Gox closes down, good bye you magnificent bastard
- Thread starter Pekelo
- Start date
OK, there are some interesting theories going on Reddit, I will share the one I believe actually happened:
"May 2, 2013 â Empty Gox was sued by CoinLab for 75 million USD for breach of contract. For unknown reasons, Gox failed to fulfill obligations to provide server access, resulting in a startup-crushing financial liability for failing to deliver. (Rob Banagale) Interestingly, thereâs a massive selloff of 750,000 coins at an average price of about 100, totalling $75M, just following this event."
So in plain English, Mark sold customers' coins to pay off a debt last year. He probably thought he can make it back in commissions (there was a crazy volume of 1.1 million coins traded in the first week of May), and actually that wasn't a far fetched plan, but after May other exchanges started to take over the volume, and Gox lost lots of trust and business.
Then in August the US government sized 5 million dollars in their cash account further depleting their ability to pay withdrawals.
Then in December lots of Chinese customer started to pull money out following the Chinese ban and that started the bank run....
P.S.: The Coinlab case started in November, but it is possible he had to put up the money and it was frozen way before that.... That actually explain when he said "unavailable at this point".
https://bitcointalk.org/index.php?topic=477142.0
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Slight variation of this theory:
"Maybe it's as simple as Gox was low on funds, Mark thought he would roll the dice and take a chance he was selling near the height of a current bubble--versus having to close shop for certain if he did not do something to fix an incredible problem--and then the price actually exploded beyond any possibility that they could ever be bought back, in order to replace them."
"May 2, 2013 â Empty Gox was sued by CoinLab for 75 million USD for breach of contract. For unknown reasons, Gox failed to fulfill obligations to provide server access, resulting in a startup-crushing financial liability for failing to deliver. (Rob Banagale) Interestingly, thereâs a massive selloff of 750,000 coins at an average price of about 100, totalling $75M, just following this event."
So in plain English, Mark sold customers' coins to pay off a debt last year. He probably thought he can make it back in commissions (there was a crazy volume of 1.1 million coins traded in the first week of May), and actually that wasn't a far fetched plan, but after May other exchanges started to take over the volume, and Gox lost lots of trust and business.
Then in August the US government sized 5 million dollars in their cash account further depleting their ability to pay withdrawals.
Then in December lots of Chinese customer started to pull money out following the Chinese ban and that started the bank run....
P.S.: The Coinlab case started in November, but it is possible he had to put up the money and it was frozen way before that.... That actually explain when he said "unavailable at this point".
https://bitcointalk.org/index.php?topic=477142.0
--------------------------------
Slight variation of this theory:
"Maybe it's as simple as Gox was low on funds, Mark thought he would roll the dice and take a chance he was selling near the height of a current bubble--versus having to close shop for certain if he did not do something to fix an incredible problem--and then the price actually exploded beyond any possibility that they could ever be bought back, in order to replace them."
CoinLab cost Gox around $5MM or so.
Karpeles had sold most of his own holdings in the $10-$12 range. He'd "borrowed" from customer accounts to the tune of $30MM, making the fraud a fractional (FTP, etc) until he could pay it out of the growth in the fee-biz. No way to limit upside exposure in this TX-hedge as you're taking BTC out of inventory before it rallies 40-50 fold.
There was no malleability rip-off. Pure false-flag. What's he going to say?
MtGox =/= "Mount Gox"
MtGox == Magic the Gathering Online Exchange
ROTFLMAO !!!
Sure, who wouldn't be willing to trust their hard-earned money to some overaged fantasy game players?
Some people are just destined to be fools taken by conmen.
MtGox == Magic the Gathering Online Exchange
ROTFLMAO !!!
Sure, who wouldn't be willing to trust their hard-earned money to some overaged fantasy game players?
Some people are just destined to be fools taken by conmen.
There is still an ongoing courtcase, in the tune of 75 millions, I linked to the case. Actually 2 cases, since Gox countersued.
Now the interesting thing was that someone sold exactly that much worth of coins at that time, thus the assumption that Mark was selling it to cover the courtcase, in case they lose. Maybe he had to deposit at least some. Or he was just playing the market and miscalculated when he expected it to fall further...
He could have earned back, although it would have taken a few years. The highest volume of Gox was the first week of May, when 1.1 million coins were traded. Using the 0.5% com. rate, after a quick division by 200, we get that they earned 5500 coins just on that week. Of course the volume couldn't stay that high for long, and after other exchanges came in their average volume dropped to 1/3rd.
So let's do the math. We know the highest volume made 5500 coins, let's say their average was half of that, or 2800 coins. After that dropping by 60%, we get that Gox still made about 1000 coins per week after May.
But I forgot that they charge both sides, thus it is really 1%, plus they had income from forex exchanges too, although we should subtract for cost too. Anyhow assuming a 2000 coins per week average, that is about 6-7 years, before he could have paid back the "borrowed" coins, if there is no bank run....