[ExI] Bitcoin - Mt.Gox

Brent Allsop brent.allsop at canonizer.com
Tue Sep 10 12:12:43 UTC 2013

Hi Gordon and MIcro,

Thanks for this great question, Gordon.  I had the same questions and 
concerns.  And thanks for the great answer, Micro...

So another question I have is why is coinbase.com so much cheaper, both 
on the by and sell side, than even Bitstamp?

And, where do you guys buy your Bitcoins, where do you hold them, where 
do you sell them, and what do you use to buy things via Bitcoin with?  
And what are the historical answers for these questions (when and from 
whom did you change and why?)

Brent Allsop

On 9/8/2013 11:51 AM, Mirco Romanato wrote:
> 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
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