I think he's trying to describe something like pairs trading, which works, but doesn't eke out much profit in flat markets, especially given the larger base of capital needed. Same issue that the returns would be decent on a few days but basically nil most days since springtime.

And this is without even considering why it makes literally no sense to spend some much time tracking small "deposits" with such exorbitant costs. That's the real problem with the scheme--not the difficulty of making profit, but absurd stupidity that would cause a hypothetical arbitrageur to buy leverage in the most expensive and time-consuming way imaginable.

Really? You have no money being held by BT that you hope to get back? You're promoting a service you yourself don't even subscribe to?

Yeah, because it's really easy for a dodgy Panama-registered corporation to hire employees in China.

I believe every pro-BT must know or strongly suspect this is a Ponzi, and you're still here in hopes that another generation of suckers will pay back your principal.

On creativity: What about the myriad ways a hypothetical arbitrageur could leverage his or her trading?

*Reinvesting some of their steady, fabulous profit until arbitrage opportunity has diminishing returns (no cost!)
*Bank loan, home loan refinance, etc. (~5%)
*Equity investors/partners (could be quite low and risk-free to arbitrageur)
*Credit card cash advance (~20%)
*Loan shark (~40%)
*Payday loan (~200%)
*Paying dozens of people 0.5-3% everyday and updating their balances appropriately (~620-3000%)

Not only is the last option the most expensive, it's the most labor-intensive. Literally the only reason someone would do that is if they want the ability to take the money and run.

It nearly (or did) touch $300 before arbitrage bots started kicking in. Still much lower, but the disparity is disappearing.

What was that about? BTC-e problem, or just some retarded selling?

Filed in the N.D.Texas Bankruptcy Court.

http://www.scribd.com/doc/212477228/Karpeles-Declaration

Clearly, the bitcoin liabilities aren't being counted at anything like their true market value, if at all. I understand that this is what was declared in Japan as well.

He claims that he lent 202,000 bitcoins to a mysterious "Big One," but has no proof of such a loan occurring (Shavers depo p. 232).  He claims his mystery borrowers paid him every week, and tries to claim several places he never paid current investors from new deposits, not a Ponzi, etc. He claims he repaid 100,000 BTC from his personal funds after Oct. 3, 2012, but can't prove that either. (p. 260.) Whatevs, loser.

As for the question about comparison with Mt.Gox, the government alleges that he received "at least 732,050 bitcoins in principal investments." That's much higher than I thought; the common figure was 500,000 in fictional account balances (with much less actual capital due to the absurd interest rates).

Even if they could make all their transactions transparent to confirm overall rates of return, and even if they allow all withdrawals, winnings could unfairly diverted to shill accounts they control. Say they have a 99.5% EV and can "prove" that they do on the block chain. That's great! But there's no way for a gambler to know that "real" users don't actually have a 90% EV while shill accounts cart away the extra profits. The only way to tell is to play over a long enough period of time that your own low rates of return diverge with statistical significance from the advertise EV. For a game with large variance, proving such a scam would be costly.

This is a problem in real casinos, but it's much more pronounced with Bitcoin where all you need to make another shill account is a couple of prime numbers.

So I don't really know what Rampion means by "provably fair rules." If he means rules that are understood by all players in advance, things like PonziCoin seem to fit the bill. If he means rules that are provably enforced by the operator fairly against players--there seem to be FAR fewer such services than there are gambling sites.

That's the key difference.

When it's calling itself a ponzi, you know that the operator will win in the end--there's no deception in it--not unlike other forms of gambling, really. The only thing that really distinguishes it is that unlike casino banking games, players have an incentive to recruit more suckers so that they aren't holding the bag in the end. Kind of like a stupid form of poker, I guess, where the house rake is huge.

To each his own though.

Satoshi's such a scammer! Oh wait, no.

Do you deny that the subforum is filled with altcoins with little innovation, hyped in IPOs, given largely to insiders at launched, eventually pumped and cynically dumped? How is that sort of behavior less "cancerous" than a Ponzi scheme correctly labelled as a Ponzi scheme, posted in the basically-appropriate gambling forum?

Honest ponzi schemes don't strike me as particularly evil. I don't know why people would want to play musical chairs where the operator gets most of the profit for no real contribution, but knock yourself out. It is like casino gambling in that the house always wins. I see a case for a subforum to distinguish it from spamming up "real" gambling, but it doesn't intrinsically bother me much.

Compare that to the many dishonest de facto ponzi schemes I see advertised here: https://bitcointalk.org/index.php?board=159.0

I dunno, speaking as someone who bought my few coins at about $5, and didn't bother to withdraw remaining loose change at Gox and other exchanges, then ignored bitcoin for a year, it wouldn't surprise me if many of Gox's customers bought some coins for fun/drugs years ago, and haven't really paid attention to how flaky Mt.Gox has been.

For that reason, I wouldn't expect a large proportion of Gox account-held-BTC owners to rebuy. They're not going to think "damn it, the $200 in coins I bought 2 years ago could have bought me a new car--now I'm going to chase after $500 BTC!" They'd probably think more along the lines of "easy come, easy go."  That's certainly what I would have done if I hadn't withdrawn almost all my goxBTC in late January.

I suppose that could be. It's not really a cold wallet if scripts from networked machines automatically pay "hotter" wallets when they run low.

Yeah. Exchanges are being very cautious about "missing transactions" for obvious reasons.

Has Gox actually said this? Doesn't seem clear who the author is.

Whatever the supposed mechanism is, it doesn't make any sense.

You should be able to calculate how many bitcoins your wallets control. Maybe there were some fees you didn't take into account, but it should be close. Then you see how many your wallets actually control. If the total is way off, you investigate, same as any other business that checks its cash register at the end of the day.

This document suggests that no one made that simple comparison for years. It's preposterous.

It would be like McDonald's declaring they ran out of assets because the cashiers kept giving out money due to an error in their protocol, and this lost cash was continually replenished from McDonald's corporate bank account. That's what the document purports.

I don't know the provenance of this apparent scan, but this is absolutely what the scribd pdf says (just download it and open it up to copy the text, highlighted in black rather than redacted ):
http://i.imgur.com/u9aP9Hg.png

Going forward: $3.3-4 million for legal fees is a litigation-sized budget, but that seems reasonable under the circumstances.

How did they allegedly run last year on only $60K salaries? Was everyone there a subcontractor?

"Net sales" and "cost of goods sold" are weird ways to describe a service. All BS placeholders?  How the hell do they project 8x growth for next year?

In the unlikely event this is not BS, looks totally wrong; just the cash portion of their fees for 10 months of declining volume should be something on the order of $20 million+. Not even in the right ballpark.

Does anyone actually believe that chunk-by-chunk Mt. Gox lost essentially all of its cold wallet storage--even more than total customer accounts? Sure, Gox might not care about customer money, but you'd think they'd care when they start sending away their own damn coins. That's gotta be a lie, or the document is fabricated for market manipulation.

BTW, has this unredacted page been posted on bitcointalk? http://i.imgur.com/u9aP9Hg.png

That's what it says. Whoever uploaded the PDF didn't actually redact the pages.  They're highlighted in black. If real, that's a stupid, stupid mistake. You can download the PDF and copy it to confirm yourself.

Lot of optimism for a takeover.

I've heard this, but are you really 5.5 times more comfortable with GoxUSD than GoxBTC? You have to think that the odds of Gox failing and eventually paying back USD deposits is over 5.5 times the odds of them allowing BTC withdrawals again. The numbers just don't make sense to me, as I explained here.

If I had stuck funds, I'd totally be long GoxBTC at these prices. Just a 5% chance they allow BTC withdrawals likely has a much better EV than any liquidation scenario at 100 GoxUSD/BTC.

Yeah, I know that neither "USD" nor "BTC" on Mt. Gox are meaningless concepts, but what is the thinking of users who (apparently) continue to sell GoxBTC for GoxBux?

If you think Mt. Gox is totally insolvent and will never pay any depositors, it shouldn't really matter what you hold on the fictional exchange. (And for what it's worth, since Mt. Gox has taken fees out both as cash and BTC, I suspect they are much lighter on cash than BTC. After all, their expenses are in cash. If any depositors get paid in cash, Mt. Gox's Japanese trustee, or whatever, would probably first need to liquidate the BTC.)

OK, so if you think that Mt. Gox will only pay out cash deposits, maybe you'd prefer to hold GoxBux. But if you're wrong and they do recover BTC withdrawals, you've just taken over an 80% haircut at current GoxBTC prices. That seems unjustifiably large.  The correct price for GoxBTC should be:

[BTC market rate] x [probability Gox recovers] / [probability Gox folds and does pay "USD" (times percentage paid)]

So if you think there's a 90% chance Mt. Gox fails, and a generous 50% chance it fails and pays USD deposits at 100%, you would still rather hold GoxBTC selling at 100 GoxBux (the current price), because in the unlikely event Mt. Gox opens withdrawals, you'll preserve your coins at full market value (EV = 0.1) instead of the "likelier" event of getting paid in cash (EV = 0.5 * ~0.18 = 0.09).

I'm pretty skeptical of Mt. Gox recovering or depositors getting paid back only for cash--so why is the price still driving to zero?

I think the threshold is a little bit higher.  I've had no problem getting single digit numbers of bitcoin out of Mt.Gox.

Agree with the rest. The devaluation of GoxBTC has finally caught up to the devaluation of GoxUSD, so Mt. Gox is finally trading at parity again. If there's light at the end of the tunnel, they've had like 9 months to tell us about it.