcoin cannot possibly tell me anything relevant to the sources of my skepticism.

Sorry if this was posted already:

Jesse Powell's Blog
Unilateral Statement Regarding Fucked Up Shit, and the Greater Good
http://jesse.forthewin.com/blog/2014/02/unilateral-statement-regarding-fucked-up-shit-and-the-greater-good.html

This plan is intriguing.  Are there any antecedents?  Examples of failed companies that were taken over by co-ops of their former retail clients?

I see two problems with this plan:

* If there is going to be a haircut on withdrawals, any BTC or USD in the accounts is worth only a fraction of their nominal value.  Suppose MtGOX's current assets are only 20% of the total balance of their clients' accounts: then the exit haircut would have to be 80%, so having 100 BTC and 2000 USD in your account is the same as having 20 BTC and 400 USD elsewhere.

In that case, the inverse haircut would have to be applied on deposits: if someone brings in 20 BTC, he should have 100 BTC credited to his account.  (Otherwise only naive investors would deposit, and they would lose 80% of their money when they did that.  It would be a scam, pure and simple.)

But then, if one had haircuts on exit and their inverse ("wigs"?) on entry,  the clients would be trading fictitious goxBTC and goxUSD that are worth 20% of their real counterpats.  What would be the point of that?

It would be more sensible to take the haircut right away, that is, all current account balances are reduced to 20%.  The net effect would be the same, but your balance at the new MtGOX would be in real BTC and real USD, not in fictitioulsy inflated goxBTC and goxUSD.

* Some clients may choose to sue MtGOX for their whole balance in real USD, instead of joining your plan that effectively haircuts 80% of it.  If the lawsuit suceeds, the fact that the company has new owners will make no difference, and money would be subtracted in full from its assets, before these are distributed among the new owners.  

Uttimately, 80% of the money recovered by litigating clients would have to come out of the balances of the clients who joined the plan.  Thus the haircut of the latter would end up being more than 80%.