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MtGox (in)solvency

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#1 David Strayhorn

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Posted 03 February 2014 - 09:48 PM

MtGox withdrawal delays have spread from the USD, not only to other fiat currencies including the EUR and the JPY, but now to bitcoin. According to several discussions in places like reddit and bitcointalk.org, there is a backlog of broken bitcoin transactions totaling in the tens of thousands of bitcoins. I personally have been waiting for over a week on five BTC withdrawals, totaling to quite a large sum, that never made it to the blockchain due to double spending. The probability that technical difficulties explain these delays appears to be vanishingly small, making insolvency appear to be more and more of a concern.

Question: Given that MtGox is one of only two Gold Members of the Foundation and is proudly displayed as such on the Foundation website, are there any actions that the Foundation can and should be taking regarding this issue?

#2 John Wnuk

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Posted 03 February 2014 - 10:18 PM

I just did a transfer from Mt.Gox, and it showed up immediately in the Blockchain and as Pending at the destination. If you have a problem with Mt.Gox, did you submit a trouble ticket?

Edit 2/5. Another transfer attempt on 2/4 did not work. I submitted a trouble ticket that has not yet been assigned. Checking the Support Home location, Mt.Gox has the following message:

"As noted recently, we are currently experiencing a problem where some bitcoin withdrawals are not being transferred correctly, affecting a limited number of users. Currently the problem is being fixed, but many previous transactions did not go through over the past days. Those transactions have now been returned to customer accounts in full, so any transactions that appeared to be "stuck" should now be refunded.

This problem applies primarily to larger transactions, so we appreciate your patience as we fix the issue. Smaller transactions should be fine in the meantime, and we will update you on the status as soon as possible..."

Edit 2/7. The good news is that my bitcoins are back. The bad news is that I can't do anything with them until the "stuck" problem is fixed. Mt.Gox is targeting on 2/10 for the fix. Some on this forum seem to understand the cause of the problem. I hope they would find a way to help resolve the problem. In the mean time, the recent drop in value makes it a great opportunity to buy low.

Edited by John Wnuk, 07 February 2014 - 04:06 PM.


#3 David Strayhorn

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Posted 03 February 2014 - 10:33 PM

The withdrawal process is very hit or miss. Of twelve withdrawals, I had seven go through just fine. My experience is not unusual. One of the longstanding members of bitcointalk.org, rpietila, claims in this message post https://bitcointalk....0149#msg4900149 to have been waiting for over 8 days on withdrawals totaling over 500 BTC. According to this website http://skanner.net/MtGox/mtgox_tx.php (which uses data supplied by MtGox) there are currently 1860 broken withdrawals.

I submitted five support tickets, all over one week ago, and received a canned response four days ago. Again, a similar experience is reported by many users on the forums.

#4 Mike Hearn

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Posted 04 February 2014 - 09:37 AM

Mt Gox has a custom reimplementation of Bitcoin that is known to be quirky and non-compliant in a bunch of ways, for example, it used to overlook the coinbase maturity rule. That means miners who use custom software to send money to MtGox immediately, without waiting for confirmation, didn't get spotted by the MtGox software. When they tried to respend the newly mined money, the transactions failed to propagate.

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?

#5 David Allen

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Posted 04 February 2014 - 06:38 PM

View PostMike Hearn, on 04 February 2014 - 09:37 AM, said:

....The question in my mind then becomes - where is Mark and what is he doing?

As he is a Board Member for the Bitcoin Foundation this is a very reasonable question.

#6 Oliver Egginger

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Posted 05 February 2014 - 12:07 AM

View PostMike Hearn, on 04 February 2014 - 09:37 AM, said:

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?

Does anybody have contact with Mark?

#7 Bruce Fenton

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Posted 05 February 2014 - 11:07 AM

John W - the problem goes far beyond a double submission or user glitch....the issues are well documented and last week there were over 36,000 Bitcoin missing from transactions people tried to withdraw.  It's very serious and well documented by people and sites.  Some have been waiting 3-4 months for a Bitcoin transfer to another address.  

The lack of response and communication by Mark and MtGox is stunning.   One must wonder what he does all day....$20 mm+ is essentially missing or not in control of the people who are supposed to own it and there have been about three paragraphs of communication in the last two months.



#8 Pierre Rochard

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Posted 05 February 2014 - 03:40 PM

Perhaps our friend Benjamin Lawsky could help out, he's got some experience in these matters: http://www.bloomberg...ozen-banks.html

#9 michael staffen

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Posted 05 February 2014 - 04:21 PM

hello, I think this is a very terrible situation not only for myself, as I am awaiting 2.75 bitcoins that I tried to withdraw last Tuesday, but for the bitcoin as a currency. There will be many people including  myself that will be disheartened if these problems do not get resolved.  What did this guy get taken by the mob, is  he  just totally stressed out?  I would be in a panick and would likely just walk  away if I were in his situation, which brings me to think this is very bad indeed. All I know is I want my bitcoins and so do many others, I have been prepared to start making a big hell raising stink about it but I do not want to cause a "bank run" on mtgox as that will not help the situation either.  
It is only a matter of time that this starts to really unfold.

#10 David Strayhorn

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Posted 05 February 2014 - 05:39 PM

I am not a Board member but if I were, I would imagine this would be a difficult situation to deal with. On the one hand, I doubt that the BF has any authority to, say, perform an audit of MtGox finances. On the other hand, by doing nothing, the Foundation may be rightly viewed as supporting a bona fide ponzi scheme. I do not use this term lightly but in this case the term applies. MtGox continues to take new customers and continues to open new methods to make unlimited deposits. Although perhaps nobody other than Mark knows the financial state of affairs of MtGox, there is plenty of publicly available evidence to raise suspicion of insolvency. People new to bitcoin see MtGox as a Gold Member of the Bitcoin Foundation with Mark K as a Board Member and will justifiably assume that the Foundation lends its endorsement to MtGox. If things end up badly for MtGox, then in hindsight the Foundation may be judged as negligent to have turned a blind eye to mounting suspicions while continuing to give its endorsement.

What I think the BF should do is, first, to make an aggressive effort to contact Mark and assess the reality of the situation. If Mark is MIA then it would be in the best interest of the Foundation to state publicly (or at least to state within this forum) that he cannot be reached despite the best efforts by the BF to contact him, and if there are any bylaws that would allow for his suspension then they should be given strong consideration. Second, if Mark is either incapacitated or insolvent, or both, the Foundation should do whatever it can to a) help him out (in a technical/advisory capacity, not financially) or b ) facilitate transfer of ownership and/or management of MtGox to a more capable entity. I doubt that the Foundation wishes to take responsibility for the financial workings of all of its corporate members. However, MtGox is a special situation, given its role in the early history of bitcoin, and I would imagine that Foundation members know enough of the players to tackle this particular problem.

#11 BODT Christian

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Posted 05 February 2014 - 06:10 PM

This lack of communication or credible explanation is not acceptable. This has been during for too long.
Mark Karpeles should resign from the foundation board.
Reddit thread:  http://www.reddit.co...ation_on_mtgox/

#12 Ronaldas Budrys

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Posted 05 February 2014 - 06:15 PM

Just some information:

I have sent the required documents (notarized and apostilled) in order to get the "Trusted" status for raising the trading limits 2 weeks ago. After sending them out, I have raised a support ticket just to clarify what is the ETA to process the docs/request once they receive them. This was done on the 4th day after the post sent out but the documents were still on route when I checked the post order status as it normally takes up to 10 days for the post to receive their office in Japan. However, they have immediately responded to my ticket and replied that I have now got the "Trusted" status and asked how much I would like my limits to be raised up to. I have responded and they raised them and I have received a confirmation from staff too. Then again I have checked post order status and it was still on route. That said, they have approved me without checking my documents and ensuring I am eligible to be approved for "Trusted". This made me wondering why they are so incompetent from this perspective. Just assuming now they are really responding to the queries where they see an opportunity to get the new deposits.

#13 David Strayhorn

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Posted 05 February 2014 - 06:43 PM

MtGox has a brand new bug today on BTC withdrawals:

"Invalid bitcoin address, please confirm your input"

I am getting this message with tiny withdrawals to perfectly valid addresses, including one that I used successfully in the past for btc withdrawal. Others are getting the same error as well.

#14 Mike Hearn

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Posted 06 February 2014 - 12:17 PM

That apparently can happen when their hot wallet runs dry.

#15 David Allen

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Posted 06 February 2014 - 02:37 PM

Ok, Jon Matonis.

As the executive director of the  Bitcoin Foundation, can you please tell your members how and when you last communicated with Mark K?

#16 Scott Stevenson

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Posted 06 February 2014 - 03:33 PM

Not too comfortable with all the news about MtGox, so i got up in the middle of the night to transfer out my BTC out of MtGox that I parked there a few months ago (wanted some diversification to where my BTCs were located).  I am a verified MtGox user and thought "hey no problem", my BTC transferred almost instantly from Coinbase to MtGox, so moving it out should be just as easy and fast.  8-hours later, my MtGox balance shows $0, but  the Bitcoins are somewhere in the "netherworld".  Also, MtGox indicated they would be charging me a fee to move it out, huh? .

I did get a transaction hash, but that's worthless to me unless I can spend it.  It's like having a basic description of the big city mugger who just robbed you. What am I going to do with that info, go to the police and say "hey some dude in a baseball cap just robbed me"?  What can they do? Take a report and look for everyone with a baseball cap?  

Hopefully its just a delay tactic on MtGox's side, maybe their servers are slow, who knows, but from my point of view I don't care. Selfishly, all I care about is "Where's my BTC?"

My fear is that if MtGox goes down, this entire Bitcoin experiment may be short lived.

Stuffing $100 bills into a mattress, starts to "feel" safer than vanishing (or temporarily missing) BTC.  I kind of feel like I don't really know where my BTCs are and if they are ever really safe.  So as a novice at all of this, I guess a paper wallet will do, but every time I look into making one I am made to feel that "someone" is watching my computer and will copy/lift my private key.  I feel kind of stuck to diversify all my BTC all over the place and hope that any individual wallet, or Coinbase/MtGox type company is secure.

Although I am not as technical as most of you, I am no dummy, so if Bitcoin makes me uncomfortable, good luck with the masses.  People don't like to feel insecure about their "money" or that their spending power is unsecure.  Just my 2 µBTC.

Oh and of course, where's Mark K?

#17 David Allen

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Posted 06 February 2014 - 03:38 PM

A better question is Where is your Board, Bitcoin Foundation?

https://bitcoinfound...on-news-please/

#18 Tom Wilcoxen

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Posted 06 February 2014 - 03:51 PM

View PostScott Stevenson, on 06 February 2014 - 03:33 PM, said:

...So as a novice at all of this, I guess a paper wallet will do, but every time I look into making one I am made to feel that "someone" is watching my computer and will copy/lift my private key.  

Not to sidetrack the topic too much, but I went through similar pains. I did create an offline wallet with a watching wallet in Armory, but it's a pain. I just received my PiperWallet a few days ago and it's pretty nice -- easy, offline paper wallets with nobody looking over your shoulder. I keep most BTC there, with a little at Coinbase and Blockchain for daily use.

Hope your BTC show up!

#19 michael staffen

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Posted 06 February 2014 - 04:07 PM

Hello, an update on my MTgox bitcoin withdrawl situation. They sent an email this morning and have redeposited my 2.74 bitcoins in to my account and I will attempt to withdraw them today. I will keep you all updated.

#20 David Strayhorn

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Posted 06 February 2014 - 04:17 PM

View Postmichael staffen, on 06 February 2014 - 04:07 PM, said:

Hello, an update on my MTgox bitcoin withdrawl situation. They sent an email this morning and have redeposited my 2.74 bitcoins in to my account and I will attempt to withdraw them today. I will keep you all updated.

Yesterday MtGox redeposited stuck withdrawals that were older than around 7 days I think, including all of mine. My subsequent 0.1 BTC test withdrawal got stuck, and unfortunately the withdrawal success rate appears to be getting worse and worse, from data posted on the forums by users who are doing numerous tiny test withdrawals.  Stuck transaction outputs from MtGox has risen from ~ 30,000 btc to just over 61,000 btc in less than 24 hours according to data here:
http://coinsight.org/mtgox.html

I really do hope that this issue is getting kicked up the BF food chain.



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