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How and why Mt.Gox should walk away

5 pointsby ksiegelover 11 years ago

1 comment

fskover 11 years ago
Problem is, if MtGox really is insolvent, there will be no bidders.<p>Why assume the liability for MtGox&#x27;s debts?<p>Suppose MtGox has 50% of the assets needed to pay off all customers in full. Then, every customer is going to take a 50% haircut, one way or another. There&#x27;s no way a non-insolvent exchange would take on that liability.<p>If there were no rumors of insolvency, they could get away with it for awhile. But all deposits will be withdrawn as soon as possible. That&#x27;s the inherent problem with fractional reserve banking.