The above theory has to explain why he did not just run the exchange normally and profit from it when he had 80-90% of all trades.

If money was the motive, he could have profited without even manipulating at all, or if he wanted some extra, just use the exchange powers to get that extra.

So adding to the above, maybe he decided to turn his customers' BTC into USD and settle the coinlab case along with whatever the US gov was squelching out of him for not having registered properly as a money transmitter when accepting USD funds from US customers.

He thought that maybe he would be able to get all this back via the arbitrage and other shady things i described, including fees from trades and deposits/withdrawals.

But then he got surprised by bitcoin shooting up like there was no tomorrow. We went from around 100 to 1200 in just a few weeks.

Now one might think, to get to 1200 there had to be a lot of USD coming into the exchange to get the price that high. But this is not true. All it takes to make the price shoot up is for people owning BTC, thinking it is more worth, not willing to sell for less, and others bringing new USD into the exchange willing to buy at those prices.

The problem here was not him not having the USD for the withdrawals, but him not having the REAL btc anymore. On the USD part, people would simply not have placed any orders on MtGox, so either the price would go down, or people would have to wait for someone willing to buy the goxBTC at such high prices with fresh USD coming in.

However, when people started to withdraw BTCs in masses, this is what collapsed the whole system. He simply did not have the BTC anymore as explained above.


The mistake was to use customer funds to pay out liabilities for court cases the exchange owned. He should have declared bankruptcy back then and pay out everyone his funds fully, then restart as a new business with a new CEO.
(or even better, pay out everyone fully, and THEN shut down and declare bankruptcy)