Mt. Gox commences bankruptcy proceedings [pdf]
mtgox.com
mtgox.com
I am absolutely certain the owners or at least an elite top at Mt. Gox have made a gain from this. Due to the nature of Bitcoin we will never 100% be certain where the coins exactly went, but it's highly unlikely they just vanished in air somewhere.
I have read no report, so if it hasn't happened yet, why should I believe it will happen?
As far as I understand they wanted to restructure but they are not being allowed to by the court. The first line[1] in the doc essentially says this. This happens when the court doesn't think there is hope for rehab, which is not surprising in Mt.Gox case.
[1] "At 5 p.m. on April 24, 2014, the Tokyo Distri ct Court issued an order of commencement of the bankruptcy proceedings for MtGox Co., Ltd."
But wouldn't a 150k BTC dump on the biggest exchanges literally obliterate the exchange rates, as well as massively devaluate the assets?
The concept of suddenly dumping too much "X" on the marketplace is so well known I wouldn't expect this to happen in this context (compared to, e.g., some of the stunts the Congress pulled in the jihad against "junk" bonds and/or trying to "fix" the S&L crisis).
Although in this case I can't see what debts might need to be chased.
So you get $1 for every $5 you are owed for example.
The government is usually entitled to this sort of treatment - the company's tax bill and fines will likely have to be paid in full before everything else is shared out. But this is being conducted under the bankruptcy laws of Japan, which I know nothing about. Ask a lawyer if you want to know.
The result of which is that they chase their debts a lot quicker and a lot harder than they did before.
I too know nothing of Japanese bankruptcy laws.
As an example, the responsible individuals of Mt.Gox would need to come up with a repayment plan for every single penny/bitcoin that they still owe. The fact that it was "stolen" from them is irrelevant, as the users entrusted the safekeeping of their money/bitcoin to MtGox. If that means that they will continually have X% of their yearly incomes divied up amongst the users, then so be it. And this will continue indefinitely until the debt has been repaid.
Sadly, this sort of solution to the problem would never be instituted in our society. Precisely because it exposes flaws in our concept of the relation between debt and slavery. In essence, it would put the individuals responsible for the fraud in a sort of indentured servitude until the debt has been settled.
It does sound like quite a scary proposition, I'll be honest. As it's something completely alien to what we're accustomed to when it comes to debt/bankruptcy. But I assure you, if this were ever instituted, and a few individuals got bitten by it: Society as a whole will grow in a much safer direction, both with more security precautions when debt is involved, and with insurance to cover losses such as this. All that, without state intervention/bailout.
If anything is found, said owner can potentially be held liable for debts, or at the very least be disqualified from running a LLC again.
However, the owner can just then declare themselves bankrupt and escape making any payments, and use a puppet director in their next venture.
Perhaps if something is risky, then maybe it shouldn't succeed, ever thought of that? Perhaps risky things come with greater rewards precisely because they are more likely to fail?
But, if you've put money into an institution, knowing ahead of time how bankrupcy could affect you in that particular instance, and you want different laws after the fact, then you're shit out of luck.
Regardless of that, equating an individual's assets with a business's assets would discourage any growth of a business, given that the individual can no longer cover the fallout if it goes bankrupt, which suggests that the economy as a whole would suffer.
Investment banks continued to be run as unlimited liability partnerships until the 1980s. The partners were personally responsible for all debts incurred by the bank, and unsurprisingly, the banks were very conservatively run. Goldman Sachs, one of the most conservative firms, retained this structure until 1999. What changed was that the NYSE altered its rules to allow public companies to be member firms, and the investment banks decided to go public, converting to C-corps and listing their shares on the stock exchanges. The side effect of these two changes was that the investment banks began engaging in riskier behavior, which almost certainly contributed to the financial crisis of 2008. Post-crisis, the introduction of clawbacks has partially returned the concept of personal liability.
Unlimited liability is not needed or desirable for corporations in general, because market forces can lead to desirable outcomes in an efficient market. However, there's an argument to be made that personal liability could play a role in systemically important institutions, because systemic risk is an externality or market failure which cannot be solved by market forces.
You need limited liability or investment becomes a very risky prospect. Imagine investing to get a 10% stake in a startup company and they end up getting sued because they violate some patent accidentally?
The current situation all comes down to intent. The way it's supposed to work is that if someone was actually negligent in their duty, then, and only then, do they become personally liable.
You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?
My point is that shit happens in business, debts can be created in unexpected ways and sometimes those debts can be far in excess of what was invested. It's not really reasonable to expect shareholders to be personally liable come what may.
Well, that all depends on what sort of agreement I had with the institution in question. This is precisely the sort of thing that insurance is supposed to fix. If the owners failed to get insurance to cover whatever agreement they went in to, then yes, they should be held fully liable for the losses.
The concept of corporations is based on a legal identity that is separate from any individual. Incorporation historically was a rare grant at the behest of the ruling monarch. This dates back to the Roman Emperors, who granted incorporation to municipalities, guilds, and religious groups. However, these corporations are distinct from what we would consider a company today. The typical business did not have access to incorporation.
Several of the oldest known companies, dating back to the 6th century, were Japanese companies that were family-owned, and were not legally limited in liability. The concept of joint-stock companies is based on transferable shares, and dates back to at least the 13th century. Limited liability was not really a legal concept (separate from royal charters) until the 19th century. The first joint-stock companies in England were unlimited liability, and the public was very much opposed to the concept of liability limitation. However, many joint-stock companies wrote liability limitation clauses in contracts with creditors, and these were considered legally enforceable. In the second half of the 19th century, most European and US states had adopted limited liability laws. Limited liability is a modern concept that has not existed for most of the history of companies.
Exactly. We have decided that you can't be placed into involuntary servitude without criminal charges being brought against you, due process, etc... I think this is a good thing.
Personal bankruptcy is an essential check on "freedom of contract" I think. Sort of how you aren't allowed to sign yourself into slavery.
Aside from giving someone who really screwed up a second chance, personal bankruptcy places some of the risk of a poorly considered loan on the creditor, which is fair, I think.
That said, we do need to be careful that corporate bankruptcy doesn't protect decision makers from criminal liability for their own actions. There are certainly some problems with the current implementation, but bankruptcy was never intended to protect you from criminal acts, fraud or otherwise.
But personal bankruptcy is essential, as you imply, because most of us feel that indentured servitude is enough like slavery that we don't want it in our society.
(I say this as someone who was notified last week of one of my debtors being declared bankrupt. Sucks that I lost my money (probably), but what good would it do if the guy would be chased by collection agencies for the next 40 years until he dies?)
Instead, you want to make a legal loophole for people to steal from you. And then people like you whine and complain incessantly about "the wall street wolf banksters and corporations that stole money" etc etc. Yeah, well that's a natural consequence of you making legal loopholes because you feel sorry for the poor and get taken advantage of.