The MtGox Saga: Insolvency, Incompetence, or Bad PR?

February 15, 2014 21:51 UTC
This altered photo of Mark Karpeles uploaded by /u/MorXpe on /r/bitcoin shows how some MtGox customers feel right now.

A large chunk of the Bitcoin community has been ready to give up on MtGox for more than a few months, but the question still remains as to whether they are insolvent, incompetent, or just bad at public relations. While there is no need for a debate over whether or not this exchange has had problems in the past, there is little proof that Mark Karpeles and the rest of the staff over at MtGox are actually fraudsters. Although MtGox bitcoins are still being sold at a discount, it’s important to realize that they’re working on a fix for Bitcoin withdrawals. It seems somewhat likely that MtGox customers will be able to get their bitcoins out of the exchange rather soon.

MtGox Insolvency

There is basically no evidence that MtGox is insolvent. Although they’ve had to deal with account seizures related to banking issues and Silk Road investigations, the reality is that we aren’t talking about a group of fraudsters here. The transaction malleability issue also affected BitStamp, and it’s important to remember that MtGox actually bailed out the customers of another Bitcoin exchange in the past. Roger Ver has investigated MtGox’s situation in the past, and he has confidence in their ability to send funds to their customers in the future. In fact, he’s even willing to purchase some MtGox bitcoins at a discount.

MtGox Incompetence

It’s a bit harder to argue against MtGox’s incompetence. There have been multiple goxxing events that have brought large amounts of stress and anxiety to MtGox customers in the past, and even Andreas Antonopoulos had some negative thoughts to share after he had a chance to look at MtGox’s source code. We also can’t forget about all those trading engine lag issues during the Bitcoin Bubble of April 2013.

MtGox Public Relations

At the end of the day, it seems MtGox is suffering from a combination of incompetence and bad public relations. A lack of communication can only leave customers to speculate about the current situation surrounding their bitcoins, dollars, euros, and other deposits, and a bit of clarity could have gone a long way once customers started asking serious questions. In other words, someone from London should not have to fly to Tokyo to get answers on the current status of their bitcoins.

Last modified: April 24, 2014 16:08 UTC

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