High profile responses
Coinapult founder and bitcoin entrepreneur Erik Voorhees posted a lengthy and emotional commiseration on Reddit, saying he had 550 BTC stored with Mt. Gox himself and “will never get any of that back.”
“I should have known better, of course. I take responsibility for leaving those funds with an entity that had proven incompetence repeatedly. I chose to ignore even my own warnings, for nothing more than the sake of convenience,” he wrote.
While laying the blame firmly at the feet of Mt. Gox, he affirmed that bitcoin itself was not at fault and security was not impossible, and implored others to continue “building a new financial order.”
“It won’t be the last calamity endured before the win,” he continued.
Bitcoin companies Coinbase and Blockchain.info moved swiftly to distance themselves from Mt. Gox and launch into a strident defense of bitcoin itself with a joint statement.
Rebranding process
The leaked proposal recommends a full rebranding of the company and even a possible relocation to another jurisdiction, like Singapore. Firstly, it calls for the immediate reduction of liabilities through the injection of new bitcoins and the purchase of coins at depressed prices on its own exchange, in what sources told CoinDesk amounted to a bailout of the embattled exchange.
It paints a wishful picture of brand continuity without promising much to customers, maybe to neutralize any anger bound to arise from a hard shutdown and keep stakeholders’ hopes somewhat alive.
“Customer support will stay operational to deal with people who want to have access to their account/history”, it says, while maintaining that few, if any, staff employed at the current company would remain, particularly CEO Karpeles.
“New branding, means that there are future-forward plans already in the works, and customers will see that MtGox actually has a plan in motion.”
“The MtGox price is low, making it possible to erase a significant portion of the debt, but it needs to be done quickly.’
Reducing liabilities
The document notes that protecting the image of bitcoin itself is a primary concern, since a failure on Mt. Gox’s scale will be a disaster for digital currency in mainstream eyes.
To reduce this damage, it appears to put out a plea to high profile members of the bitcoin community to inject funds in the order of 200,000 BTC into the exchange, saying “the costs of not doing so are incalculable at this stage.”
“Support from Bitcoin big players and core community – long term, high leverage:
Coins for equity, coin donations, and cash injections to buy coins at the cheap MtGox price are some options among many.”
“Bet on future profit to refill the lost coins – Long term, low leverage:
Regardless of malleability and regulatory issues, MtGox’s main problems are massive robbery and poor bitcoin accounting. However, the business as an exchange is highly profitable and healthy when run properly.”
Mt. Gox becomes Gox
The documents suggest stakeholders would eventually see some kind of return, without saying when or indeed what the return might be. Should the company re-open with a new image, the strategy would be to limit withdrawals both in bitcoin and cash to prevent a bank run.
Note the timeframe (italics are for emphasis):
“With the profit, a meticulous analysis will be made over the coming years to clean the bitcoin balance sheet while running the exchange and generating revenue to pay back stakeholders. New offerings such as additional currencies, low trading fees, etc will give customers a reason to stay with MtGox.”
Management reshuffle
Removing Mt. Gox’s management team seems to be a priority and, ironically, this is an area the Japanese authorities seem willing to regulate.
“In Japan, a CEO cannot resign until a new CEO is nominated. In that case customers knows that MtGox is still around and working, but under new management,” it continued.
“Try to reduce the impact and raise stakeholder con?dence, and eventually get Mark out.”
One strategy the document puts forward is a “Letter from the CEO”, essentially a mea culpa from Mark Karpeles that admits Mt. Gox’s technology was inadequate to deal with the task of maintaining a bitcoin exchange, both in transaction volumes and response to the the malleability issue.
Mounting evidence
Though doubts remain among certain high-profile sources, at least two of the company’s four listed strategy points seem to have already been confirmed.
For example, Part Three of the four-part plan called for the company to rebrand as Gox.com, a process that it said would require it to “reset all SNS channels for communication”, which is consistent with Mt. Gox deleting its entire history of Twitter posts just yesterday.
Further, a search of the Internet domain registration database WHOIS seems to confirm Mt. Gox’s intention to rebrand as Gox.com. The resource shows that the domain Gox.com has been purchased by Mt. Gox parent company Tibanne Co Ltd, and is currently owned by Karpeles (http://www.whois-search.com/whois/gox.com).
Theft
According to an apparently leaked document, Mt. Gox has apparently lost a massive amount of bitcoins: As much as 750,000 BTC, to be exact. The theft was apparently due to the transaction malleability issue Gox has blamed for its troubles, but occurred closer to the time the problem was initially discovered, in 2011.