Post
Topic
Board Service Discussion
Re: Mt.gox story
by
Bitnicity
on 10/02/2014, 16:50:30 UTC
1. Purposely raise the price of BTC, attract traders come to Mt.gox and deposit BTC. Market situation: Sell >> buy;
... and how did they do this, exactly? They could try to buy BTC with their own cash reserves (which I'm not sure they had enough cash to do), or they could adjust everybody's buy/sell orders up a bit, but someone would notice and call attention to it, and I haven't seen *that* happen, either. So, explain to me how they can magically cause BTC sellers to have more cash in their pockets after selling at MtGox.

Keep in mind that what you're describing is the same as when countries try to enforce a certain exchange rate for their currency versus another country's currency. In just about every case, it fails. The central bank just isn't big enough to outweigh the whims of the rest of the market.

4. Mt.gox sold customer's 40,000 BTC, and block withdrawing BTC;
Where's the record of this sale in the blockchain? How do you know it's 40,000 BTC? Where's the evidence that they've sold any depositors' BTC or that 40,000 BTC was what they had to sell?

I'm not sure Karpeles is insane enough to gamble like that with depositors' assets. Keep in mind that BTC is a preferred currency for those who don't care much for laws (Silk Road, anybody), and, in this age of the internet, it's getting increasing difficult to hide from people who want to track you down. Surely, Karpeles woud know that, if he went down that road (of gambling with other people's money), it would end with him bleeding out in a dark alley somewhere.

Like I said... I can't imagine that he's that crazy.



they don't need to have cash reserve to buy your coins, and the same applies that they don't need to have btc reserve to sell you btc. that's the grand magic and beauty of running an exchange where you can play around 'fractional reserve' trick, so long as you could estimate the relative inflow/outflow of fiat and btc into the system, you can very easily manipulate the system, because you as an Exchange have all the information regarding your actual clients fiat/btc balance. All the trades can be manipulated (give you an example, assuming I am the Exchange, I don't have any dollar but I create a buy order to purchase 1BTC from you for $700, I credit that $700 into your account, so long as you don't withdraw that dollar balance, you will not notice that I don't have the fund and the trade is actually fake) . But often times, it fails to work because your estimate may deviate when some unexpected inflow/outflow cause systematic  imbalance, hence lead to "bank run" and screw up your scheme, i believe this is what happening now at Gox.