Interestingly, when the big banks were caught laundering drug cartel money they only had to pay fines a fraction of the amount laundered.<p><a href="http://www.bloomberg.com/news/2013-03-31/money-laundering-banks-still-get-a-pass-from-u-s-.html" rel="nofollow">http://www.bloomberg.com/news/2013-03-31/money-laundering-ba...</a><p><a href="http://www.globalresearch.ca/money-laundering-and-the-drug-trade-the-role-of-the-banks/5334205" rel="nofollow">http://www.globalresearch.ca/money-laundering-and-the-drug-t...</a><p><i>In March 2010 Wachovia cut a deal with the US government which involved the bank being given fines of $160 million under a ”deferred prosecution” agreement. This was due to Wachovia’s heavy involvement in money laundering moving up to $378.4 billion over several years. Not one banker was prosecuted for illegal involvement in the drugs trade. Meanwhile small time drug dealers and users go to prison.</i>
Keep in mind that half of Mt. Gox's value is in BTC. They tend to receive about 1% of volume (average 0.5% commission on both sides of trade - half of which is fiat, other half BTC)<p>Last month or so they've had about 20K or so daily volume. So 600K X $100/BTC X 1% = about $600K/month. Let's double that for good months. Hell, triple it. $1.8 M/mo, or $900K cash. I'd assume $100K/mo for salaries, infrastructure, etc. So about $10M/year in profit.<p>Half of it's frozen. Meanwhile, they have $900K/mo in BTC. That's a liability if they can't properly cash out. They'd probably have to sell about 1/2 of what's in their wallets to get to solvency as people continue to want their money. They control like 60% of the market - so what would be the effect of about 30% of all BTC hitting the other exchanges? Assuming they could handle the traffic, it would devastate prices.<p>Or they liquidate. 60% of all BTC flooding market.<p>Or they go under. It'd be good for those holding in other exchanges, but that would be an epic implosion as all those BTC's "disappear".<p>I can't see this scenario change, unless they can start fulfilling all wires within the next couple of weeks.<p>Folks will split hairs about the fact that the freezes are on their subsidiary... but how of Mt. Gox's business runs through it? Enough that the distinction is pointless.<p>All of these numbers are ballparked, but the deeper point: much of Bitcoin's success and attractiveness is based on the Mt. Gox exchange. Too much. It's going to destroy the market as it currently stands.<p>The only alternative is for everyone to pull out BTC, destroy Mt. Gox, and hold as the other exchanges stabilize.
For anyone who's directing their rage at MtGox for this, that should not be the target.<p>We should be outraged at the banking system and the lawmakers instead. They are the ones who are putting roadblocks on to MtGox, as these documents prove.<p>MtGox does not operate a MSB according to the laws in Japan, so if it has a bank account in the US, how does it make it a MSB?<p>Besides, the FinCEN guidelines are not clear for Bitcoin. For example, there's no clear definition for what is a "User" and what is an "Administrator".<p>Being P2P, users are administrators at the same time. (You don't necessarily need to mine bitcoins to be an administrator, if you're a user, then your client still needs to do administrative tasks such as relay transactions across the network)<p>Besides, bitcoins should be considered as virtual messaging service, rather than a currency as in the traditional sense of the word. In essence, Bitcoin is a distributed messaging network. (When bitcoins are bought, the buyer is actually paying the seller to send a message to the network).<p>We need better, clearer guidelines on this.
Report from #mtgox when I asked, the deposits and withdrawals in USD are still flowing, but it's so slow they might as well not be. You can move your money out of Mt.Gox as bitcoins but you take a "9% haircut" because the Mt.Gox USD are undervalued.<p>(Unless of course your money is already bitcoins.)<p>Wire transfers are being fulfilled in an average of 7 weeks.<p>This is 100% hearsay but I went and asked yesterday because this article popped up on HN and was deleted before anybody had a chance to comment, and I wondered why.<p>No comments about the seizures, other than "anything but business as usual".
How is Mt. Gox on the legal and lobbyist front? They might be able to go hard on this with USV and others to back off the pressure and cut a deal that preserves BTC without onerous regs. (It might be expensive.)
If you trusted a company that started out trading Magic: the Gathering cards with a significant amount of your money, you probably need the lesson you are going to learn from this.