Borked Bitcoin bunker MtGox in administration: Lawyer seizes control

Collapsed Bitcoin exchange MtGox has been put into administration by a court in Japan, where the website is based, after it became clear the site's chances of recovery are nil. The biz, which has mislaid half a billion dollars of BTC, was granted protection from creditors in February by the Tokyo District Court as it battled …

[DavCrav]

"But if a buyer can be found for MtGox, people owed money could have a slice of future earnings, it is believed."

Believed by whom? Who would take over the tainted MtGox brand *and* sacrifice a slice of any future profits they manage to carve out to the current creditors? Not to mention be the subject of significant Internet hacking/backlash/death threats from criminals?

[Anonymous Custard]

At least this time it won't be the normal stooge of J Random Taxpayer, aka you and me...

[Destroy All Monsters]

Well, THAT show is currently still ongoing. For example in lovely Italy.

[silent_count]

“Believed by whom? Who would take over the tainted MtGox brand *and* sacrifice a slice of any future profits they manage to carve out to the current creditors?"

Who spends huge wads of money on a photo sharing site or messaging platform, both of which make a loss?

My conspiracy theory for the day is that Mr Karples didn't lose all those bitcoins. He saw, to his horror, that his exchange was making a profit, so he ran a multi-pass disk wipe over the bitcoins in order to make MtGox a more attractive buyout target for Facebook. So Mr Karples could be free of this running-an-exchange thing and turn his attention to more important things, like drinking mohitos on some warm carribbean beach.

[Anonymous Coward]

Who gets compensation?

1. The Administrators take a cut. Usually taking years to sort it out while putting in eyebrow raising claims for their time. The longer it takes the better for them.

2. The Taxman gets first dibs at anything outstanding.

3. The rest get what's left which usually amounts to about 2p in the £.

[Annihilator]

"The biz, seeking to rebuild itself after losing half a billion dollars of BTC"

To be fair, they could probably just wait a year or so and the real-world value of the loss will probably have come down to pennies ;-)

[Grikath]

It already has, and has always been.

Trading cards are nothing more than coloured pieces of cardboard. It's only idiots that assign any value on them beyond purchase cost. Same goes for any "collectible" : the'"market" thrives on idiots dreaming themselves rich, and other idiots falling for it.

The actual value of a Bitcoin is the amount of 'leccy used to obtain it. any value above that is Hot Air.

[justincormack]

"The actual value of a Bitcoin is the amount of 'leccy used to obtain it. any value above that is Hot Air" hey will you pay me for these digits of pi I generated with some leccy then? No? Maybe turning leccy into computation does not create value...

[Anonymous Coward]

I bought some bitcoins online. I was able to use them to buy some computer stuff online from abroad (second hand), which promptly arrived (and all works!).

So, for me, the bitcoins were very easy to use and therefore have value to me, beyond the cost of the purchase.

Bitcoins are not just 'collectables' as you seem to call them. I'm not collecting any of them. Just using them as I would any useful tool.

[TheOtherHobbes]

>The actual value of a Bitcoin is the amount of 'leccy used to obtain it. any value above that is Hot Air.

The actual value of a banknote is the cost of printing. Any value above that is Hot Air.

[Charles Manning]

Value

"The actual value of a Bitcoin is the amount of 'leccy used to obtain it. "

Err, no!

The value is only what someone is prepared to pay for it. The leccy cost just sets a point at which it is no longer economically feasible to mine them. The myth seems to exist that that value is linked to the energy required to generate it, but that is not so.

To use od economics: the leccy is Cost Of Good Sold (COGS). When you can sell something above that, you make a profit. When you sell something below that, you make a loss.

There are numerous unprofitable companies selling product below COGS. They tend to go broke and go out of business.

Bitcoin is a fantastic wheeze, COGS starts off tiny (virtually zero) and gets more. As a result, we're about half way through the BC number space and the COGS has gone up to $500. That means the people that kicked off the whole game:

a) risked almost nothing

b) made a stonking profit if it took off.

[Bronek Kozicki]

Lawyer named Kobayashi takes charge?

Next we will learn that actual name of MtGox owner is Kayser Söze.

[AbelSoul]

Re: Lawyer named Kobayashi takes charge?

> "... actual name of MtGox owner is Kayser Söze."

Nah, that's the mystery dude behind bitcoin itself: "... and like that he's gone..."

[Obitim]

Re: Lawyer named Kobayashi takes charge?

Came for this response

[deadlockvictim]

Re: Lawyer named Kobayashi takes charge?

Well, they *are* in Japan and Kobayashi is by no means an uncommon name there.

If he were a tricksy hobbitses, he would go by the name of Littlewood, Smallgrove or something along those lines.

[Anonymous Coward]

Mighty quiet ....

Not heard anybody suggesting recently how BitCoin is a FIAT currency, etc etc. I'm guessing this is the death throes of the BitCoin bubble

[Brenda McViking]

Re: Mighty quiet ....

By its definitition, Bitcoin is not FIAT. It doesn't derive its value from any government or legislation, and relies instead on its scarcity (due to it theoretically being finite) to attain value.

Of course, once trust in a currency is gone, it becomes worthless anyway - MtGox is certainly the most trust-damaging event to date, but bitcoins are still trading.

[I ain't Spartacus]

Re: Mighty quiet ....

The price is steadily dropping. I think it dropped down to $400 the other day, but bounced back towards $500 again. However it's been in steady decline since the heady pre-Christmas days of over $1,000.

But that's the point. Those were only days. And not very many days at that. There seems to be a steady trade in the things still. So there's definitely a value there. There's definitely a continuing market. But it's a much smaller market than the hype suggests, and therefore I think the price will probably keep dropping back towards the $100-$200 range. Maybe much lower.

All this is assuming the exchanges are giving true information. It would be easy for them to hype the prices by posting false numbers - because transaction volumes are so low. Esepcially if they're willing to trade with their customers' funds (in the way Mt Gox were considering to save themselves). It would be an easy market to rig, either by trading or by fiddling the figures. It might even be possible to do some of that legally, as it's not a regulated market.

[Mark .]

Re: Mighty quiet ....

Another way of looking at it is that almost always true with Bitcoin that the price at any given time is significantly less than its all time high - because Bitcoin tends to grow in sudden spurts where the value rockets up, then drops back down to a lower value, that's still much higher than the previous level. So being at $500 when the all time high is around $1000 isn't any sign of a decline.

Whether the price will drop down to a lower level like $100-200 or not, is anyone's guess.

[captain veg]

BitCoin is a FIAT currency

Unlikely. FIAT is an acronym for Fabbrica Italiana Automobili Torino, an Italian car maker.

On the other hand, fiat is a Latin word meaning "let it be done". Perhaps that's what you meant.

-A.

[Valeyard]

FTFY

The biz, which has mislaid half a billion dollars of BTC

I think you meant 'misappropriated'

;)

[Winkypop]

They are not lost

They are just pining for the fjords.

[Aristotles slow and dimwitted horse]

@ Winkypop

Are you suggesting that Bitcoins migrate?

[Anonymous Coward]

Re: @ Winkypop

"Are you suggesting that Bitcoins migrate?"

Not at all. They could be carried....

[Matt Bryant]

Re: Aristotles slow and dimwitted horse Re: @ Winkypop

"Are you suggesting that Bitcoins migrate?" I would suggest that Mr Winkypop is implying the currency is not dead, merely resting.

http://www.youtube.com/watch?v=npjOSLCR2hE

[User McUser]

Liquidity

[Mt Gox] has a stash of 200,000 BTC locked in its digital vault, which if liquified will leave plenty of creditors out of pocket.

BTC is supposed to be currency so, pedantically speaking, you can't liquefy it; like a US Dollar or a GB Pound, it's already as liquid as it can get.

[Rick Brasche]

in spite of all this

BC prices have been increasing steadily all week. Barely dropped below the "magic $500 barrier" for a couple days and then back on the rise with no rhyme or reason.

Seems even fishier as the worse the news gets, the higher the price goes. If this worked anywhere else, Enron would be the most valuable shares in the world's history right now.

[I ain't Spartacus]

Re: in spite of all this

I hope this link works

That should give you a year's prices on Bitstamp. Which I believe is now the top-dog exchange. Prices managed to crawl back above $500 this week, although it looks like they're on the way down again.

There's several interesting things to note. Firslty is the most obvious. Trading volume was steady, along with price, for 9 months last year. Then suddenly things went bonkers in December - and the price spiked up to over $1,000. Transaction volumes have been higher since, although at least some of that will be customers moving from Mt Gox (and others), as Bitstamp hasn't been top exchange for all that long.

Since the peak, prices have been much more volatile, but on a clear downward trend.

What we need is an understanding of the Bitcoin economy. Someone should be measuring its GDP. That might help explain what's going on. There looks to be a steady trade in the stuff, so I imagine there's various people selling stuff online. At least some of that is drugs and computer crime type stuff. But also legit stuff. Would be nice to know the mix? Silk Road has gone down since the price spike, and yet that doesn't seem to have dropped trading volumes. So either something's taken it's place, or it wasn't as important to the Bitcoin economy as people were suggesting.

The next question is 'what's changed'? Has there been a sustainable change in demand for BTC? As an example that CryptoLocker malware was demanding payment in BTC. It hit the big time around the December price spike. So was that the cause? Which would drop the price when it goes away.

One thing that does seem to have changed is the volatility. $100 swings in a day are not unusual. It looks to me like prices fall on large volumes of trading (as one would expect) - and several of those correlate with particular bad news days. Mt Gox's travails, and the 2 big days when China was said to be clamping down on Bitcoin.

There are also often big price jumps. Could just be natural, or people seeing the price lower than recently so aiming for a profit. After all, most people are presumably paid in real money, and converting to BTC to buy stuff. So why not buy a few days early when the price looks cheap? But given how stable the price and volume often are on other days, I suspect that we're looking at people 'investing'. People like the Winklevoss twins for example. Either seeing BTC as cheap, so investing. Or ones who've already got a holding, so are buying in whenever the price drops. In the hopes of maintaining the value of their previous investments. Looks like a losing game to me, but then it's not my money.

All guesswork of course. It would be a great project for some economist, or PHD student. EVE Online employ/consult a couple of economists, as they try to run their game economy with fewer and fewer inputs, and rely on interactions between the players.

[MondoMan]

This has all happened before

A few years ago, back when Bitcoin had soared and had hit the heady value of 30 USD (and when people still used graphics cards to mine BTC!), Mt Gox suffered an enormous theft, other large thefts/scams were in the news, and BTC dropped about 10x in value. Many proclaimed the end of Bitcoin and the press lost interest...

[Stevie]

Bah!

And herein lieth the first lesson: Bank ye not with tech nerds running sites repurposed from geek hobby interests, for their real world connect is ephemeral and vanisheth with the rising of the sun (along with your fungible assets).

A half billion? The mind boggles.

Part of the problem is that bank fraud (as in: banks perpetrating fraud on the public) is now so ubiquitous and so usurious that we don't sit up and take notice until eight or more zeroes are involved.

[Anonymous Coward]

Wouldn't it be funny if...

The liquidator was called Satoshi Nakamoto.