I doubt that out of fiat scenarios, they had plenty of opportunity to "fix" this lately (price arbitrage).
But I noticed that also EUR withdrawals started to take very long in the last 6 weeks, although after a while all withdrawals arrived.
Topic: Is Mt. Gox out of fiat reserves: A back of the envelope calculation (Read 968 times)
February 17, 2014, 04:18:43 PM
February 17, 2014, 04:09:56 PM
Bumping my own thread. Those claiming that the only explanation of Gox's problems being them being out of funds, please disprove my reasoning.
Note that this was written in last October. By now they should have gained enough to offset all of their net debt.
Note that this was written in last October. By now they should have gained enough to offset all of their net debt.
October 24, 2013, 05:13:45 AM
They most probably have kept some bitcoins from the fees they collected over time - and after the April rally this should be worth much. Unless they did something really stupid they still should have the money.
That said I have moved out from MtGox a long time ago.
That said I have moved out from MtGox a long time ago.
October 24, 2013, 02:19:06 AM
...
(Although my opinion is that they should just have disabled the regular USD withdrawal option already in June or July and just eaten the 5% loss for the outstanding withdrawals and made the 5% extra bank fee an explicit requirement for USD withdrawals. It's outrageus that they still advertise the regular USD withdrawal as an existing option.)
(Although my opinion is that they should just have disabled the regular USD withdrawal option already in June or July and just eaten the 5% loss for the outstanding withdrawals and made the 5% extra bank fee an explicit requirement for USD withdrawals. It's outrageus that they still advertise the regular USD withdrawal as an existing option.)
All Mt. Gox would have had to do to keep me as a supporter would simply have been to not be dishonest. I could even understand situations where they could not give complete information, but false information is a different beast. Obviously I would take my business elsewhere as long as they cannot support my needs, but I would have been willing to come back if/when they became an operational exchange again.
The only legitimate reason to be dishonest and deceitful would be if they themselves doubt their own viability and wish to arrange the most favorable exit possible.
I bailed several months ago, but left a $5k debt in the form of an international wire. Even then I figured that there was a good chance that I'd have to fight for it as a creditor and probably would not get it at all. At the time I was still favorably disposed toward Mt. Gox. Only when they lied to me on my status update query did I turn negative.
October 24, 2013, 01:58:25 AM
Let's see.
I'm mostly just pulling these numbers out of my ass, so excuse me for their inaccuracy. I'm just aiming for the big picture.
Their USD trade volume (ytd) is about $1.3 billion. So, assuming they make 1% from each trade, their total fee revenue (ytd) is at least $13 million. (Not an unfounded assumption, small trades usually pay 1.3% and only the biggest traders can get below 1.1%. Fees on both sides are counted.)
This is just USD, but it's the biggest currency so I'll ignore the rest for now.
There's another $13 million in the orderbook (all currencies, because of their peculiar multi-currency orderbook). And there's probably at least $10 million on Mt.Gox accounts out of orderbook (in the withdrawal queues or just sitting there). All of this is money that someone has deposited to Mt.Gox at some time.
Known seized funds amount to $10.5 million.
Let's move to the uncharted territory: Mt. Gox operating expenses. I do not know anything so I'll just have to guess. Let's throw $2 million a year into personnel costs. Maybe a generous $.5 million/a into office space, servers etc. and another $.5M/a to various other expenses. So, $3 million, which on YTD basis is $2.5 million.
The biggest question is their administrative and legal expenses. This can be anything from less than $1M to several million dollars. Let's be pessimistic and assume $5M (ytd).
Bottom line, $10 million out-of-orderbook scenario:
Total Assets: $25.5 million
Total Liabilities: $30.5 million
Net debt: $5 million.
So, while they might owe more than they have, we should be really afraid only if the fiat in the orderbook drops below $5 million. At the current rate, they're making $1M/month in fees, and even after operating and legal costs (the above pessimistic level assumed) they're left with $.25 million/month net profit. So, if my scenario is the truth and nothing changes, they should be out of the water in 20 months, or mid-2015.
The above calculation also ignores all of their possible reserves accumulated before 2013. It's actually very likely that they have significant BTC reserves (that they can't legally sell on their own exchange, if anywhere). They could well be offsetting the costs by paying wages (and even lawyer fees) with the accumulated BTC, and thus, it's possible that they have enough fiat to cover all of their customer account balances. Also, it's perfectly possible that they have enough profit left over from the previous years that they've never been under the water.
So, if someone still believes Mt.Gox is intentionally stalling withdrawals because they're out of fiat reserves, please explain your reasoning. My view is that they're speaking the truth.
(Although my opinion is that they should just have disabled the regular USD withdrawal option already in June or July and just eaten the 5% loss for the outstanding withdrawals and made the 5% extra bank fee an explicit requirement for USD withdrawals. It's outrageus that they still advertise the regular USD withdrawal as an existing option.)
I'm mostly just pulling these numbers out of my ass, so excuse me for their inaccuracy. I'm just aiming for the big picture.
Their USD trade volume (ytd) is about $1.3 billion. So, assuming they make 1% from each trade, their total fee revenue (ytd) is at least $13 million. (Not an unfounded assumption, small trades usually pay 1.3% and only the biggest traders can get below 1.1%. Fees on both sides are counted.)
This is just USD, but it's the biggest currency so I'll ignore the rest for now.
There's another $13 million in the orderbook (all currencies, because of their peculiar multi-currency orderbook). And there's probably at least $10 million on Mt.Gox accounts out of orderbook (in the withdrawal queues or just sitting there). All of this is money that someone has deposited to Mt.Gox at some time.
Known seized funds amount to $10.5 million.
Let's move to the uncharted territory: Mt. Gox operating expenses. I do not know anything so I'll just have to guess. Let's throw $2 million a year into personnel costs. Maybe a generous $.5 million/a into office space, servers etc. and another $.5M/a to various other expenses. So, $3 million, which on YTD basis is $2.5 million.
The biggest question is their administrative and legal expenses. This can be anything from less than $1M to several million dollars. Let's be pessimistic and assume $5M (ytd).
Bottom line, $10 million out-of-orderbook scenario:
Total Assets: $25.5 million
Total Liabilities: $30.5 million
Net debt: $5 million.
So, while they might owe more than they have, we should be really afraid only if the fiat in the orderbook drops below $5 million. At the current rate, they're making $1M/month in fees, and even after operating and legal costs (the above pessimistic level assumed) they're left with $.25 million/month net profit. So, if my scenario is the truth and nothing changes, they should be out of the water in 20 months, or mid-2015.
The above calculation also ignores all of their possible reserves accumulated before 2013. It's actually very likely that they have significant BTC reserves (that they can't legally sell on their own exchange, if anywhere). They could well be offsetting the costs by paying wages (and even lawyer fees) with the accumulated BTC, and thus, it's possible that they have enough fiat to cover all of their customer account balances. Also, it's perfectly possible that they have enough profit left over from the previous years that they've never been under the water.
So, if someone still believes Mt.Gox is intentionally stalling withdrawals because they're out of fiat reserves, please explain your reasoning. My view is that they're speaking the truth.
(Although my opinion is that they should just have disabled the regular USD withdrawal option already in June or July and just eaten the 5% loss for the outstanding withdrawals and made the 5% extra bank fee an explicit requirement for USD withdrawals. It's outrageus that they still advertise the regular USD withdrawal as an existing option.)
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