Hacked Bitcoin Exchange Mt Gox Gives Up, Files For Liquidation

[Karloff]

Hacked Bitcoin Exchange Mt Gox Gives Up, Files For Liquidation

CEO Karpales won't be going to the US any time soon.

Up until now, Bitcoin exchange Mt Gox has been relying on bankruptcy proceedings to save itself from utter ruin, after hackers managed to a few coins [http://www.escapistmagazine.com/news/view/132788-MtGox-Customers-Hack-Karpales-Account-Post-Fraud-Evidence-Update] hidden under the metaphorical sofa cushions - but that tactic seems to have run its course. According to the Wall Street Journal, Mt Gox has given up on bankruptcy protection and will file in Tokyo for liquidation instead. Should this proceed, creditors can expect to recover much less than they had hoped from Mt Gox's remains, though there is a small chance someone will swoop in and buy the exchange. Should that happen future profits might help recoup some of the exchange's half billion dollar losses.

However if you're in the US and hoping to catch a glimpse of CEO Mark Karpales as he answers questions in the US bankruptcy proceedings Mt Gox also filed, forget it. Despite a judge telling him, Karpales has refused [http://www.escapistmagazine.com/news/view/133460-Mt-Gox-CEO-Karpales-Ordered-to-Attend-US-Bankruptcy-Hearings]. Apparently he needs more time with his lawyer.

"Mr. Karpeles is now in the process of obtaining counsel to represent him with respect to the FinCEN Subpoena," says Mt Gox's latest filing. "Until such time as counsel is retained and has an opportunity to 'get up to speed' and advise Mr. Karpeles, he is not willing to travel to the US." Mt Gox filed for US bankruptcy protection back in March [http://www.scribd.com/doc/211626536/Karpeles-Declaration].

It's not clear what effect the Tokyo liquidation proceedings will have on Mt Gox's US bankruptcy filing. If liquidation goes ahead - which requires a majority of Mt Gox's 127,000 creditors agree to it - a trustee will be appointed who will take over management of the company's assets from Karpales. Before all this happened, Mt Gox was the world's busiest Bitcoin exchange; at Karpales' own estimate, when it went under Mt Gox took 7% of the world's total Bitcoin supply with it.

Source: Wall Street Journal [http://online.wsj.com/news/article_email/SB10001424052702303663604579504691512965308-lMyQjAxMTA0MDEwNTExNDUyWj]


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[Something Amyss]

when it went under Mt Gox took 7% of the world's total Bitcoin supply with it.

That's a lot of pissed off criminals and conspiracy theorists.

 

[dangoball]

Things are looking less and less good for Bitcoin especially since the US Govt ruled they are subject to taxation. Lol.

Actually I think getting subject to taxation is good for Bitcoin in the long run, because it means that US Government recognizes is as a commodity, if not medium of exchange.

Also, in my humble opinion, approaching cryptocurrencies like currencies is a bit of a mistake. Think of them as more of a share in a company sans the company. You buy it low, you sell it high, you ka-ching!

Though it's not like I trade in cryptocurrencies so what do I know.

 

[Pr0]

Bitcoin and crypto currency in general is just a new approach to an old problem that crops up when economies are bad.

Back in the 1970s and 1980s, when the economy was in the toilet, there were literally barter exchange systems that used barter tokens and vouchers, exchanging all cash into a primary central system where the value of a voucher or token was accepted at a base value amongst its membership for exchange of goods and services.

Heres an example of one, Barter Systems, INC [http://www.leagle.com/decision/199013159utcm72_1111], via a public record of a civil suit case. This wasn't the only Barter exchange developed in the 1980s. Nor is this the first example of public lack of faith in local or global economies spurring the fearful or opportunistic towards new "ideas" about money which aren't new ideas at all, to place their faith and trust in other systems which are just as likely (if not more likely) to fail than the established economic/financial system.

Simple facts are is that Bitcoin and all Crypto-currency exchanges are simply a Gen X/Millennial expression of an old autonomic reaction to financial uncertainty. To attempt to reject the system and replace it with something "better" only to spectacularly fail and end up costing the adopters more than the time, effort and money was worth.

This isn't to say that everyone should just trust their local economic systems....there are plenty of problems with the dollar, the yuen and the pound and the euro to justify a healthy skepticism when it comes to any of them.

But when it comes down to it, all money is just an idea, a temporary agreement that something that is essentially worth nothing, equals the value of something that is worth something. Bitcoin was an old idea expressed in a new way, and while I'm sorry for the people that lost their shirts on it.....I'm glad I have enough perspective on things that I never adopted it as a secondary financial strategy.

The upside of this is there should be a flood of really good after market graphics cards showing up on Amazon for really cheap as people dismantle their mining rigs to get whatever they can back out of the hardware. So....I suppose in the end, theres a silver lining behind every dark cloud...right?

 

[Exterminas]

I haven't followed this whole Bitcoin-thing very closely. But from what I understand the whole thing is basically a glorified Snake-Oil-Sale where someone tries to con you into giving you real money for some other sort of currency that is even more made-up than real money and can be stolen by people with computers rather than people with blow-torches and striped convict shirts.

How wrong am I?

 

[dangoball]

Things are looking less and less good for Bitcoin especially since the US Govt ruled they are subject to taxation. Lol.

Actually I think getting subject to taxation is good for Bitcoin in the long run, because it means that US Government recognizes is as a commodity, if not medium of exchange.

Also, in my humble opinion, approaching cryptocurrencies like currencies is a bit of a mistake. Think of them as more of a share in a company sans the company. You buy it low, you sell it high, you ka-ching!

Though it's not like I trade in cryptocurrencies so what do I know.

Of course problem is.. the value of bitcoins has always been ethereal. However having them subject to the capital gains tax would not make bitcoin hoarders happy... being taxed based on the inflated value of the commodity pretty much means holding on to it will cost you real money over time.

And that's kinda the thing. The value of BTC is dictated by the market and it's a finite commodity (once mined out), therefore BTC hoarders would be actively hurting BTC economy because for it to be healthy BTCs have to be in circulation, not tucked away somewhere, artificially driving their cost upwards.
That's why BTC can hardly serve as a "store of value" and why it'll most likely never be considered a true currency (by definition: medium of exchange, store of value and unit of settling; of which BTC is only the first 'cause of it's volatility).

 

[Jupiter065]

For those interested in simulating the Bitcoin experience for yourself, I heartily recommend this very realistic simulator.
http://www.beepboopbitcoin.com/

 

[Li Mu]

I haven't followed this whole Bitcoin-thing very closely. But from what I understand the whole thing is basically a glorified Snake-Oil-Sale where someone tries to con you into giving you real money for some other sort of currency that is even more made-up than real money and can be stolen by people with computers rather than people with blow-torches and striped convict shirts.

How wrong am I?

Snake oil, eh? Where can I get some of this snake oil? I hear it has great unverifiable health benefits. Take my money.

 

[lacktheknack]

A cousin of mine was told that, in five years, 10% of the world would have purchased something with Bitcoin in the past month. He made a sizable bet against that.

Reading stories like this, I get the feeling that he's going to win the bet easily. I'm certainly not touching the bleeding thing after everything that's happened to it.

 

[shial]

Things are looking less and less good for Bitcoin especially since the US Govt ruled they are subject to taxation. Lol.

Actually I think getting subject to taxation is good for Bitcoin in the long run, because it means that US Government recognizes is as a commodity, if not medium of exchange.

Also, in my humble opinion, approaching cryptocurrencies like currencies is a bit of a mistake. Think of them as more of a share in a company sans the company. You buy it low, you sell it high, you ka-ching!

Though it's not like I trade in cryptocurrencies so what do I know.

Things being taxable is a pretty low bar. The IRS can nail you for robbing banks if you didn't report your illegal gains as income. Anything with value is supposed to be reported.

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

 

[faefrost]

I think the between the lines takeaway from this that no one has explicitly said in public, is that Mr. Karpeles probably faces a rather substantial chance of federal arrest should his feet touch US soil. That is the only reason his lawyers would be telling him to stay out of the country and dodge the subpoena. There is probably a lot more interesting things going on out of view regarding Mt Gox and Mr. Karpeles.

 

[2012 Wont Happen]

Things are looking less and less good for Bitcoin especially since the US Govt ruled they are subject to taxation. Lol.

Actually I think getting subject to taxation is good for Bitcoin in the long run, because it means that US Government recognizes is as a commodity, if not medium of exchange.

Also, in my humble opinion, approaching cryptocurrencies like currencies is a bit of a mistake. Think of them as more of a share in a company sans the company. You buy it low, you sell it high, you ka-ching!

Though it's not like I trade in cryptocurrencies so what do I know.

You can also use cruptocurrency to buy things though.

It's like a much less stable version of gold when it was in money, both currency and tradable commodity.

 

[2012 Wont Happen]

I haven't followed this whole Bitcoin-thing very closely. But from what I understand the whole thing is basically a glorified Snake-Oil-Sale where someone tries to con you into giving you real money for some other sort of currency that is even more made-up than real money and can be stolen by people with computers rather than people with blow-torches and striped convict shirts.

How wrong am I?

It's value can come from two things. Speculation, which is essentially the great continuing scam modern economies are built on, and untraceably purchasing illegal goods and services

The only stability in bitcoin comes from its value that comes from the latter, as speculation is inherently unstable. Even the latter, which gains a good deal of stability as it can be used to get tangeable things on the Internet that regular money cannot, it is also somewhat unstable as it relies on things like external Tor based black markets and could be altered by things like police action against the people who run the marketplaces or sell the products or services.

So, all of its value from speculation is a scam, and all its value that is based in tangeable commodity is illegal.

 

[Someone Depressing]

I still have no idea what the hell Bitcoins are (my rock's quite cozy, thank you) but considering all the crap that's been going on with them, I'm all too happy about that.

But still, 7% of all of dese new fangled things? That's a lot of money; and honestly, I wonder where it is now.

 

[FalloutJack]

A cousin of mine was told that, in five years, 10% of the world would have purchased something with Bitcoin in the past month. He made a sizable bet against that.

Reading stories like this, I get the feeling that he's going to win the bet easily. I'm certainly not touching the bleeding thing after everything that's happened to it.

I don't think it's going to last five years, in which case the winner would be you, then?

OT:
Like predicting a stock market crash, I am feelin' good. This domino has fallen. The rest will go, thanks to the rather unpleasant realities that this fantasy money must live by...and therefore not really live at all. Good times.

 

[Strazdas]

when it went under Mt Gox took 7% of the world's total Bitcoin supply with it.

That's a lot of pissed off criminals and conspiracy theorists.

i was going to say "dont gforget speculators" but then i realized you already covered them with these two.