Comment by ashray | Hacker News Reader

Comment by ashray | Hacker News Reader

MtGox has put a lot of bitcoin users at huge risk. I've had a huge USD withdrawal from Mtgox pending for over 7+ weeks now (8 weeks on 21st September).

Every single time I email them asking how much longer it's going to take they just get back to me saying "We don't know, a few more weeks." It's incredibly frustrating! They always offer to cancel my withdrawal and credit the funds back to my Gox account (so I can buy BTC at their inflated rates ? Nu-uh!).

Another offer they made me after a lot of back and forth was a 5% fee on my withdrawal (for a 7 day turn around time). That is ABSOLUTELY insane. Imagine a $100k withdrawal - you'd be paying $5,000 as fees on that. OUCH!

So here I am (along with possibly tons of other bitcoin users) with my money stuck in Gox. I already started using other trading platforms but I have to somehow retrieve this cash... Maybe I'll just take a hit and convert back to bitcoin and move my BTC out ? I don't know.. there's about a 10% price difference between Gox and other exchanges. So I'd lose 10% if I were to convert back to Bitcoin now, sell them on another exchange and cash out there.

Gox has lost a LOT of customers because of their behavior so far.. it's only a matter of time before they lose all of them.

I suggest taking the 5% hit and getting your money out.

There's a reason why the SEC exists. These are the risks you have to put up with when you work with unregulated markets. When the SEC finally starts regulating BTC exchanges, that's when things will be safe enough for me to use.

You can't expect me to dedicate any significant amount of money to an unregulated exchange / market... when issues like this haven't been figured out yet.

1. There are other exchanges that don't have this restriction.

2. Exchanges should only be used to buy and sell so if you deposit money, buy your coins quickly and get them to a safe place and you don't to worry.

3. By the time further regulation exists and bitcoin infrastructure is fully developed (these are certainties) you will have missed the differential in profits.

For #3, you can certainly waste your money on it. But I see plenty of cracks in the BTC mechanism. We now know that BTC is not anonymous (Ron and Shamir gained a lot of information from public analysis of the blockchain: http://eprint.iacr.org/2012/584.pdf), we know that huge amounts of BTC are being horded (The paper tracked 90,000 BTC), and we also know that if BTC Guild weren't self-limiting themselves... they'd have enough hashing power to perform the fabled 51% attack against the BTC Network (http://mineforeman.com/2013/04/06/btc-guild-voluntarily-limi...)

So we know that the 51% attack is feasible within the BTC community... specifically by BTC Guild. Many "benefits" of BTC are flat out false, and simply the act of using BTCs often ends up getting your ISP's servers hacked like no tomorrow. (Linode hack and OVH hack)

And yet you think BTC has a stable future ahead? Don't kid yourself, there are major issues here that need to be resolved.

And if Mt.Gox falls, then the world's largest USD<->BTC conversion market will have failed. Sure, BTC-e might be available now... but are there any guarantees that BTC-e will survive the pressure in the long run?

almost sounds like a ponzi scheme.

...or PayPal.

This most definitely sounds like a ponzi scheme. If so, it's probably falling apart right now. Scary.

Its only an exchange. A weakness in Mt.Gox does not create a weakness in the greater BTC network. It just means it is that much harder to find a BTC Exchange that you can trust.

Its like history unfolding again. Eventually, people will (re)learn that giving large sums of money to people you don't know requires major amounts of trust. Ex: What guarantees do I have that Mt.Gox isn't trading with my money?

I mean after all... Mt. Gox money is virtual currency. Maybe you can't withdraw your money from Mt. Gox because they're playing with it themselves.

You see? Its a trust issue. SEC is in charge of investigating this sort of behavior.

Having other people seize 10 million of your assets does not make anyone's business a ponzi scheme.

MTGox should be able to cover these costs by selling BTC onto their own market. The strange thing is that if they were doing this, it should drive bitcoin prices LOWER on MTGox than elsewhere, and encourage people to play the arbitrage game in reverse (depositing rather than withdrawing USD).

Maybe they are having deposit issues in addition to withdrawal ones.

People said this when this Bitcoin started years ago, but nooooooo, it was different. ( they always are. )

The money is just not there my friend.

Are you predicting an Mt. Gox bankrun?

That might be a bit scary to see unfold...

They've already had a bankrun. You just can't see the other depositors, nor is there any regulator shutting them down and trying to reclaim cash for said depositors.

ha! and you thought a Libertarian paradise was the way to go with your money.

I would also suggest you get your money out for the 5%. If their Japanese branch starts giving them trouble (they don't have licensing in Japan), there's the risk your money will be seized.

I bought BTC with my cash there a couple of weeks ago, took the hit, and got out.

Mt. Gox has the distinctive feel that they have inadvertently slipped into Ponzi mode, perhaps as a result of the money they've lost. But, it "feels" like they are moving money around to pay people (whether from collecting additional transaction fees, selling their own BTC, or otherwise). They need more activity to continue cashing people out because they simply don't have the money.

I didn't want to be without a chair when the music stopped.

But, I suppose the more people who do what I did and get out, the better the odds that those who remain will receive their money.

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