[c0ldfusi0nz]

Whether or not the run-up was "legitimate" in your eyes is inconsequential - the exchange rate ran up to the point that the market could no longer bear, then crashed back to reality. Does the run-up's legitimacy somehow make the current exchange rate illegitimate? I think not.

[sillysaurus3]

Actually, the rate ran up to the point that Mt. Gox could no longer bear. Unfortunately, it's rather easy to start an exchange and get people using it (or at least, it's no more difficult than any other startup) so there will probably always be companies willing to manipulate the market for personal gain. And since every popular exchange's price affects every other, manipulation from one will manipulate the price at all the rest.

The modern day bitcoin trader should carefully consider whether they want to be a part of a market where the largest actors aren't bound by the rules they set for everyone else.

[drcode]

Though I agree somewhat with your argument, a true "legitimate market" requires full transparency by all parties without people trading on insider info.

In this case, however, only some parties knew that MtGox's internal accounting was broken. Therefore, the price run up may have been "illegitimate" for a limited time period based on this asymmetry of information.

You are right though that over the long term a market price is always "legitimate" by definition, because of the maxim "something is worth whatever someone is willing to pay for it."