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Topic: MtGox withdrawal delays [Gathering] - page 39. (Read 908727 times)

JorgeStolfi

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Quote from: DrApricot on September 15, 2014, 01:52:27 PM

It's a huge win for lawyers and accountants who will profit when the rightful owners of Mt. Gox's bitcoins can't agree on how to settle the matter. The only way to reverse this is for depositors to somehow work together and overturn this liquidation with an out-of-court settlement.

Thanks for pointing out the obvious though--liquidation is a total "no-win" for everyone. Even Spock would agree, liquidation isn't "logical" when there can be a better way.

You mean, let Sunlot get possession of the coins and money, instead of the liquidator?

I give up, I don't know what else to say...

DrApricot

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Quote from: Tzupy on September 15, 2014, 09:33:29 AM

Quote from: JorgeStolfi on September 15, 2014, 08:08:03 AM

I suspect that he will choose to auction the BTC and divide the yen, to avoid that messy situation.

That's why it's important to know when that auction will be. If a 30k BTC auction (Silk Road 1) triggered a significant price drop,
the auctioning of 100k - 200k BTC is going to do significant damage to the price.

Another excellent reason why liquidation should never be allowed to proceed.

I'm no lawyer, but my understanding is Japanese law provides having a committee participate in the proceedings assuming that it can meet certain conditions, including representing all depositors and other creditors, and having the support of more than half of these. At the very least Mizuho Bank and several of Mt. Gox's very large bitcoin depositors would have to come to some kind of agreement including presumably a plan to refinance the exchange.

This brings up the practical problem of how best to expedite formation of such a committee and fund its activities. This would entail the recruitment of legal representation in Japan to negotiate with the creditors and the court. The goal would be a quick and simple out-of-court settlement rather than a protracted liquidation wherein everyone loses.

Edit:
I was just rereading Nobuaki Kobayashi's report distributed at the July creditor's meeting. In it, he states:

Quote

VIII. Corporation assuming business
I am searching for a company which desires to assume the business, etc. of the bankrupt entity. The company that will assume the business is not determined at this point, but several companies showed interest and I continue to conduct the selection process.

From this, it does not appear the trustee intends to liquidate Mt. Gox at all, but rather to transfer it to some company that wants to assume its business. Of course, how much will be left for depositors is still an open question, as his primary objective appears to be finding a company who will acquire it. It should be noted that Kobayashi's law firm is involved in lots of mergers and acquisitions.

The only way around this is for depositors to take a more aggressive role, and press for an out-of-court settlement in which they get a better deal for themselves.

DrApricot

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Quote from: JorgeStolfi on September 15, 2014, 06:57:27 AM

Quote from: DrApricot on September 15, 2014, 06:41:58 AM

Quote from: JorgeStolfi on September 15, 2014, 12:22:10 AM

I would be very surprised if the court agrees to let some of the creditors negotiate the distribution of some of the assets. The whole point of the bankruptcy process is to make sure that all creditors get their fair share of the spoils. So all the depositors would have to be contacted and agree on the settlement plan.

It is starting to look like no class of creditor, whether depositor or otherwise, will benefit very much should this liquidation continue. However, you are quite correct that communication between the various groups will be a real challenge. However, an effective out-of-court settlement of the bankruptcy could be a win-win solution for everyone concerned.

If we use the Kobayashi Maru test as an analogy, wherein Star Fleet cadets are tested on how they handle a no win situation, perhaps depositors would be wise to emulate the example of James T. Kirk instead of that of Mr. Spock. As you may recall, Kirk quietly reprograms the test simulator and comments that he doesn't believe in "no win" situations. Even though he circumvented the rules, in the end he gets an award for "original thinking". Spock believes only through his own sacrifice can he deal with "no wins". See http://en.wikipedia.org/wiki/Kobayashi_Maru#James_T._Kirk.27s_test

Japanese law gives priority to certain classes of creditors (IIRC, employee salaries first, then secured creditors, then unsecured creditors, then investors, and management for last).

In this case the bulk of creditors are the former clients, which are all in the same bag. On the average, they will get no more than 1/5 of their account balances, courts or no courts. Thee is no "win" possible for them.

One big difference between bankruptcy and the Sunlot proposal is that the latter would NOT exclude management from the division; and in fact has "absolved" McCaleb and Gay-Bouchery from any wrongdoing even before any investigation, and would not say what they will do about Mark.

I don't think that the Japanese courts will take Star Trek jurisprudence into account. Ultraman's , perhaps. Cheesy

Tzupy

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Quote from: JorgeStolfi on September 15, 2014, 08:08:03 AM

Imagine that a gold exchange has got only two customers, George who deposited a chunk of gold worth 990'000 dollars, and Dick who deposited only 10'000 dollars, at the same time. The same day the exchange goes bankrupt, and the liquidator finds only 5'000 dollars worth of gold and 5'000 dollars in cash, that is, 1% of what it was supposed to have. How will they be split?

If the liquidator were to compute gold and dollar claims separately, Dick would get all the 5'000 dollars (50% of his deposit), while George would get all the gold (about 0.5% of his deposit).

That is why I think that the MtGOX liquidator must convert all claims to yen, so that he can establish the ONE fraction of the assets that each customer should get. EDIT: Not for moral reasons, but to avoid legal claims of unfair division of the spoils.

In the example above, George's claim would be 99% of total claims while Dick's would be 1%, so they would get 9'900$ and 100$, respectively (for both, 1% of their deposit).

Once the MtGOX liquidator has established the fractions, he may let each client choose whether he wants to get his slice of the total assets as BTC or as yen. But, even in this case, he will have to compute the total worth of the assets using the current JPY/BTC price, irrespective of the criterion used to compute the claim values. But then he will have to administer the conflict between the disparate wishes and the amount of BTC actually remaining.

In the example above, what should the liquidator do if George wanted to get his part in cash (as the law entitles him to) and Dick asked to have his in gold?

I suspect that he will choose to auction the BTC and divide the yen, to avoid that messy situation.

JorgeStolfi

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Imagine that a gold exchange has got only two customers, George who deposited a chunk of gold worth 990'000 dollars, and Dick who deposited only 10'000 dollars, at the same time. The same day the exchange goes bankrupt, and the liquidator finds only 5'000 dollars worth of gold and 5'000 dollars in cash, that is, 1% of what it was supposed to have. How will they be split?

If the liquidator were to compute gold and dollar claims separately, Dick would get all the 5'000 dollars (50% of his deposit), while George would get all the gold (about 0.5% of his deposit).

That is why I think that the MtGOX liquidator must convert all claims to yen, so that he can establish the ONE fraction of the assets that each customer should get. EDIT: Not for moral reasons, but to avoid legal claims of unfair division of the spoils.

In the example above, George's claim would be 99% of total claims while Dick's would be 1%, so they would get 9'900$ and 100$, respectively (for both, 1% of their deposit).

Once the MtGOX liquidator has established the fractions, he may let each client choose whether he wants to get his slice of the total assets as BTC or as yen. But, even in this case, he will have to compute the total worth of the assets using the current JPY/BTC price, irrespective of the criterion used to compute the claim values. But then he will have to administer the conflict between the disparate wishes and the amount of BTC actually remaining.

In the example above, what should the liquidator do if George wanted to get his part in cash (as the law entitles him to) and Dick asked to have his in gold?

I suspect that he will choose to auction the BTC and divide the yen, to avoid that messy situation.

Amitabh S

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any info on how the 800k or so btc were "stolen"?

so much money does not just vanish into thin air.. there has to be a trail.

JorgeStolfi

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Quote from: ?? on ??

Someone who has made deposits on Gox from his own wallet could easily prove that he still owns the addresses from which the deposits were made by signing a message saying so, thus proving something that no hacker could.

I don't know whether the court will accept that. However, the source of the deposits noes not prove account ownership. Consider deposits in yen: what would have prevented person X from sending a bank transfer to MtGOX, to be deposited in the account of person Y?

Moreover, suppose that the real owner Y of the account is someone who cannot claim it because he is a criminal at large, a tax evader, a MtGOX manger, etc.. He could ask his "clean" proxy Y to claim the account, and sign the message himself. Or even give Y the private key.

The basic problem here is that knowledge of the private key gives possession of the coins in some address, but does not establish whose property they are.

JorgeStolfi

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Quote from: DrApricot on September 15, 2014, 06:41:58 AM

Quote from: JorgeStolfi on September 15, 2014, 12:22:10 AM

DrApricot

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Quote from: JorgeStolfi on September 15, 2014, 12:22:10 AM

Quote from: DrApricot on September 14, 2014, 03:03:10 PM

The Japanese can't be blamed if the depositors take the initiative to voluntarily settle with the other creditor(s) (Mizuho Bank?) and the debtor, Mt. Gox. Not sure how this can be accomplished in Japan, yet it's a very common to have "compositions agreements" and "extension agreements" to settle out-of-court a bankruptcy proceeding in the U.S.

JorgeStolfi

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Quote from: rpietila on September 15, 2014, 02:06:15 AM

Quote from: JorgeStolfi on September 10, 2014, 03:44:58 PM

The above interpretation was not in the spirit of the TOS (nor in the letter, but I don't have all the versions that might have been applicable during the time). If it was, the mere act of sending BTC to Mt.Gox and receiving Goxbux would have been a taxable sale of one type of property and purchase of another (similar as you sell a house and buy one next to it).

This underlines the need for common reason in the action of governments/courts. If they rule something that is clearly contrary to what the people voluntarily have chosen to do, they cause more resentment, and people start to actively ignore government in everything they do, instead of passively.

Quote

Client preferences and their opinions as to what is the "just" division are usually irrelevant in liquidatons. The process is usually predefined very tightly so that the liquidator does not have to negotiate with thousands of creditors with different desires and opinions.

If the stuff stored is customer property, it is not touched and is just returned.

If it is customer accounts, it is not touched and is just returned.

I am not trying to defend morally what the liquidator and the courts will do, only predict what, in my understanding, they are likely to think and do.

Bank accounts are legally different than safe deposit boxes. The contents of the boxes are always your property, the bank is only renting you a space in their safe room. On the other hand, the money that you deposit in you account, for all I know, becomes legally the property of the bank, and in return you get the legally binding promise of the bank to give you the same amount of money when you want to withdraw, under the applicable conditions and procedures.

AFAIK, the criterion of deposits minus withdrawals is what was used in Madoff's case and is the standard in US and Japanese law. I can even understand why it makes sense in legal logic; it is irrelevant for this thread whether it is morally justified or not.

I don't know how MtGOX was registered, and how the deposits were classified for Japanese tax purposes. (In the US, AFAIK an exchange would have to register as some sort of bank or money transmitting service, and that is why there are still no exchanges in the US.)

MtGOX customers cannot just ignore what the law says. The coins and cash are now legally in Kobayashi''s custody, and will be released only with the court's approval.

Quote from: rpietila on September 15, 2014, 02:06:15 AM

According to natural law, if you identify using the same means that originally was the basis of identification, you should be able to have the same rights (or at minimum be required to upgrade your identification to a level acceptable to the court first). Dismissing non-verified ppl out-of-hand goes against everything (as pretty much all that the govts/"justice" system does, unfortunately).

Sure, if you identify yourself and can prove to the court's satisfaction that you were the owner of a certain account, I suppose that will be treated like any verified account. I assumed that the original question was not in that spirit.

I am afraid that proving ownership of unverified accounts will be difficult, however. Since Mark claims that he was hacked, and the database was ostensibly leaked against his will, hackers could also have stolen passwords and whatever other means was used to access the accounts -- unless it used sound crypto techniques that could not be broken by malware on MtGOX's servers. Is that the case?

rpietila

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Quote from: JorgeStolfi on September 10, 2014, 03:44:58 PM

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

I don't know what will happen to non verified accounts

I would be VERY surprised if those accounts will get any consideration. The court will not deliver anything, yen or BTC, to people that are not fully identified.

JorgeStolfi

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Quote from: Brewins on September 15, 2014, 01:06:22 AM

After several months, no money and no coins back.

I wonder about how people that bought Gox coins after withdraws have been suspended are feeling now about their "investment"

Bankruptcy liquidations take a long time. Creditors should not count on the outcome to pay their monthly bills.

This one is extra complicated for several reasons.

On the other hand, liquidations are routine procedures and Mr. Kobayashi, I understand, is quite used to overseeing them.

Brewins

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After several months, no money and no coins back.

I wonder about how people that bought Gox coins after withdraws have been suspended are feeling now about their "investment"

JorgeStolfi

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Quote from: DrApricot on September 14, 2014, 03:03:10 PM

DrApricot

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Quote from: iikun on September 11, 2014, 10:01:28 AM

Quote from: bitcoinvest on September 10, 2014, 02:08:48 PM

Quote from: iikun on September 10, 2014, 11:09:08 AM

Quote from: DrApricot on September 10, 2014, 10:45:33 AM

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

Quote from: bernard75 on September 10, 2014, 02:21:22 AM

I still dont understand why they dont release that damn claim form, its not like the forms or the situation will change anytime soon.

my thought is that the have found 100% what happened and trying to reopen somehow the exchange without anyone "hurts"..
So they have to find the best way to tell us "the truth" and give back to owners the BTC. This will take some time to write the senario etc....

Many threads of evidence do point in this direction. If so, then perhaps Mt. Gox can be reopened using Vircurex as the model under "mew" management and the watchful eye of JADA. The judge can dismiss the bankruptcy action, and there will be loud cheering all around. Time for a cold one!

We will still all be here come next year when Kobayashi finally gets off his ass & releases the claim form. (I bet that 6mil will be eaten up by his "fees" tho)

I want to mention about Japan..... that i am sure 1000% they want to clear the name and not having a black cloud above and i'm sure the investigation (i think it's over by now) will be very clear....

Personally I hope you are right instead of me, but I feel the Japanese investigation will be done to death so that they cant be blamed for anything. The Japanese are quite particular about that..think Patton vs Montgomery in WWII.

iikun

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Quote from: bitcoinvest on September 10, 2014, 02:08:48 PM

Quote from: iikun on September 10, 2014, 11:09:08 AM

Quote from: DrApricot on September 10, 2014, 10:45:33 AM

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

Quote from: bernard75 on September 10, 2014, 02:21:22 AM

I still dont understand why they dont release that damn claim form, its not like the forms or the situation will change anytime soon.

I think it's very simple...

Do you remember Vircurex situation?

Do that for a momment and again think MtGox

Recentrly received a big ammount of Cash from OkPay. Why send them to gox and not to clients? Huh

And investigation have told us is ongoing.

my thought is that the have found 100% what happened and trying to reopen somehow the exchange without anyone "hurts"..
So they have to find the best way to tell us "the truth" and give back to owners the BTC. This will take some time to write the senario etc....

my time in Japan tells me that this is absolutely not what is happening. Once a Japanese court has chosen to go one way they do not easily turn around. Ask this man:
http://www.theguardian.com/world/2014/mar/27/japanese-man-freed-death-row-retrial

Also, as to the question why the money is put into holding rather than being paid out, the answer is in the quote above from bernard75. They haven't established exactly who the clients are & who is owed what. So how could they possibly pay out??

optimism is good, but having blinders over your eyes looking for good to come isn't i'm afraid. We will still all be here come next year when Kobayashi finally gets off his ass & releases the claim form. (I bet that 6mil will be eaten up by his "fees" tho)

trully i don't see dreams about it or having blinders over my eyes. as i said it's a thought. your opinion might look right in same % with my opinion.
only time will tell

I want to mention about Japan..... that i am sure 1000% they want to clear the name and not having a black cloud above and i'm sure the investigation (i think it's over by now) will be very clear....

I think what you say about them wanting to clear their name is true in a sense, but I feel they will likely say btc is a young market, regulators cant be blamed etc etc, and at the end of the day the theft was (likely/certainly/) perpetrated by a French national.

Personally I hope you are right instead of me, but I feel the Japanese investigation will be done to death so that they cant be blamed for anything. The Japanese are quite particular about that..think Patton vs Montgomery in WWII.

DrApricot

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Quote from: JorgeStolfi on September 10, 2014, 03:44:58 PM

There are many people who would like to stop the liquidation and reopen MtGOX, presumably because they have dirty money in there, or don't want the truth about the "theft" to be found. But the court has already decided that there is no hope to let MtGOX resume and pay all its obligations, so the liquidation will go on.

This may turn out to be the singular case wherein something different actually happens. The legal system is being forced to deal with bitcoin, and It is very ill-equipped for doing so. More disclosure about the facts of the closure would be most welcome once investigations are complete.

There was a recently published Harvard Law Review article about Silk Road and Mt. Gox. It's conclusion was:

Quote

There is little doubt that Bitcoin and the multitude of progeny crypto-currency platforms it spawned have the potential to fundamentally change our conception of money. All signs point to it becoming increasingly accessible and popular—brick and mortar retailers have started allowing the use of Bitcoin at their stores, allowing consumers to transact with Bitcoin in the “real” world in addition to online. In order to continue its challenge to our traditional system of financial transactions, however, it must contend with and react to our traditional legal structures. Either that, or it must evolve beyond them. The Silk Road and MtGox episodes are early suggestions that crypto-currency technology will not be able to circumvent the traditional legal system entirely. As Bitcoin grows in prevalence, so does the law’s interest in being able to reach it.http://jolt.law.harvard.edu/digest/digest-note/the-silk-road-and-mtgox-lessons-in-law-for-bitcoin?utm_source=rss&utm_medium=rss&utm_campaign=the-silk-road-and-mtgox-lessons-in-law-for-bitcoin

DrApricot

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Quote from: JorgeStolfi on September 10, 2014, 03:44:58 PM

if not this will be written in modern History as the biggest inside theft....

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

If those coins were really stolen, I believe that the stolen amount (500 M USD) is already way more than the largest bank heist/robbery in history.

If it was embezzlement by the MtGOX management or staff, however, I doubt that it will be among the top 10 largest.

The issue is that we don't really know what happened. If Mt. Gox was running a Ponzi like Bernie Madoff then you might be right about the trading having taken place with non-existent bitcoins.

If they were running a fractional reserve, or essentially a bucket shop, then the trades were also derivative in nature, and might have to be evaluated similar to a Ponzi.

However, if they were running neither Ponzi nor bucket shop, and trades were based on real bitcoins held in escrow, then final balances seems to be a more just way to divide the 220,000 bitcoins held by the trustee on behalf of Mt. Gox depositors.

JorgeStolfi

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Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

Recentrly received a big ammount of Cash from OkPay. Why send them to gox and not to clients? Huh

Because they still don't know who the legitimate clients are, how much each is due, and therefore how big a slice of the leftovers (including that OKPay amount) each one will get.

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

my thought is that the have found 100% what happened and trying to reopen somehow the exchange without anyone "hurts"..

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

Claims are simple and i can't read anymore senarios... what you had available by the time closed? THAT IS YOUR PROPERTY and you can claim for it... all the others are silly to me... [ ...] they will (THEY HAVE TO) return our BTC back.

The balance in your MtGOX account not your property; it was only a promise by MtGOX that they would send you so many BTC and so many dollars if you chose to withdraw it all. Unfortunately, the spoils of MtGOX do not cover 1/5 of those promises. For months, if not years, their clients were trading with coins and dollars that did not exist.

Client preferences and their opinions as to what is the "just" division are usually irrelevant in liquidatons. The process is usually predefined very tightly so that the liquidator does not have to negotiate with thousands of creditors with different desires and opinions.

Check how the Bernard Madoff liquidation was handled. AFAIK the court ignored Madoff's inflated account balances and considered only the investor's deposits minus withdrawals. I am told that this is the standard rule for liquidations, in the US and in Japan.

IF Kobayashi chooses to rely the final balances, rather than deposits minsu withdrawals, he may choose to distribute what is left of the BTC as BTC. That has one advantage (saves him the work of auctioning them) but several potential legal problems.

However, to anyone who is not a fanatic bitcoiner, the demand to have the spoils returned as BTC rather than yen sound childish and irritating. "Do those guys want their wealth back, or do they want to keep on playing their silly bitcoin game even in the court?"

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

I don't know what will happen to non verified accounts

I would be VERY surprised if those accounts will get any consideration. The court will not deliver anything, yen or BTC, to people that are not fully identified.

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

if not this will be written in modern History as the biggest inside theft....

bitcoinvest

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Quote from: iikun on September 10, 2014, 11:09:08 AM

Quote from: DrApricot on September 10, 2014, 10:45:33 AM

Quote from: bitcoinvest on September 10, 2014, 09:35:53 AM

Quote from: bernard75 on September 10, 2014, 02:21:22 AM

I still dont understand why they dont release that damn claim form, its not like the forms or the situation will change anytime soon.

trully i don't see dreams about it or having blinders over my eyes. as i said it's a thought. your opinion might look right in same % with my opinion.
only time will tell

I want to mention about Japan..... that i am sure 1000% they want to clear the name and not having a black cloud above and i'm sure the investigation (i think it's over by now) will be very clear....