Topic: Open Letter to Mark Karpeles: Voluntary Reorganization is the Best Option for Us (Read 4456 times)

I have no gox account, i saw red flags before i ever registered.

Nevertheless I like the gist of this open letter, if done properly this could be THE ultimate showcase for blockchain tech, not sure tough if Karpeles fits in this plan as CEO.

http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft

The $20M is on the Crisis Strategy Doc (actually its $22.4M USD -  but with other assets it makes a total of around $33M)
Total liabilities $55M + (744K BTC * current price on stamp) = $501M


At current Bitcoin prices looks like  they will be paying out liabilities at 15 cents on 1 Dollar (15%)  ($500M/$33M)
Which means Bitcoinbuilder should be trading at 0.066 for break even (Though I wouldn't touch it anymore, even at .01)

No one knows yet the situation of MtGOX.  

According to rumors, the account balances (debts) with no cover are at least 400 million dollars.

User @twobitidiot (at reddit?) says that he sold all his bitcoins after learning of the situation. Claims that Mark approached three investors but they ran away when they began to realize the extent of the damage:

http://two-bit-idiot.tumblr.com/post/77920927310/i-retract-nothing-i-have-written-so-far-regarding-mt
http://two-bit-idiot.tumblr.com/post/77967162725/breaking-full-mt-gox-story-coming

Do you have a source for that "20 million" of assets?

Fulltiltpoker is almost a carbon copy of this case except they were flat broke, at least gox has 20 mil

 This could be an opportunity to build and have a bitcoin exchange like no other. With full transparency, audited by trusted inspectors appointed by an elected committee ..and so on, governed by rules selected by all the shareholders (thousands of users)

Wouldn't be unfair that 5% of  the users will get their full share back (just because they sued) and the rest not ?

As far as I remember things don't go like this : Company x with 100 users goes bankrupt. 2 users have layers and sue and get their money back and the rest of the 98 get nothing.
I think in cases like these the company is forced by a judge to issue a statement on their website like : All the users affected should contact us for a refund.. Or something like that.

It's not unusual for a company to be taken over by its creditors and restructured with the creditors holding equity. It's rare when the creditors are small and numerous.

There's one famous historical success - Volkswagen AG. Volkswagen was originally financed, during WWII, by German civilians pre-paying for cars that were never built. After the war, those car buyers got stock in Volkswagen AG. This worked out very, very well for those who held onto the stock for a decade or more.

But that's a manufacturing company. Mt. Gox, as a business, doesn't do much. They have no manufacturing plants, no large skilled workforce, and, at this point, no active customers and negative brand value. So the value of Mt. Gox as an ongoing business is very low, and there's little value in keeping the business going. What matters is recovering the assets, cash and Bitcoins, they have left, before the people who created this mess squander them.

This plan is intriguing.  Are there any antecedents?  Examples of failed companies that were taken over by co-ops of their former retail clients?

I see two problems with this plan:

* If there is going to be a haircut on withdrawals, any BTC or USD in the accounts is worth only a fraction of their nominal value.  Suppose MtGOX's current assets are only 20% of the total balance of their clients' accounts: then the exit haircut would have to be 80%, so having 100 BTC and 2000 USD in your account is the same as having 20 BTC and 400 USD elsewhere.

In that case, the inverse haircut would have to be applied on deposits: if someone brings in 20 BTC, he should have 100 BTC credited to his account.  (Otherwise only naive investors would deposit, and they would lose 80% of their money when they did that.  It would be a scam, pure and simple.)

But then, if one had haircuts on exit and their inverse ("wigs"?) on entry,  the clients would be trading fictitious goxBTC and goxUSD that are worth 20% of their real counterpats.  What would be the point of that?

It would be more sensible to take the haircut right away, that is, all current account balances are reduced to 20%.  The net effect would be the same, but your balance at the new MtGOX would be in real BTC and real USD, not in fictitioulsy inflated goxBTC and goxUSD.

* Some clients may choose to sue MtGOX for their whole balance in real USD, instead of joining your plan that effectively haircuts 80% of it.  If the lawsuit suceeds, the fact that the company has new owners will make no difference, and money would be subtracted in full from its assets, before these are distributed among the new owners.  

Uttimately, 80% of the money recovered by litigating clients would have to come out of the balances of the clients who joined the plan.  Thus the haircut of the latter would end up being more than 80%.

Already did a few minutes ago. Its clear to me that something criminal has been going on at Mtgox for a while and like you said, its most probably involving many other people.. not just Mark, I would not be surprised if the foundation was involved.

Read this:

http://jesse.forthewin.com/blog/2014/02/unilateral-statement-regarding-fucked-up-shit-and-the-greater-good.html

Scroll to near bottom and read the propositions, point 1.

Gox was robbed of a massive amount of coins (800k+) at some prior point in time, possibly June 2011, and has been operating a fractional reserve since.

If everything was stolen in 2011, then we could possibly see a massive cover up unveiled, involving more people than just Karpeles. I fail to see how only he would notice the theft of 800k coins.

I dont know about you all, but I do want to see Mark locked up. He has been allowing people to trade on his defunked site for months knowing full well that they dont have the cash or BTC to cover the trades.

Off with his head! 

He works on BTC IOU's lol

Why not help people set them up and just link it to your own mining account? lol  "Here use this config file"

Good question. He has an entry in Martindale-Hubble, the legal directory, but it doesn't give a firm. He's in New York; admitted to the bar in 2011. Went to Brooklyn Law School. One source has him listed at Robinson Brog, an NYC firm, but he's not on their current attorney list. So he's not a prominent or experienced attorney.

Wouldn't be the first, nor the last 

I'm tempted to send him a message asking for help setting up a GPU miner...

He was going with the joke..

Humor awareness fail

...


Fail.

I'm one of those grammar Nazis that just stops reading whatever the debate is as soon as I see elementary spelling and grammar errors.  It's a heavy burden.

No itz alright. Thanx bitconminor!! 

(Moot, moot, moot....)

https://twitter.com/ProjectGox  < follow, retweet etc etc

Technicality speaking, your correct.

Moot point.  Sorry.  This drives me nuts.

Whatever plan you have now, First you need to find Mark and let him listen to you, which seems to be quite difficult.

He denied to tell the public what is happpening and what he is going to do, that is the worst thing.

This would be great ! I hope it goes through. It would be a great example to the whole world. Bitcoin would truly be on every newspaper.

This would be a good start.

if you wanna support this project chatroom:


irc channel ##mtgox-statement

I would like to see Mark go to jail then we discuss about reorg. He just can't go away without punishment, i don't believe he is innocent.

It's a bit of a mute point to carry on but of course he has some somewhere. If you had been involved in Bitcoin for all that time, running the biggest exchange, making the most BTC, would you never have taken some off the exchange?

He is having trouble admitting clearly that everything is gone although it's clear that's what he is going to have to say. Of course he is not going to say "Some of my BTC is on Gox, and some is in my personal cold storage".

Anyway as I said its not such an important point (to me anyway). Whatever he says I'm sure he has something somewhere for himself. The big question is where is the Gox balance?

He states on that irc talk that every btc he have is on gox.

http://www.wickedfire.com/shooting-shit/179038-my-conversation-mark-karpeles-mtgox-2.html#post2164682

He also has a stash somewhere of course. I don't think the 700k but let's just say a very healthy retirement fund that he has been carefully building just like every other Bitcoiner tries to do.

If he really loses 750k btc he have no right to benefit from this deal, he should step away and leave the company so the new managment try to clean up the balance sheets.

WHat is in for him is not financial, it is peace. I think it worth a lot more that millions of dollars and the fear of murder at every corner.

its obviously realistic he has to get something from the deal no?

You are right, I think this is only an option if he steps down and leave everything. It would be a honourable thing to do, but until now history has proven that the CEO never take the financial hit.

As long as Mark Karpeles is the CEO, there is no future for Gox.
So, why ask him to come back and repeat history once again in 2 years' time?
Just let the auditors go in and see how much money is left inside first.

He have a wife, kid and a cat.

He have much to lose if he just runs. Japanese authorities are in the matter, he would face years of lawsuits and verbal abuse from angry customers, possible jail time if fraud is proven, there is a lot for him to gain by accepting a debt for equity swap, not financially, but at least he could move on with his life not fearing what could happen to his beloved ones.

That is all very good for debtors, but what's in it for Karpeles? There is not much incentives for him to carry on, the best for HIM is still to take his money and leave, isn't it?

Who is Daniel J. Kelman?

I don't think this sentence applies to many people who lost funds to the gross incompetence and potentially fraudulent behavior of Mark Karpeles and co.

It seems viable to me.

I'd be fine with converting my BTCs into shares or withdraw limits etc.  I'd be happy to be involved in the project also.  

Others arent going to want to take a haircut i guess - even though gox is already short on funds.

Legally this can be done despite gox facing issues, pokerstars bought out fulltilt when it faced legal issues + fulltilt had zero funds.

 

http://www.reddit.com/r/Bitcoin/comments/1yyrvf/open_letter_to_mark_karpeles_voluntary/

Dear Mr. Mark Karpeles,

We are your investors. We are writing you this letter to inform you that we forgive you for the unfortunate demise of Mt Gox and we do not want to see you go to jail. We are also writing you to inform you that we have a proposal to save Mt. Gox and provide the Bitcoin community with what it truly needs: an exchange that has the trust of the entire community. This can be accomplished through a voluntary reorganization of Mt. Gox resulting in your depositors being granted shares in the new exchange.

The ideas behind Bitcoin are bigger than our personal stake and the numbers in our accounts. These ideas are bigger than the 750,000 Bitcoins that may or may not have been stolen from Mt. Gox and are bigger than Mt. Gox itself. The world is watching Bitcoin right now and waiting to see how we handle this. There are those who would love to see us panic and devolve into an angry mob stricken with personal greed and out get every last coin possible. But we are better than that. We know you are, too. This is why we are taking the first step and forgiving you for the mistakes that resulted in the current losses we all face, provided you agree to do what is necessary to make us whole. At present, the first step is to discuss the voluntary reorganization of Mt. Gox taking us on as shareholders. We are putting the idea of Bitcoin ahead of our personal stake because we believe in it, do not want to harm it, and believe that cooperation represents the best method for recouping our losses. We know you agree.

We have a long term vision of Bitcoin, as we believe you do as well. We are open to many suggestions as to how to resolve this, but at this point we believe the following points embody our best options: (1) shareholders should be offered a stake in the new company on a pro rata basis based on their holdings in Mt. Gox (we can come up with a formula for valuing Bitcoin denominated holdings later); (2) those who wish to leave should be offered a haircut. There are many details to be worked out, but this is the essence of the plan. It is a plan that will benefit your depositors, benefit yourself, benefit Bitcoin and benefit other virtual currencies. Most importantly, it will show the world we can regulate ourselves in the face of great adversity. Our ability to self-govern in this time of crisis will serve as a model for other governments and organizations the world over.

We welcome an open discussion about the possibilities for resolving this in a manner that benefits the Bitcoin community and movement as a whole, and balances those interests with our right to compensation while recognizing that you are human. Please restore our faith in yourself and in Mt. Gox by accepting this invitation to discuss our situation.

On Behalf of any Mt. Gox Depositors in Agreement,
Daniel J. Kelman, Esq.