Firstly it has been claimed that they have freshly mined coins stored undistinguished from others. If someone withdraws an amount that draws from an address with new coins, that withdrawal will be delayed.
I'm not sure how those freshly minted coins get to MtGox in the first place (any such transfer would presumably be delayed). Assuming they do have freshly minted coins in their pools, That would be consistent of some short term delays. I have experienced delays that fit this model where a Hash for the transaction has been provided but the transfer does not arrive at the other end for a few hours. Anything affected by this mechanism shouldn't be delayed beyond 17ish hours.
There are transactions not going though for longer periods, The transaction hash is being provided. I have seen claims suggesting that transactions are failing because of a subtle protocol incompatibility, which would explain the fairly random nature of the failed transactions.
Lots of people are saying MtGox is out of funds and the sky is falling. The biggest problem with those claims is that people have been predicting the imminent demise of MtGox for quite some time. MtGox may be failing, but everything that happens cannot be a sign of imminent collapse if it keeps on going.
I'm not sure if the claims of MtGox running a fractional reserve on the sly are very valid. I think it's more likely that they have technical issues, but the very nature of Bitcoin means that they could potentially lose all their bitcoin through technical issues alone. If you lose a private key or transfer bitcoin to an address with a lost key, those coins are effectively gone. If your software isn't behaving it's quite possible to make an automated money shredder.
It's fairly obvious that at this point they need to do some fairly significant steps to demonstrate that they are in control of enough bitcoin. If they want to restore confidence in their ability to pay out, they should use Bitcoin's ability to demonstrate ownership to do just that. Restoring confidence in their ability to operate is going to be a longer road.
Both p2pool and eligius.st allow coinbase payouts to any address, and for arbitrary amounts. It's entirely possible for a person to set their mining address to their deposit one, and suddenly Mt Gox has unspendable coinbase transactions in their wallet pool. People frequently assume as you did that no spends would occur of coinbase transactions, and suddenly end up with broken systems because of it.
Here's one from p2pool, paying to 402 outputs (truncated for brevity).
"in":[
{
"prev_out":{
"hash":"0000000000000000000000000000000000000000000000000000000000000000",
"n":4294967295
},
"coinbase":"03435404062f503253482f"
}
],
"out":[
{
"value":"0.00174533",
"scriptPubKey":"OP_DUP OP_HASH160 7abdace1a0588adf6bc6673ea11ba2312285f1db OP_EQUALVERIFY OP_CHECKSIG"
},
[......]
]
edit: oh, you mean they're unspendable for the 100 generations it takes to confirm a coinbase.
They ran a business for a few years in obscurity then when they become a central figure in potentially a massive change in financial infrastructure they decide to run off with the silver? MtGox had the potential to be worth many billions if they were a significant service provider in a successful BitCoin scenario. They possibly still do to some extent if they can get their act together.
But it feels like they've been having withdrawl issues for like a year now, and since they haven't made any public statements about what's actually happening and what steps they are taking to rectify it, I've completely lost faith.
If MtGox needs frehsly mined coins to keep their exchange alive, they are probably dead. When and at which price did they spend their client's bitcoins so that now they have to rely on mining new ones?
Why? Well, according to Gox the Fiat withdrawal issues where caused by "ye olde banking system". But, you only had Goxes word for that. So considering all possibilities, including that they simply might not have the money, one needs to make a risk analysis, what would it mean if they didn't have the money?
Well, if Gox doesn't have the Fiat to process Fiat withdrawals, it stands to reason that in an effort mitigate issues, they would exchange (themselves) customer funds between fiat <-> coins in order to try to weasel themselves out of the hole. So this means that any liquidity problem on either side (coins or fiat) would manifest itself on both sides (coins AND fiat).
Once you can recognize that there's a risk that Gox might have liquidity problems, and that those problems can mean that you will not be able to withdraw your coins, there's only one logical conclusion. This conclusion you could have reached over a year ago, withdraw all funds in any way possible from Gox.
And if you didn't do that, well, it sucks, a lot, been there, done that, consider it to be a valuable lesson about dealing with banks in general.
Roger Ver, who is well respected in the Bitcoin world, also posted this video: https://www.youtube.com/watch?v=UP1YsMlrfF0
It's a little creepy though, like he's being held at gunpoint, forced to read a statement...
I agree it's risky to keep money in a Bitcoin exchange that's showing signs of trouble.
Yes, that video looks like Roger is held at gunpoint by his captors forced to read a statement. Obviously, that's not what happened. However I believe that Roger had a choice of how to deliver his statement. And obviously, if he had seen something to suggest that there would be liquidity problems, or if he was unconvinced, he couldn't have said so. Gox would've probably sued him in the ensuing bank run.
Still, he went there, looked at it, and had to get the news out. So how to do it in a way, that doesn't make Gox sue him? Pretty much exactly how Linus did admit that NSA has approached him. Do it in a way to leave you least open to being sued, while still getting the message across.
And that's exactly how many interpreted this statement of Roger.
Look at his eyes, he is actually reading the statement.
1. Stop all deposits until the issue is resolved.
2. Stop all withdrawals and then process all those that were already made - manually.
3. Only then try and fix the bug.
4. Reopen with no fees and some other nice things for customers.
All steps should be accompanied by a statement explaining everything thoroughly. Even that course of action wouldn't necessarily restore confidence, but it wouldn't destroy their business.
If they're not doing this, it means something else is up and they are not to be trusted. At this point, their business is done anyway (unless they do the steps above like right now). The question is, will people see their BTC. My bet is not. But who knows.
2. I don't think they can undo the already sent coins. If it really is because of using coinbase outputs, the transactions will confirm eventually (100 generations = ~17 hours?). Sending the money again would cause a double withdrawal.
3. Why? The faster it's fixed the less issues for them
2. There are no transactions on the blockchain. All withdrawals are stuck within MtGox.
3. People who withdrew money don't care about the fix, they care about getting their money back. Start paying now or say goodbye to your business. This is no game.
Apparently they have done just that: https://www.mtgox.com/press_release_20140207.html
Don't get Gox'd, use a better exchange.
Interestingly, a bug (and maybe margin trading exploit) took down trading on Bitfinex earlier tonight and withdrawals are currently halted. Before this I've never had any issues with the exchange.
The last few months dealing with bitcoins have made me realize how important it is to have your money insured.
Your account has been restricted from accessing funding options. Please contact support@mtgox.com for additional information on why your account has been restricted.
I've tried contacting their support, but no luck so far. I have never used BitInstant and I was verified before.
Anyone else having similar issues?
If they do not do this, we must assume that they are insolvent and have lost their customers' coins.
Also, it's less likely to be a lie if they do it sooner rather than later.
I'm not blaming the victims here, just can't understand the reasoning behind. Then again, I have never used MtGox, so I might have been missing something.
MtGox hasn't released any official statement except this one: https://support.mtgox.com/entries/26128504-Update-Statement-...
No proof of having enough funds, no explanation.
The reference page mentioned their "hot wallet" went dry (presumably it ran out of coin) and someone went to their offline storage and took out the USB stick with the offline wallet and will drive back into town and put some coinage into the account.
I suppose if you knew who the Mt Gox folks were, and you had enough BTC you could try to 'stage' this ala Oceans 11 or the Italian job but given the challenge of moving really large quantities of BTC into fiat currency I'm not sure that makes sense.
One of the things that is really fascinating about the BTC ecosystem is that all of this stuff happens visibly, unlike private banks where they just find the guy who embezzled the money shoot him and drop him off a pier or something.
I don't know if that specifically is still an issue, but the MtGox scanner site suggests that their implementation fails to implement a bunch of other edge case rules around fees, sizes, and canonical signatures.
It seems very likely to me that for some reason Mark K is not able to work on his codebase anymore, and isn't able to resolve bugs in a timely manner, leaving his support staff to try and clean up the mess by making horrible hacks like "throw away and retry later". The question in my mind then becomes - where is Mark and what is he doing? "
It didn't even make sense to use them as a new user, the price of BTC was considerably more expensive than other exchanges!
I think in part it's caused by the media always refering to MtGox for price information as they have the longest historical data and inadvertently providing MtGox with a lot of free promotion.
I wonder how sites like eToro who allow you to trade Bitcoin pegged on MtGox price will be impacted if MtGox really is insolvent.
To me the simplest explanation for all the problems MtGox is suffering is that they are insolvent.
Sell price was ~$100 more on MtGOX than on other exchanges. If you have ten bitcoins you want to sell, that's $1,000 more if you're willing to wait 6 weeks for MtGOX to send you your money.
Now that avenue is apparently closed, too, so it will be interesting (to say the least) to see how this plays out.
An alternative hypothesis very popular in the community: Mt. Gox has been functionally insolvent since the US froze about $6 million in their accounts when they closed the US subsidiary for being a money laundering operation, and Mt. Gox has been delaying hard-currency withdraws to the majority of their customer base to buy time until their transaction fees make them solvent again.
A point in favor of the alternative hypothesis: I don't have to be an idiot to believe it is true.
Another hypothesis I'd grant greater than zero credence to: Bank: "We think you're a money transmitter." Gox: "Really!?" Bank: "Certainly looks like that." Gox: "We prefer to think of ourselves as a technical firm which is compliant with all the laws of Japan as long as nobody asks any pointed questions." Bank: "No technical firm requires more than, say, 10 outgoing wires per day. If you need more than that, we need to ask some pointed questions."
It was, as they say, to good to be true.
Anyone who's banked in Japan wouldn't be surprised at all to hear that.
This is a country where the only ATMs that take foreign cards are the ones at 7-11. All international transfers are performed by hand, on paper. They'll call you at home to ask you the reason for your transfer. What company other than Mt Gox sends out thousands of international wires per day? Everyone else has foreign subsidiaries to deal with that. And we all saw what happened when Mt Gox tried that...
That said, that's no excuse for people to attempt to use them as a customer. The lack of transparency this far along into the problem has made me lose any faith in them as well. They seriously can't even give you a queue number and ETA on your transfer?
[0] - http://www.dailymail.co.uk/money/saving/article-2168701/RBS-...
[1] - http://www.dailymail.co.uk/news/article-2517106/NatWest-RBS-...
You have all the problems of a normal bank run, and* the problems of being a regulatory gray area, and no political or regulatory bailout mechanism available. There is also the constant risk of technical failure or criminal activity losing all your assets beyond all possibility of recovery.
* Eventually. Not immediately, after a period of a few years.
Mt. Gox is not covered by the formal or informal guarantees to make creditors whole which the Japanese government customarily extends to regulated depository institutions. Mt. Gox has been, let me be delicate, cagey about their extent of involvement with Japanese regulators.
Should Mt. Gox abscond with your money, you will certainly have civil torts available. You can pursue them in any court of competent jurisdiction in Tokyo. This will take 3 to 5 years and cost you several hundred thousand dollars. I'll save your competent legal representative some time and cut to the chase: vindication in court will not enable you to recoup a single yen.
So many good alternatives:
VaultOfSatoshi.com, Bitstamp.com, Kraken.com, etc..