Quote from: BITCOIN-PIZZA-DAY on February 26, 2014, 06:38:50 PM

https://bitcointalk.org/index.php?topic=83794.0#post_toc_21

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The event's scale was widely disputed; some report a theft of almost 500000 BTC due to related account hacking. However, these reports are sparse and disreputable. Closer inspection puts the losses at closer to 2500 BTC.

They proved they had 500k coins back then. But they were the only big exchange in june 2011. What if they actually had over one million?

We know that they had around 60,000 users back in June 2011 from the leaked database, but those were all early adopters and people may have thought nothing of leaving tens/hundreds of thousands of bitcoins on the exchange--it didn't represent that much money. They could easily have had over a million bitcoin on deposit. When bitcoin was $1, Gox may have thought that being down $800k wasn't insurmountable, but time went on and bitcoin continued to grow in value beyond their expectations, sending the target further and further out. They were essentially short bitcoin, which clearly has been a bad bet but if they'd been able to keep up and continue pulling fees in bitcoin, it's conceivable they would have broken even at some point. They could also have made money back by playing the arbitrage opportunity themselves and frontrunning.

I can imagine myself being in that position, having made the decision to go ahead fractional and try to pay people back, and then every day being in a slightly worse and worse position, incrementally. Psychologically, it's hard draw the line once you're already in it, which is why pro traders determine their exit before they open their position. Mark was probably struggling with not wanting to let down the community/customers, not wanting to hurt Bitcoin, not wanting lose his business, not wanting to go to prison. If he'd been able to continue, all of those problems would be solved. I'm sure the guy has been living with a lot of stress for the past few years. While I'm on the topic, I should mention that personally, I'm not an ends-justify-the-means kind of guy. If Kraken is ever insolvent, you will know immediately and we will all deal with the consequences together in a transparent and open manner.