After reading the joint-statement on blockchain, and the fact MtGox is down now, I am scared, what are my options? Is there anyone who can help me in my situation? I purchased those coins for 800$.

Edit: MtGox files for bankruptcy protection. What is the difference between bankruptcy and bankruptcy protection? I don't know, but I don't think that I am going to see anything from there...

  • 3
    I'm really sorry to hear that. Unfortunately no one really knows what's going on at Mt. Gox right now, and nothing they're doing is in any way reassuring. We'll just have to wait and see how this all plays out. – ChrisW Feb 25 '14 at 7:20
  • 3
    Also keep your coins to yourself, whenever possible. Never let them be sitting around somewhere. I dodged a bullet here... – Jori Feb 25 '14 at 10:35
  • 1
    The exchanges should show you your private key so you could always transfer the money from a different client. – ja72 Feb 25 '14 at 14:03
  • @ja72, I don't think any exchange actually do that. It is impossible to maintain a hot wallet this way. – Pacerier Feb 26 '14 at 6:15
  • 1
    @ja72: That would cause its own problems. Suppose you've just sold some coins, but then the price went up so you wish you could undo the trade. If you hold the private key, you could try a double spend, and if you're successful the trade has to be unwound. This would mean that the buyer couldn't safely spend or resell those coins until 6 confirmations or so - it would drastically slow down the market. – Nate Eldredge Feb 27 '14 at 14:55

This is generally called counterparty risk - if your resources are in custody of someone else, there is a risk that they go bankrupt and you lose it. And in that case it is too late and your options are limited to making a sadface :( and writing it off as a loss - do note that you can get x% of the loss back from your income tax in most places.

There are options to limit that risk before it materializes - it might be too late for MtGox, but important for the future. All the lessons are pretty the same as historically for 'normal' banks before modern regulation.

  1. Diversify the risk - if your funds are spread out among multiple institutions, then there is less chance in losing it all than putting it all in one basket;

  2. Insure the risk - your bank deposits are insured in most countries, i.e., if the bank can't return them then the insurer pays up to a certain amount. Bitcoin companies currently aren't insured that way, however it means that when some of them get deposit insurance then that would be a serious selling point for their trustworthiness; and if (when?) regulated banks start offering bitcoin services, then you'd get that protection as well. Also, you can purchase insurance for yourself, although it might be unpleasantly expensive.

  3. Reduce the risk - choose the company properly. Reputation certainly didn't help in MtGox case and it's not a guarantee, however, you should be looking at solid evidence that the company is solvent. I.e., you want periodic, publicly visible financial statements that are seen and analyzed by many people and that show that they really can afford to pay all the depositors back even if they have a bad day or a bad year. At the very minimum you need this to be (a) according to common accounting standards; (b) expressed by a company officer in a manner that means jail for him if (s)he lies in these statements; (c) audited by a third party - otherwise these statements are worthless, as if there will be real problems, then they will lie always. Regulators of financial institutions do much of that job for banks; not eliminating those problems but reducing them - for unregulated entities you'll have to check everything yourself.

  • What exactly happens to the bitcoins that Mt. Gox does have, though? Just because they have more liabilities than assets doesn't mean no one should get back anything they lost, does it? – Mehrdad Mar 2 '14 at 11:26
  • During bankruptcy, the assets would be liquidated and then distributed proportionally to everyone that MtGox owes. However, I haven't seen solid financial reports of MtGox (that itself being a poor sign), but the leaked documents seemed to indicate that their assets are just a tiny fraction of what they owe (i.e., they lost $500m worth of bitcoin but have ~$40m of assets). In practice that means that within due time (1-2 years?) depositors might receive a payout of some 5% of their funds or something like that. – Peteris Mar 3 '14 at 0:31
  • I see, thanks for the info! – Mehrdad Mar 3 '14 at 0:35

You are not going to like this:

Man-up and accept that you took a chance using MtGox and lost. The same applies to stocks, commodities, gold, etc. You decided to keep substantial funds in an unregulated exchange in an unregulated "currency".

What was lost was the amount in fiat currency represented by the BTC at the time you deposited them, not todays, yesterdays or any other chosen dates rate. Just like buying stock--except stock exchanges are regulated.

P.S. My holdings are down too, but not via holdings at MtGox.

  • 1
    Consider: I bought 1 Bitcoin at $400. it goes up to $600. I lose the Bitcoin. How much have I lost, $400 or $600? Next: I bought 1 Bitcoin at $400. it goes down to $200. I lose the Bitcoin. How much have I lost, $400 or $200? – zaph Feb 25 '14 at 17:14
  • 1
    I am sorry about anyone's loss. BTC and other coins are speculative; one may win big (10x, 100x) or loose all (1x). As are gold, gems, property, etc. Regulation helps to stabilize losses but also tends to limit gains. One needs to decide the level of risk one is willing to take. Personally I have invested in mining, the only way I will make any real money is if BTC succeeds in a rather big way. I figure it will take years to determine the outcome. My wife and I have discussed how much we are willing to risk while admitting we may well lose our entire investment. – zaph Feb 25 '14 at 17:31
  • 1
    One the positive side one can only lose all of their investment. There are many ways to lose much more than your investment, been there, got the t-shirt. But, if you don't play you can't win. – zaph Feb 25 '14 at 17:35
  • 1
    @Gracchus I was referring to IOUs. Your IOUs become worthless when their issuer is bankrupt/just never uses Ripple anymore. It seems inconsistent to be disgruntled at Bitcoin for people losing money to a localized instance of counterparty risk, and then advocating a system completely built around counterparty risk. – Murch Feb 27 '14 at 9:59
  • 1
    @Zaph, while the IRS hasn't yet stated its intended way of accounting for casualty loss of Bitcoin, I speculate that it's safe to assume that it would be regulated as a commodity or security. Thus, you can only lose what your initial investment was. You had not realized the gain. So, in either case, your loss is $400. – Colin Dean Feb 27 '14 at 15:18

I received this email:

To whom it may concern,

At 5:00 p.m. on April 24, 2014, the Tokyo District Court granted the order for the commencement of the bankruptcy proceedings vis-à-vis MtGox Co., Ltd. (“MtGox”), and based upon such order, I was appointed as the bankruptcy trustee (Tokyo District Court 2014 (fu) no. 3830). The bankruptcy trustee will implement the bankruptcy proceedings, including the administration and realization of the assets and investigation of the claims. For the purpose of providing information to the related parties, we hereby inform you of the basic matters regarding the bankruptcy proceedings as attached.

This email address(mtgox_trustee@noandt.com) is used only for the purpose of sending messages, and we are unable to check and respond to any replies to this email address. Since we plan to provide the information regarding the bankruptcy proceedings by posting it on the website hosted by the bankruptcy trustee ( http://www.mtgox.com/ ), please check this website.

Bankrupt MtGox Co., Ltd. Bankruptcy trustee Attorney-at-law Nobuaki Kobayashi

One of the links on the mtgox site had a Q&A section

Q. Please return the bitcoins and cash that I deposited with the Company.
A. We will make the liquidating distribution to the bankruptcy claims if funds for distribution are secured. With regard to the liquidating distribution under the bankruptcy proceedings, please see below.

Q. How many bitcoins or how much cash does the Company have?
A. The actual amount and value of bitcoins and cash of the Company will be investigated by the bankruptcy trustee with the cooperation of certain experts, etc.

Q. Will the bankruptcy trustee investigate the bitcoins and cash that are said to be lost?
A. The bankruptcy trustee will investigate such matters to the extent possible through its asset administration. The Company has consulted with the police authority, and the bankruptcy trustee will also proactively cooperate with it when such cooperation is requested.

  • Yep, I got it too. – Ilya Gazman May 23 '14 at 3:04

Contact a Lawyer and sue them.

  • 2
    Suing an entity that has no money is just like flushing it down the toilet. Suing out of you own jurisdiction is much worse. Extrapolate that to suing in a Pacific Rim Nation – zaph Feb 25 '14 at 13:58
  • 2
    @zaph: Well, as they are filing for bankruptcy, as a creditor you can make a claim for a share of whatever assets they do have. It may be hard to know at this point how significant those assets are. – Nate Eldredge Feb 26 '14 at 0:51
  • 1
    ~$25k USD in Bitcoin is not an insignificant amount. However, it's likely to be a protracted battle and unlikely to be settled in BTC. – Colin Dean Feb 27 '14 at 15:20
  • I can see a "Former Mt.Gox clients bring class-action suit" line in the newspapers, very soon... anyway, it's your legal right to fight to get back at least one cent off every Bitcoin you had there. Even recovering 1mBTC would be better than losing it all... – Joe Pineda Feb 27 '14 at 23:11
  • Ha! Happened earlier than I thought arstechnica.com/tech-policy/2014/02/… Since aprox. 30% of MtGox users were from Europe rather than USA, let's see how long 'till a similar class-action arises in a Schengen-area country... – Joe Pineda Mar 1 '14 at 0:04

I think this question deserves a simple and direct answer.

What are my options?

None, essentially.

  • Forget about your 31 bitcoins - they are now in the hands of a thief and are untraceable.
  • Wait several months, perhaps years and see whether some fractional return results if
    • MtGox is resurrected in another form and makes some effort to repay creditors from future earnings.
    • Japanese investigators can salvage anything

Is there anyone who can help me in my situation?

No. No-one can help you to retrieve your 31 bitcoins.


2013-02-28 Yahoo News report

"We're at a loss for how to help them," said Yuko Otsuki, who works in the [Consumer Affairs] agency's counseling department.

  • Not meaning to diminish the Japanese police and their investigators, I don't think they'll be able to accomplish much. Frankly, save a handful of very specialized units in certain countries (USA? Israel?? Britain???) I doubt any police force in the world would be able to understand the robbery, much less track the robbed coins, retrieve them and jail the perpetrators :( – Joe Pineda Feb 27 '14 at 22:49

I feel very fortunate in learning before I invested in BTC the difference between public and private keys. Also knowing how to use Localbitcoins (as an example) as an exchange and being advised once I received my bitcoins at LBC not to leave them there for any time.....because you never know what will happen to any exchange. I was advised to transfer the BTC in LBC to a wallet such as Electrum which uses a random seed to generate private keys. Storing your BTC in such a way gives you far more security than leaving them deposited on an exchange.

  • Theoretically, a well-run company would/could have best-of-breed people devising ways to improve security and building layer upon layer of redundancy, honeypots, offline storage, etc. none of which you can unless you happen to be a security expert. Most people's wallets aren't attacked because of their being very small targets rather than the high-security of a typical PC. MtGox blunted it, period. – Joe Pineda Feb 27 '14 at 23:17

There are people buying and selling 'MTGox BTC' for 'Real BTC' here

https://bitcoinbuilder.com/

essentially a gamble on whetehr they payout on the accounts there. But they now it seems have stopped trading since the official insolvency declaration. However as a once (a long time ago) customer of MtGox I did see in my inbox a form entitling me to apply to get any funds I may have held in MtGox back as part of the liquidation process. I would suggest you look to that as your first avenue. Failing that as is the case in many liquidations you may never see your BTC back.

  • Can't, I need to transfer my funds to his bitcoin account, but bitcoin trade is down. – Ilya Gazman Mar 5 '14 at 7:26

Kraken just sent an update for MtGox funds claim. Log in here - https://claims.mtgox.com/assets/index.html#/ .

Thou I have to admit I have problems logging in.

  • Yeah I so it, going to try latter. Will keep you posted – Ilya Gazman Apr 22 '15 at 21:23

Your Answer

 

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Not the answer you're looking for? Browse other questions tagged or ask your own question.