13
3
After reading the joint-statement on blockchain, and the fact MtGox is down now, I am scared, what are my options? Is there anyone who can help me in my situation? I purchased those coins for 800$.
Edit: MtGox files for bankruptcy protection. What is the difference between bankruptcy and bankruptcy protection? I don't know, but I don't think that I am going to see anything from there...
11
This is generally called counterparty risk - if your resources are in custody of someone else, there is a risk that they go bankrupt and you lose it. And in that case it is too late and your options are limited to making a sadface :( and writing it off as a loss - do note that you can get x% of the loss back from your income tax in most places.
There are options to limit that risk before it materializes - it might be too late for MtGox, but important for the future. All the lessons are pretty the same as historically for 'normal' banks before modern regulation.
Diversify the risk - if your funds are spread out among multiple institutions, then there is less chance in losing it all than putting it all in one basket;
Insure the risk - your bank deposits are insured in most countries, i.e., if the bank can't return them then the insurer pays up to a certain amount. Bitcoin companies currently aren't insured that way, however it means that when some of them get deposit insurance then that would be a serious selling point for their trustworthiness; and if (when?) regulated banks start offering bitcoin services, then you'd get that protection as well. Also, you can purchase insurance for yourself, although it might be unpleasantly expensive.
Reduce the risk - choose the company properly. Reputation certainly didn't help in MtGox case and it's not a guarantee, however, you should be looking at solid evidence that the company is solvent. I.e., you want periodic, publicly visible financial statements that are seen and analyzed by many people and that show that they really can afford to pay all the depositors back even if they have a bad day or a bad year. At the very minimum you need this to be (a) according to common accounting standards; (b) expressed by a company officer in a manner that means jail for him if (s)he lies in these statements; (c) audited by a third party - otherwise these statements are worthless, as if there will be real problems, then they will lie always. Regulators of financial institutions do much of that job for banks; not eliminating those problems but reducing them - for unregulated entities you'll have to check everything yourself.
What exactly happens to the bitcoins that Mt. Gox does have, though? Just because they have more liabilities than assets doesn't mean no one should get back anything they lost, does it? – Mehrdad – 2014-03-02T11:26:45.503
During bankruptcy, the assets would be liquidated and then distributed proportionally to everyone that MtGox owes. However, I haven't seen solid financial reports of MtGox (that itself being a poor sign), but the leaked documents seemed to indicate that their assets are just a tiny fraction of what they owe (i.e., they lost $500m worth of bitcoin but have ~$40m of assets). In practice that means that within due time (1-2 years?) depositors might receive a payout of some 5% of their funds or something like that. – Peteris – 2014-03-03T00:31:43.490
6
You are not going to like this:
Man-up and accept that you took a chance using MtGox and lost. The same applies to stocks, commodities, gold, etc. You decided to keep substantial funds in an unregulated exchange in an unregulated "currency".
What was lost was the amount in fiat currency represented by the BTC at the time you deposited them, not todays, yesterdays or any other chosen dates rate. Just like buying stock--except stock exchanges are regulated.
P.S. My holdings are down too, but not via holdings at MtGox.
1Consider: I bought 1 Bitcoin at $400. it goes up to $600. I lose the Bitcoin. How much have I lost, $400 or $600? Next: I bought 1 Bitcoin at $400. it goes down to $200. I lose the Bitcoin. How much have I lost, $400 or $200? – zaph – 2014-02-25T17:14:45.837
1I am sorry about anyone's loss. BTC and other coins are speculative; one may win big (10x, 100x) or loose all (1x). As are gold, gems, property, etc. Regulation helps to stabilize losses but also tends to limit gains. One needs to decide the level of risk one is willing to take. Personally I have invested in mining, the only way I will make any real money is if BTC succeeds in a rather big way. I figure it will take years to determine the outcome. My wife and I have discussed how much we are willing to risk while admitting we may well lose our entire investment. – zaph – 2014-02-25T17:31:02.127
1One the positive side one can only lose all of their investment. There are many ways to lose much more than your investment, been there, got the t-shirt. But, if you don't play you can't win. – zaph – 2014-02-25T17:35:25.237
@Gracchus You do realize that Ripple is completely based on counterparty risk? – Murch – 2014-02-26T20:27:06.883
1@Gracchus I was referring to IOUs. Your IOUs become worthless when their issuer is bankrupt/just never uses Ripple anymore. It seems inconsistent to be disgruntled at Bitcoin for people losing money to a localized instance of counterparty risk, and then advocating a system completely built around counterparty risk. – Murch – 2014-02-27T09:59:01.757
Could you phrase your advice in a less sexist way? – Nate Eldredge – 2014-02-27T14:57:02.060
1@Zaph, while the IRS hasn't yet stated its intended way of accounting for casualty loss of Bitcoin, I speculate that it's safe to assume that it would be regulated as a commodity or security. Thus, you can only lose what your initial investment was. You had not realized the gain. So, in either case, your loss is $400. – Colin Dean – 2014-02-27T15:18:26.100
@Colin I agree. My intent was to bring home that the the loss (in my hypothetical example) was $400. – zaph – 2014-02-27T16:07:49.963
@Colin I do take exception to your edit of my post, in particular the deletion of "Man-up". I do not view it as sexist in the same manner as the English language allows the word "he" to be used when both sexes (male and female) are being addressed. The phrase "Person-up" just does not work nor does ""Man/Woman-up". The intent was to imply "Take responsibility", that is now lost. Please change it back! As an aside, you might want to explain how this is sexist. If you don't like my use of "Man-up" feel free to down-vote my answer. Nate, I suspect that the last sentence applies to you as well – zaph – 2014-02-27T16:37:52.590
@Nate, Colin "Man-up" meaning grow up, accept responsibility, don't be a baby. If you want sexist, just look at advertisements including my local newspaper on-line version, horrible. – zaph – 2014-02-27T17:01:35.953
Your meaning is clear, but I stand by my objection to your word choice. – Nate Eldredge – 2014-02-27T17:08:08.773
@Nate I have no problem with that, no problem with your comment, no problem with your down-voting (not saying you did). My post was about taking responsibility yet Colin did not mention his change to my post, the change nor why. I do have a problem with Colin changing the meaning of my post. There was a down-vote yet that person did not take responsibility, provide a reason. I support their right to do so, just find it in juxtaposition to accepting responsibility. Oops, I referred to Colin with a masculine gender (common English) yet Colin might be a woman. – zaph – 2014-02-27T17:29:50.667
I have a question: Do you ever use the word Policeman or Fireman? My Wife was a police officer and I have a friend who was a firewoman (somehow that seems awkward yet PC). – zaph – 2014-02-27T17:32:04.393
If you insist on your wording you can certainly edit to change it back. I don't think it will be productive for us to discuss it further here. – Nate Eldredge – 2014-02-27T18:09:01.273
1Actually, from an ethymological POV "man-up" is not sexist at all. "Man" is Germanic for "generic human being" just like "homus", "anthropos", "manu" are unisex in Latin, Greek and Sanskrit respectively. All these languages had specific words for male humans: "were", "vir", "andros", "virah" respectively. The fact that over time Indo-European languages have largely dropped the male-specific word and put the unisex to do double work (meaning both unisex and male-specific) is a sad turn-up of history. "Woman-up" or "were-up" would be indeed sexist :) – Joe Pineda – 2014-02-27T22:25:27.753
@Gracchus Ripple's good for a lot of reasons, but it's not the panacea, either. It takes this modern-economies' concept of "banks creating money ex-nihilo by emission of debt" to the extreme! Remember: what is transmitted thru the Ripple-network is not money, but debt. We're all sending each other IOUs and then settle them altogether. So the network as a whole has same risks as a bank, for the same reasons: should a significant % of users go bankrupt, default or do plain fraud, rest of users will take a heavy blow to their finances. – Joe Pineda – 2014-02-27T22:34:34.097
1@Zaph I completely agree with you: thank God with BTC you may win big or lose at most your initial investment - with other speculative investments you can lose much more than that. As to losing $400: due to inflation the amount is actually higher, though for accounting purposes I guess that's the most you can claim as a lose. – Joe Pineda – 2014-02-27T22:40:01.530
@Gracchus Kinda. You may read http://bitcoin.stackexchange.com/questions/10242/ as well as questions 11963, 7621 and 7714.
4
I received this email:
To whom it may concern,
At 5:00 p.m. on April 24, 2014, the Tokyo District Court granted the order for the commencement of the bankruptcy proceedings vis-à-vis MtGox Co., Ltd. (“MtGox”), and based upon such order, I was appointed as the bankruptcy trustee (Tokyo District Court 2014 (fu) no. 3830). The bankruptcy trustee will implement the bankruptcy proceedings, including the administration and realization of the assets and investigation of the claims. For the purpose of providing information to the related parties, we hereby inform you of the basic matters regarding the bankruptcy proceedings as attached.
This email address（mtgox_trustee@noandt.com） is used only for the purpose of sending messages, and we are unable to check and respond to any replies to this email address. Since we plan to provide the information regarding the bankruptcy proceedings by posting it on the website hosted by the bankruptcy trustee ( http://www.mtgox.com/ ), please check this website.
Bankrupt MtGox Co., Ltd. Bankruptcy trustee Attorney-at-law Nobuaki Kobayashi
One of the links on the mtgox site had a Q&A section
Q. Please return the bitcoins and cash that I deposited with the Company.
A. We will make the liquidating distribution to the bankruptcy claims if funds for distribution are secured. With regard to the liquidating distribution under the bankruptcy proceedings, please see below.
Q. How many bitcoins or how much cash does the Company have?
A. The actual amount and value of bitcoins and cash of the Company will be investigated by
the bankruptcy trustee with the cooperation of certain experts, etc.
Q. Will the bankruptcy trustee investigate the bitcoins and cash that are said to be lost?
A. The bankruptcy trustee will investigate such matters to the extent possible through its
asset administration. The Company has consulted with the police authority, and the
bankruptcy trustee will also proactively cooperate with it when such cooperation is
requested.
Yep, I got it too. – Ilya Gazman – 2014-05-23T03:04:33.240
3
Contact a Lawyer and sue them.
2Suing an entity that has no money is just like flushing it down the toilet. Suing out of you own jurisdiction is much worse. Extrapolate that to suing in a Pacific Rim Nation – zaph – 2014-02-25T13:58:19.970
2@zaph: Well, as they are filing for bankruptcy, as a creditor you can make a claim for a share of whatever assets they do have. It may be hard to know at this point how significant those assets are. – Nate Eldredge – 2014-02-26T00:51:56.673
1~$25k USD in Bitcoin is not an insignificant amount. However, it's likely to be a protracted battle and unlikely to be settled in BTC. – Colin Dean – 2014-02-27T15:20:20.733
I can see a "Former Mt.Gox clients bring class-action suit" line in the newspapers, very soon... anyway, it's your legal right to fight to get back at least one cent off every Bitcoin you had there. Even recovering 1mBTC would be better than losing it all... – Joe Pineda – 2014-02-27T23:11:35.030
Ha! Happened earlier than I thought
http://arstechnica.com/tech-policy/2014/02/illinois-man-files-class-action-lawsuit-against-bitcoin-exchange-mtgox
Since aprox. 30% of MtGox users were from Europe rather than USA, let's see how long 'till a similar class-action arises in a Schengen-area country...
2
I think this question deserves a simple and direct answer.
What are my options?
None, essentially.
Is there anyone who can help me in my situation?
No. No-one can help you to retrieve your 31 bitcoins.
2013-02-28 Yahoo News report
"We're at a loss for how to help them," said Yuko Otsuki, who works in the [Consumer Affairs] agency's counseling department.
Not meaning to diminish the Japanese police and their investigators, I don't think they'll be able to accomplish much. Frankly, save a handful of very specialized units in certain countries (USA? Israel?? Britain???) I doubt any police force in the world would be able to understand the robbery, much less track the robbed coins, retrieve them and jail the perpetrators :( – Joe Pineda – 2014-02-27T22:49:20.590
1
I feel very fortunate in learning before I invested in BTC the difference between public and private keys. Also knowing how to use Localbitcoins (as an example) as an exchange and being advised once I received my bitcoins at LBC not to leave them there for any time.....because you never know what will happen to any exchange. I was advised to transfer the BTC in LBC to a wallet such as Electrum which uses a random seed to generate private keys. Storing your BTC in such a way gives you far more security than leaving them deposited on an exchange.
Theoretically, a well-run company would/could have best-of-breed people devising ways to improve security and building layer upon layer of redundancy, honeypots, offline storage, etc. none of which you can unless you happen to be a security expert. Most people's wallets aren't attacked because of their being very small targets rather than the high-security of a typical PC. MtGox blunted it, period. – Joe Pineda – 2014-02-27T23:17:57.877
1
There are people buying and selling 'MTGox BTC' for 'Real BTC' here
essentially a gamble on whetehr they payout on the accounts there. But they now it seems have stopped trading since the official insolvency declaration. However as a once (a long time ago) customer of MtGox I did see in my inbox a form entitling me to apply to get any funds I may have held in MtGox back as part of the liquidation process. I would suggest you look to that as your first avenue. Failing that as is the case in many liquidations you may never see your BTC back.
Can't, I need to transfer my funds to his bitcoin account, but bitcoin trade is down. – Ilya Gazman – 2014-03-05T07:26:19.133
1
Kraken just sent an update for MtGox funds claim. Log in here - https://claims.mtgox.com/assets/index.html#/ .
Thou I have to admit I have problems logging in.
Yeah I so it, going to try latter. Will keep you posted – Ilya Gazman – 2015-04-22T21:23:22.790
3I'm really sorry to hear that. Unfortunately no one really knows what's going on at Mt. Gox right now, and nothing they're doing is in any way reassuring. We'll just have to wait and see how this all plays out. – ChrisW – 2014-02-25T07:20:29.647
3Also keep your coins to yourself, whenever possible. Never let them be sitting around somewhere. I dodged a bullet here... – Jori – 2014-02-25T10:35:02.587
1The exchanges should show you your private key so you could always transfer the money from a different client. – ja72 – 2014-02-25T14:03:09.573
@ja72, I don't think any exchange actually do that. It is impossible to maintain a hot wallet this way. – Pacerier – 2014-02-26T06:15:10.657
I guess I need to look up "hot wallet." – ja72 – 2014-02-26T11:54:37.650
1@ja72: That would cause its own problems. Suppose you've just sold some coins, but then the price went up so you wish you could undo the trade. If you hold the private key, you could try a double spend, and if you're successful the trade has to be unwound. This would mean that the buyer couldn't safely spend or resell those coins until 6 confirmations or so - it would drastically slow down the market. – Nate Eldredge – 2014-02-27T14:55:44.350
Seems not all hope is lost. According to this press report http://www.theguardian.com/technology/2014/feb/28/bitcoin-mtgox-bankruptcy-japan , MtGox could theoretically reimburse 59.47% of its clients money should they be able to get 100% value off their still existing assets. Unlikely, of course, but getting back 0.4 or 0.5 from every 1 BTC depositted could be a God-sent gift to many people.
– Joe Pineda – 2014-02-28T23:23:42.990@joe see my comment in the edit – Ilya Gazman – 2014-03-01T06:33:47.207
I guess your last question can only be answered by someone versed in Japanese law... – Joe Pineda – 2014-03-01T11:25:42.133