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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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(Score: 2) by mth on Tuesday March 04 2014, @06:54PM
If they participated in trades with their own money, acting as a market maker would still have no impact on being able to pay out the user accounts. If they traded with their customers' money, it is possible that trade losses would reduce coverage for user accounts below 100%. (I don't know the correct bookkeeping terminology, but I hope it's clear what I mean.)
At some point MtGox controlled such a large portion of the bitcoin exchange market that they would have been able to steer the price by injecting their own trades. Later their share diminished and they would no longer have had the opportunity to do that.
So while it is of course still speculation, your theory at least makes sense.
One thing that is mentioned in various different analyses is that they may have been running without insufficient funds to pay out all customers for quite some time, but they were able to cover it up because more money was coming in all the time. Only when people started pulling their money out they collapsed. In other words, the root cause may well be unrelated to recent events.
I'm curious what the bankruptcy investigation will turn up.
(Score: 1) by Non Sequor on Tuesday March 04 2014, @11:29PM
I think we're on close to the same page.
To be clear, I doubt they would have paid trades with any kind of money they are holding for a customer (trade completed but not withdrawn) but I believe paying a 100 bitcoin seller with the inflow from a 100 bitcoin buyer is, in itself, kosher. I'd expect nonkosher actions would have run them into a wall sooner than they did.
But I think it's plausible that: they could write an exchange platform, that platform did not have any glaring issues, but eventually they ran into a ditch because they lacked funding and risk controls to keep things operating when the cashouts substantially exceeded buyins. If that's the case, then this should just be regarded as the expected outcome of an ill-advised adventure.
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