# Last edited on 2014-12-05 21:25:30 by stolfilocal
# For the thread "MtGox withdrawal delays [Gathering]" 
# NOT POSTED YET


[quote author=DrApricot link=topic=179586.msg9751050#msg9751050 date=1417808162]
[/quote]
No, if the insolvency were faked, in order to sabotage a vital part of the bitcoin ecosystem, for the nefarious purpose of preemption, as freedombit has clearly stated, then the judge would have been making himself an accessory after the fact to fraud by permitting this bankruptcy hoax to proceed. 
[/quote]

No one knew whether the insolvency was faked or real.  No one know that, still.
 
After declaring that he was insolvent, Mark requested bankruptcy protection for MtGOX to the courts.  According to the law, the bankruptcy judge must first decide whether the company must be closed, its assets liquidated, and the proceeds given out to the creditors; or it can be allowed to continue operating, with the creditors put on hold while it tries to make enough revenue to pay them off.  

Mark ostensibly wanted the latter, but, given the numbers that he presented to the court (almost 1 billion dollars debts, assets amounting at the time to only a small fraction of that, 13 million dollars revenue in 2013) the decision to liquidate was unavoidable.  

So, the claim that [b]the court's decision to liquidate[/b] was part of some evil plot does not stand.  On the contrary, besides being inevitable, it was the only way to ensure a prompt, comprehensive, and impartial investigation of MtGOX's accounting and assets, and ensure the fair distribution of the latter to the creditors.  Any other path -- in particular, allowing MtGOX to continue operating, or having it taken over by Sunlot -- would certainly have meant no real investigation, no chance of finding the missing coins, and no guarantee of a fair distribution of the remaining assets.  It is disconcerting to see the MtGOX victims accuse of all sort of evil intentions the only persons that deserve some trust and may be honestly trying to help them.

But I do not dismiss the possibiliy of MtGOX'sinsolvency being faked.  In fact, I must have raised that possibility somewhere in this forum, early this year.  Here is how a hypothetical scammer could pull a hypothetical scam that would look like MtGOX's saga:

(1) Scammer collects deposits of 220'000 real BTC from real clients.  

(2) Scammer creates some phony accounts and credits them with 660'000 non-existant BTC, with a fake deposit and trade history in the database.

(3) Puts on a public charade, with all the typical attitudes of the manager of an insovent company: stall withdrawals with unbelievable "technical problem" excuses, stop answering emails, avoid interviews, promise to fix and/or explain everything "soon", refusal to answer questions with the excuse that he is under a gag order, etc..

(4) After a few months of the charade, the scammer "confesses" that the company is insolvent because a thief stole 3/4 of the clients' coins (660'000 BTC).  As customers rush to sue the company, he requests bankruptcy protection.

(5) He repeats in court the claim of "660'000 BTC were stolen".  Meanwhile have an "anonymous hacker" leak the doctored database, to provide "independent proof" that MtGOX was indeed holding 880'000 BTC of client money.

(6) The company closes and the remaining 220'000 BTC are distributed to all former clients, proportionally to their account balances.  Thus, 1/4 (55'000 BTC) go to the real clients, and the remaining 3/4 (165'000 BTC) go to the owners of the phony accounts, who happen to be the scammer and his accomplices.