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Comment by dpanah | Hacker News Reader

Can Mt.Gox buy at $260 at home and cash at $650 elsewhere and laugh all the way to the bankster?

Yes, if Mt. Gox is certain they can deliver on the locked-up account bitcoins, then it can use its cash reserves to buy bitcoins elsewhere, then trade with its own account holders, effectively letting them cash out a little early in return for Mt. Gox taking 50% of the value.

Alternately, if Mt. Gox is certain they canNOT or will not deliver on the locked-up bitcoins, they can trade some of the locked-up non-existent ones for real ones and recover 50% of the value.

Either way, Mt. Gox makes a killing because they know the state of their books and their future intentions and you do not. They can bet knowing the outcome of the bet.

This is why you want financial regulation.

(Incidentally, this is what Goldman Sachs is doing with aluminum and other commodity markets.)

If Mt. Gox has your money or fake money, you need to contact a good class action law firm and see if you can get them interested.

I do not want financial regulation of virtual currency. I want people to be able to decide for themselves if they understand and are willing to take on risk - if they are not, then don't. Only allowing winners and losers and warts and unicorns will allow virtual currencies to find their place.

I DO want fraud prosecution, but we already have that.

Currency shouldn't be risky. It's a means of transacting. People shouldn't have to assume risk just to transact; they'll simply choose a less risky vehicle. It's fundamentally why Bitcoin won't succeed unless and until it gets its volatility under control.

If MtGox halts trading, settles all pending BTC exchange transactions, return all fiat deposits, and then intentionally never returns any BTC, does one have any recourse?

I guess it would be some matter of Japanese law, international law (for claimants outside Japan), and the MtGox terms of service? What if these were virtual pets that people had traded?

> This is why you want financial regulation.

I believe we're in the beginning of a weird transitory period right now, but in the long term cryptography and cryptocurrencies have the potential to replace the need for certain types of regulation entirely.

For example, it's possible to build a decentralized exchange between different cryptocurrencies (or assets where ownership tracked on a crypto ledger) where no party needs to trust any other party at all (e.x. https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Atomic_cross-chain_trading)

Are you asking if they can buy from themselves...?

Or do you think that exchanges set a price and then are given leave by the council of BitCoin to just hand out an infinite number of BTC's at that price.

They have an inventory, yes they could sell coins but it would be view-able on the blockchain if they started moving lots of inventory through a major exchange.

They are an exchange, not a shop. They would be buying from their users, not themselves.

They are what they want to be. This is not regulated.

And you know this how exactly?

Oh right. You have no idea at all, and are completely talking out of your ass.

Oh yea , who is it regulated by? Yo xhbvtv

No, they just become the buyer at Mt.Gox for all those sellers, then turn around and sell either already funded accounts with all the Bitcoins they already have had, or they move the ones they just bought round about to the accounts at other exchanges. Who gives a flying fuck you can trace it. You wanted to sell at $260...not them.

Who do you think is buying over there for X sakes! All these new buyers coming in? blah

If they're insiders, why buy before selling? An insider could take the bitcoin from the vault without updating the seller's balance on the website, sell it on a different exchange for $600, then pay the $260 to the Gox seller to balance the books.

That way you're not limited to the number of $260 bitcoins you can afford.

If 1 MTGOX BTC is backed by 1 actual BTC, yes. The fact that they are not doing this is certainly interesting.

Okay, God. Because of course you would have to be God (that is, omniscient) in order to know what sort of positions Mt. Gox and its corporate executives are taking in the various bitcoin markets.

Wait. You're not omniscient? Then why would you write such a silly thing?

Well, you can tell that they haven't bought all the orders that are under $600 because there are still orders on the book to sell for under $600. In particular, using only orders currently on the books of various exchanges, you could currently buy ~1600 MTGOX BTC at ~$300 and sell an equal number at ~$600. If you were Mt. Gox, would you take the free $480,000 or would you leave it?

Do I also have to be God to know that the sky is blue?

Edit: I suppose, based on your other reply, that you are contending that the orders on the books are already from Mt. Gox. I'm not sure why you would believe this, but let's pretend it is so for a moment. This leads back to the same conclusion: either Mt. Gox wants to sell BTC worth $600 at $300 and lose money, or they want to sell MTGOX BTC worth $0 at $300 and make money. Which do you suppose is likely to be the case?

So, you made an assertion about what Mt. Gox is doing that is entirely unsupported by any knowledge on your part, I pointed out that you couldn't possibly know that, and your counter is that because Mt. Gox hasn't wiped out the entire order book in a particular direction, they must not be participating in the market at all.

Such brilliance.

Sorry, there has been a misunderstanding. My first comment to which you replied could be rephrased as "There is a big arb opportunity which they are not exploiting, and it is interesting that they are not doing it." The continued existence of the arb opportunity is a public fact, which is why I was a bit baffled that it would be questioned. It was not clear to me at first that you believed I had claimed that Mt. Gox was not participating in the market at all.

Only if they actually have any real BTCs left at home to cash elsewhere.

buy from where at 260? they ate the ones selling at that price. nobody else

its like a shady guy in the corner offering you gold for half the price. good luck with that.

Isn't it the account holders at gox who are selling at that price?

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