Topic: Can Gox buy their way out of this mess? (Read 2483 times)

It's interesting that for the first time yesterday, Jon Matonis read the ongoing forum debate regarding the resignation petition (below, according to him) and within 24 hours Karpeles resigns. Jon Matonis released the resignation statement this morning.

https://bitcoinfoundation.org/forum/index.php?/topic/740-petition-to-remove-mark-karpeles-from-the-bitcoin-foundation-board/page__st__20

I think we can safely assume that Jon called Mark. We can only speculate as to how that call transpired, but one would have to believe that solvency was an important focus of the conversation. It seems like a very fast resolution (less than 24 hours), which makes one wonder

• Did Karpeles throw his hands up and say 'to hell with it, I'm sick of dealing with the public' then resigned or
• Did he reveal that things were so dire at Mt. Gox that Matonis basically told him that he must resign immediately?
• Or did Mark resign for the sake of the Foundation, as he knows that the tarnish will be impossible to remove regardless of the outcome

One would think that if things were going to improve (vis–à–vis buying their way out, etc.) at Mt. Gox, Karpeles would have at least thought about the resignation for a day or two before resigning.....

@pungopete468
I don't know how you got that 1% per year thing.

Also I can't imagine how high their expenses should be to absorb so much of the fees income.
Also I'd like to know how does increase in trading volume increase their expenses.
Just theoretically, please.

So far I have seen no evidence that Mt.Gox is in a 'Mess' and needs extra money to 'buy their way out'.
Can somebody actually provide some kind of reference for this allegation? It seems that many people on this forum believe in the hype that everything that's happened at Gox is because they have no money - that has no basis in fact that I can see.
If anyone can prove me wrong, please be my guest.

I don't know how profitable you guys think the trading fees are; they can't just simply "cover" $5 million USD seized by the FBI and continue to pay their normal operating expenses...

I don't know their level of actual expenses but I do know that in business your expense is a sliding scale; the more you make, the more it costs to stay in business... Financial exchanges typically operate on less than 1% Net Profit per year after all is said and done...

Let's just run a little financial simulation for speculation purposes. These are the conditions:

- Assume you need to pay off $5 million USD and still have enough for regular operating expenses.
- Assume you can operate at a 90% Gross Profit after operating expenses. (On average, for Every $111 of Gross Income you spend $11 on regular Operating Expenses leaving $100 left over.)
- Trade commission is 1.2% total for each transaction.
- All debts rely on new incoming USD as the older pre-existing accounts were forfeited.


To become solvent:

$5,000,000.00 (Gross Profit) = [$504,583,333.33 (Volume of Trade) * 1.2% (Trade Commission)] - $1,055,000.00 (Normal Operating Expenses @ 90% Gross Profit Ratio)

Net Profit @ 1% of Gross Income (not Gross Profit) = $60,550.00 per year.

It would take 82.5 years to cover the loss at that pace. If the volume of trade would bump up to say, $5 Billion it would be 8 years, and at $50 Billion would take 0.8 years...


Most financial exchanges deal with Hundreds of Billions of Dollars per year in volume... 1% start's to look pretty good there.


On top of all this; enough new USD will need to be transferred in monthly just to cover the expenses in order to stay in operation until they have enough time to recover. Even if old accounts are traded back and forth so rapidly that the volume of trade was a trillion Gox Bux they still wouldn't have any USD to spend unless it's transferred in from outside of the exchange.

Regardless of how they choose to apportion the minimal amount of USD transferred into Gox's account daily they are probably insolvent and operating on borrowed time and money... They wouldn't likely be able to pay their obligations right now anymore than they could squeeze blood from a turnip.

It's not an insurmountable problem given enough time, very careful spending, and solid growth of Bitcoin... Unless the incoming USD deposits slow down...

Basically, they've been skating on very thin ice and when people stopped sending in USD and just sent Bitcoin it put them under tremendous financial pressure. They likely cover expenses by selling coins on other exchanges to compensate for the decrease in USD deposits...

Now I'm not talking about peoples money, I mean profit. Money that Mark can reinvest into the company to buy coins and become solvent.

I believe the bug is long fixed but extra work is being done to improve standards. I also believe that Gox lost a lot of coins that need to be replaced in order to survive, a challenge that Gox is/should be working on. I also think this so called lawsuit will be dropped once withdraws are opened and I don't believe that Mark will disappear as that would pi$$ off a lot of ruthless individuals. So my only concern is that Gox has enough funds to buy their way out of this mess but how much funds are needed? At what price? does Gox have enough? Essentially, can they buy their way out of this?

Your thoughts.

Please no fud or trolling and no trolling or fud please.

how do you know 90% of those transactions aren't just Mt Gox coins creating liquidity back and forth to itself?

and who's to say there aren't some special VIP whales that are allowed really cheap if zero price on doing the same?

I find it interesting that the resignation happened immediately after this hypothetical phone call.

One way it could have gone --

Matonis 'Hey, everyone's worried about your solvency. What's the status?
Karpeles 'We're solvent.'
Matonis 'Oh good. Then perhaps issue a PR stating this or otherwise prove that you are to the public.....this will really help and perhaps the calls for your resignation will cease.'
Karpeles 'Great. Will do.'


Instead, he resigns immediately and does not issue a more definitive PR or attempt to alleviate his clients worries. Rather than simply show the world he is solvent (if he is), he would rather move to a virtual office, erase his Tweets, and remove himself from the Board? Interesting approach.....

I'm not trying to get off-topic. To me, this is simply one more sign that they are unable to buy themselves out of this mess........It seems highly unlikely that they are this bad at PR. Who could be THIS bad at EVERY step along the way.

It's interesting that for the first time yesterday, Jon Matonis read the ongoing forum debate regarding the resignation petition (below, according to him) and within 24 hours Karpeles resigns. Jon Matonis released the resignation statement this morning.

https://bitcoinfoundation.org/forum/index.php?/topic/740-petition-to-remove-mark-karpeles-from-the-bitcoin-foundation-board/page__st__20

I think we can safely assume that Jon called Mark. We can only speculate as to how that call transpired, but one would have to believe that solvency was an important focus of the conversation. It seems like a very fast resolution (less than 24 hours), which makes one wonder

• Did Karpeles throw his hands up and say 'to hell with it, I'm sick of dealing with the public' then resigned or
• Did he reveal that things were so dire at Mt. Gox that Matonis basically told him that he must resign immediately?
• Or did Mark resign for the sake of the Foundation, as he knows that the tarnish will be impossible to remove regardless of the outcome

One would think that if things were going to improve (vis–à–vis buying their way out, etc.) at Mt. Gox, Karpeles would have at least thought about the resignation for a day or two before resigning.....

Still they made a bit less than 1000 BTC in fees in the last 24h.
That's very good business if ran properly.
They can buy their way out but the question is more like "will they?"
Do they want to keep the business they created?

I'd want if it was mine, heh.

I also believe that the pressure of negative public opinion is getting to Mark Karpeles very personally but that he is the kind of stubborn guy who will just refuse to be pushed into being open and resents many of his customers, leading to big communication problems.

Ideas?

It's interesting that for the first time yesterday, Jon Matonis read the ongoing forum debate regarding the resignation petition (below, according to him) and within 24 hours Karpeles resigns. Jon Matonis released the resignation statement this morning.

https://bitcoinfoundation.org/forum/index.php?/topic/740-petition-to-remove-mark-karpeles-from-the-bitcoin-foundation-board/page__st__20

I think we can safely assume that Jon called Mark. We can only speculate as to how that call transpired, but one would have to believe that solvency was an important focus of the conversation. It seems like a very fast resolution (less than 24 hours), which makes one wonder

• Did Karpeles throw his hands up and say 'to hell with it, I'm sick of dealing with the public' then resigned or
• Did he reveal that things were so dire at Mt. Gox that Matonis basically told him that he must resign immediately?
• Or did Mark resign for the sake of the Foundation, as he knows that the tarnish will be impossible to remove regardless of the outcome

One would think that if things were going to improve (vis–à–vis buying their way out, etc.) at Mt. Gox, Karpeles would have at least thought about the resignation for a day or two before resigning.....

As I said, If they sold the frozen BTC on another exchange they wouldn't have any left on Gox to replace the frozen and lost BTC.

The only other option I see is they buy BTC on Gox at a discount, sell them on another exchange, use the profit to buy more again on Gox and repeat until they have enough capital and BTC to reopen withdraws.

Now I'm not talking about peoples money, I mean profit. Money that Mark can reinvest into the company to buy coins and become solvent.

I believe the bug is long fixed but extra work is being done to improve standards. I also believe that Gox lost a lot of coins that need to be replaced in order to survive, a challenge that Gox is/should be working on. I also think this so called lawsuit will be dropped once withdraws are opened and I don't believe that Mark will disappear as that would pi$$ off a lot of ruthless individuals. So my only concern is that Gox has enough funds to buy their way out of this mess but how much funds are needed? At what price? does Gox have enough? Essentially, can they buy their way out of this?

Your thoughts.

Please no fud or trolling and no trolling or fud please.