[jellicle]

Yes, if Mt. Gox is certain they can deliver on the locked-up account bitcoins, then it can use its cash reserves to buy bitcoins elsewhere, then trade with its own account holders, effectively letting them cash out a little early in return for Mt. Gox taking 50% of the value.

Alternately, if Mt. Gox is certain they canNOT or will not deliver on the locked-up bitcoins, they can trade some of the locked-up non-existent ones for real ones and recover 50% of the value.

Either way, Mt. Gox makes a killing because they know the state of their books and their future intentions and you do not. They can bet knowing the outcome of the bet.

This is why you want financial regulation.

(Incidentally, this is what Goldman Sachs is doing with aluminum and other commodity markets.)

If Mt. Gox has your money or fake money, you need to contact a good class action law firm and see if you can get them interested.

[thrill]

I do not want financial regulation of virtual currency. I want people to be able to decide for themselves if they understand and are willing to take on risk - if they are not, then don't. Only allowing winners and losers and warts and unicorns will allow virtual currencies to find their place.

I DO want fraud prosecution, but we already have that.

[gamblor956]

Currency shouldn't be risky. It's a means of transacting. People shouldn't have to assume risk just to transact; they'll simply choose a less risky vehicle. It's fundamentally why Bitcoin won't succeed unless and until it gets its volatility under control.

[neomantra]

If MtGox halts trading, settles all pending BTC exchange transactions, return all fiat deposits, and then intentionally never returns any BTC, does one have any recourse?

I guess it would be some matter of Japanese law, international law (for claimants outside Japan), and the MtGox terms of service? What if these were virtual pets that people had traded?

[tlrobinson]

> This is why you want financial regulation.

I believe we're in the beginning of a weird transitory period right now, but in the long term cryptography and cryptocurrencies have the potential to replace the need for certain types of regulation entirely.

For example, it's possible to build a decentralized exchange between different cryptocurrencies (or assets where ownership tracked on a crypto ledger) where no party needs to trust any other party at all (e.x. https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Atomic_cross-chain_trading)