[ExI] Bitcoin - Mt.Gox

[Mirco Romanato]

Il 07/09/2013 17:58, Gordon ha scritto:
> Concerned about the financial health of Mt. Gox, (the largest Bitcoin
> exchange), I transferred out what coins I had there. News surfaced in
> recent weeks that the US seizure of Mt. Gox funds was no small affair.
> Not only was its Dwolla account seized, but so too was its US Wells
> Fargo bank account. The total funds seized amounted to about $5 million,
> including $50,000 of the CEO's personal funds.
> 
> While all this was happening, Mt. Gox was telling customers about the
> Dwolla seizure, but not about the Wells Fargo seizure, and it was not
> divulging the dollar amounts. They put a hold on withdrawals of USD
> which they attributed to supposed technical difficulties as they
> established new financial relationships. The hold was later lifted, but
> I've seen numerous reports that USD withdrawals are still delayed as
> much as four weeks or more. I appears to me that Mt. Gox is experiencing
> undisclosed financial problems, and that they have been less than honest
> about it with their customers. 
> 
> The liquidity issues at Mt. Gox would also explain the wide spread
> between the market price there and other exchanges like Coinbase. The
> Mt. Gox BTC price is about 10% higher. It looks like an arbitrage
> opportunity, but the discrepancy is probably explained by the fact that
> US sellers at Gox cannot get ready access to their USD. 
> 
> What do you think, Mirco? (or anyone)

Apparently, the Bitstamp MtGox gap was reduced in the last few days.

My opinion about MtGox is a bit more complex:

Albeit the seizures of Dwolla e WF accounts were serious they do not put
the solvency of MtGox in danger. They had a lot of fee in the past and
now to cover the losses.

MtGox have limits imposed by their bank to the number of international
wires they can do for free (something like 12/day), so they had to put
up a rotating queue and currently people there have a slot available
every three weeks. So, if people do a withdrawal it is satisfied in few
days, the second wait its free slot (21 days), the third the free slot
after it (other 21 days). So a lot of people doing multiple transactions
have a lot of problems (and the customer support tell them to cancel
them and consolidate them is a single transaction)

The problem with € is a bit different because their bank(s) in Europe
put a limit in money transmitted (and not the number of wires) so they
are able to put together a lot of smaller transactions until the limit
is reached.

Anyway, if people is in a hurry to get their fiat money, my
understanding is MtGox allow them to request a expedited withdrawal that
is manually processed by their bank and cost 5% of the sum transmitted.

This explain the reason for a long time the differential between MtGox
and Bitstamp was around 10%. People could arbitrage only if the
difference was a lot over 5%.

When AurumExchange worked the differential was no more than 5% because
the cost to move fiat from Gox to Stamp was 1-2-3% and the currency were
credited in minutes (at worst hours). They had reserves at both
exchanges and raised the cost of the transfer as their reserves depleted.

My opinion is we are seeing the effects of the balkanization of the
international banking system (not a lot of trust available between
banks) and currency controls. Even sending US$ to Gox is a problem.
MagicalTux (Karpeles) stated their bank credit to their account the
money send immediately, but make  it available to them with a large
delay (more than a week, IIRC), they had a lot of transactions sending
money to them reversed after days or weeks (and this often result in a
loss as they credited immediately the credit to the customer account)
and even transaction they sent to customers were reversed or hold for
weeks without any reason apart fear of money laundering (a lot of bank
managers are in permanent "CYA Mode ON" because of KYC and AML laws).

A lot of the US legislation is making dealing in US$ and with US
residents absolutely insane for banks and other financial institutions.
So banks in Europe are refusing their services to US citizens and their
spouses and so on. Before or later they will ask for the same
legislations against US banks (it would be interesting if US banks were
forced by German of Italy laws to give data about their Italian and
German customers and their spouses in US or risk seizures and jail for
their management if they do not comply).

So I'm optimist with Bitcoin just because I see the previous system
collapsing.

Mirco