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unitron writes:
"Via Twitter, Cmdr Taco passes this along
'A crazy theory, MtGox had its btc seized by us govt during Silk Road investigation, but gag order prevents disclosure'
The actual article, by Chris Pacia (who links to and credits PuffyHerb on Reddit for most of the thinking behind it), is here:
http://chrispacia.wordpress.com/2014/02/28/this-is -what-most-likely-happened-to-mtgox/"
[Ed's Note: The paragraph above is pretty much how it was received. I leave it up to the readers to draw their own conclusions on the plausibility or otherwise of this report and the linked article. It is, by its very nature, speculative but worthy of further discussion nonetheless.]
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A Theory - MtGox Was Mugged by Uncle Sam
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Future looks spotty. You will spill soup in late evening.
(Score: 5, Informative) by Papas Fritas on Monday March 03 2014, @06:04PM
(Score: 1) by goose on Tuesday March 04 2014, @08:48AM
In addition to the above (in the link), it occurs to me that all exchanges *have* to be doing something dodgy to cover the spread between what the BTC was worth when deposited and what it's worth when withdrawn. For example a BTC deposited when it is trading at $35 might be withdrawn when it's worth $900; should the exchange be running some sort of fractional reserve system (even if it is a large fraction) it would soon collapse due to the currency deflation.
Of course, perhaps the exchanges make all their money on fees for withdrawal/deposits, in which case it might be cheaper to simply put money in the bank and pay via EFT. Either way, there's no need for exchanges and no way for them to run in the black. Normal banks are able to run in the black due to using the deposited money to make more money and relying on slight inflation to ensure that their costs are met. BTC exchanges do not have this functionality.
It would be better if the other exchanges (who the BTC'ers keep calling "reliable" and "trustworthy") post their trial books so we can see exactly how they make enough money to stay in business. The silence from other exchanges on how to make money out of running an exchange is very telling.
(Score: 1) by Non Sequor on Tuesday March 04 2014, @11:04AM
See this post:3 80 [soylentnews.org]
http://soylentnews.org/comments.pl?sid=410&cid=10
Long story short, the entity that's missing from your picture of things is a market maker: someone who has enough dollars, bitcoins, and patience to take both ends of any incoming trade request. The market maker absorbs the risk of price moves between the time a buyer is found for a seller or vice versa, but there are methods to hedge these risks (although those methods may be hamstrung for a developing market like bitcoin).
It's sounded to me like MtGox never had deep enough pockets themselves or from other sources to provide their exchange with an adequate market maker. Trying to make an exchange work without one would be a futile exercise, as would trying to play at being a market maker without the resources and risk controls needed to make it work.
Write your congressman. Tell him he sucks.