Tips/Donations: 1GNpjpBzjccvEgFMawdm4YDYLyeuhz7U7Q

Mt. Gox Is Dead. Long Live Bitcoin

  • Pinterest

mt.gox-ripSo after weeks and days of uncertainty and lack of information, finally culminating today in the website being taken down, Mt. Gox have apparently released an unconfirmed "Crisis Strategy Draft" to "avoid a chaotic situation". It seems appropriate then that Mt. Gox began life as a site dedicated to a fantasy game, because that is what it has once again become with this document. This document looks more like wishful thinking than any sort of coherent strategy, designed to make it look as if Mt. Gox actually cares about what  has happened, while giving customers at least some hope.

 Even if those behind Mt. Gox can resurrect the exchange in some form, will it still have a future? Will those with Bitcoin and fiat currency stranded at Mt. Gox get their funds back? Let us look at this so called "strategy":

1- Immediately reduce liabilities as much as possible with partners
With actual assets using arbitrage/ injecting new coins to erase them from the books. Informing and asking selected Bitcoin main players to ask for their help. The MtGox price is low, making it possible to erase a significant portion of the debt, but it needs to be done quickly. Injections in coin are most useful (enough to run the exchange) but some cash is also needed to not run a fractional reserve.

2- Switch off the MtGox exchange temporarily (1 month) while announcing a restructuring and re-branding

On a freshly branded static homepage, post a letter from Mark Karpel├Ęs stepping down as CEO of MtGox, bringing in transition advisors, and citing poor organization and technology. Moving to a new country (Singapore?) could be helpful.

3- Push the new branding (ready) and reset all SNS channels for communication:
Using Facebook, Twitter, etc with the new branding, we will give constant updates, changing the tone of communications and informing stakeholders on all progress: new advisors, team members, location, fee structure. We need to inspire confidence.

4- Set up a competent team and redesign the service and codebase:
Announce a new CEO, talented developers, and trusted business people to establish a new business model. ( Finance, marketing strategy, IT, developers, Customer support). Build a low-cost, profitable business again that gives customers a reason to stay (low fees, stability, etc) while we work off our debts to stakeholders.
4 Parts Strategy

 There is one fundamental issue first of all - if Mt. Gox are insolvent, which they clearly are, then they should place the company in to the Japanese equivalent of Chapter 11, at which point the entire Mt. Gox management will be dismissed, and qualified insolvency practitioners brought in to decide how to most fairly deal with assets, debts, liabilities etc which may well result in the company being sold to the highest bidder. 

The My. Gox team have proved themselves to be negligent at best by losing 744,000 Bitcoin over the course of several years without apparently noticing that hundreds of millions of dollar equivalent has gone missing. This shows an astounding degree of negligence and incompetence that shows they are simply not capable of running a company, much less saving it. 

Most of this "strategy" is predicated on the belief that existing customers will simply forget about the millions of dollars collectively lost, and continue to trade on (Mt.) Gox as if nothing had happened. 

The whole basis of this so called "strategy" is revealed in part 3:

3- Push the new branding (ready) and reset all SNS channels for communication:
Using Facebook, Twitter, etc with the new branding, we will give constant updates, changing the tone of communications and informing stakeholders on all progress: new advisors, team members, location, fee structure. We need to inspire confidence.

This is nothing more than a marketing strategy designed to convince existing and new customers that Mt. Gox is a victim of "transaction malleability" issues within the Bitcoin protocol, and has nothing to do with the way that the company has been managed.

It is difficult to believe that 744,000 Bitcoin simply "went missing" unnoticed over the course of several years. Everyone will draw their own conclusions. It would be interesting for Mark Karpeles to issue a statement about how much Bitcoin he has personally lost due to the "transaction malleability" issue. 

This "4 part strategy" not only highlights how poorly equipped the management are to run a company, much less one with such vast amounts of Bitcoin and cash flowing through it, but how little respect they have for the plight of countless customers who have lost countless millions as a result of the Mt. Gox shortcomings. Those customers will never forget or forgive.

All creditors of Mt. Gox should declare the company insolvent and have it placed in to the Japanese equivalent of Chapter 11 immediately. This is the best way to ensure that all victims of Mt. Gox are dealt with equally and fairly.

In the meantime, Mt. Gox is dead

Long live Bitcoin which has a future as promising as ever, despite the Mt. Gox factor which will simply go down in history as s speed bump on the road to the rise of Bitcoin as a new global monetary system. 

 

  • Pinterest

Search Bitcoin Reporter

The Definitive Bitcoin Book. Reserve Your Discounted Copy Today

Mastering-Bitcoin

Facebook Page

Tips/Donations: 1GNpjpBzjccvEgFMawdm4YDYLyeuhz7U7Q