<story><title>Mt. Gox knowingly traded non-existent Bitcoins for two weeks, filing shows</title><url>http://www.theguardian.com/technology/2014/mar/14/mtgox-knowingly-traded-non-existent-bitcoins-for-two-weeks-filing-shows</url></story><parent_chain><item><author>Tuna-Fish</author><text>I&amp;#x27;ve been saying this for a while now, including on HN.&lt;p&gt;&amp;gt; The reason I tend to believe this scenario is because it&amp;#x27;s completely consistent with their behavior.&lt;p&gt;Another reason to believe this is that it is something that has happened &lt;i&gt;often&lt;/i&gt; in the past before modern banking regulations. Seriously, read history of banking in Netherlands or England, the idea:&lt;p&gt;&amp;quot;Oops, I just lost my customer deposits. I&amp;#x27;m probably going to get lynched now. But hey, if I just hide this until I make the loss back from fees&amp;#x2F;reckless trading, I&amp;#x27;ll be able to pay my customers back and avoid being lynched. It&amp;#x27;s a win-win.&amp;quot;&lt;p&gt;Is something that at least hundreds, if not thousands of bankers have had over the course of history. As far as we know, it never works.</text></item><item><author>sillysaurus3</author><text>One theory is that Mt. Gox became fractional reserve some time in the past, either by losing bitcoins or by spending them.  Then they were unable to replenish their supply, so it was a matter of time before a bank run.&lt;p&gt;The reason I tend to believe this scenario is because it&amp;#x27;s completely consistent with their behavior.  I watched them very closely, and there seemed to be no rhyme or reason for their behavior.  That is, unless they were missing everyone&amp;#x27;s bitcoin for some reason.  Then their behavior made perfect sense.&lt;p&gt;In that scenario, Mt. Gox would have knowingly traded non-existent Bitcoins for far, far longer than two weeks.&lt;p&gt;EDIT: I should mention that there&amp;#x27;s still no evidence whatsoever that malleability somehow led to the loss of &amp;gt;500,000 BTC.</text></item></parent_chain><comment><author>a-priori</author><text>&lt;i&gt;As far as we know, it never works.&lt;/i&gt;&lt;p&gt;There&amp;#x27;s no way to know how often this sort of thing has happened in the past. We only find out about the cases where a bank is &lt;i&gt;not&lt;/i&gt; able to earn back it&amp;#x27;s loss and runs out of cash. At that point they have to admit they&amp;#x27;re insolvent.&lt;p&gt;If the bank was able to earn back the money and become solvent again, then no one outside the bank would know it happened and the bank would have every reason to cover it up to save its reputation.</text></comment>
<story><title>Mt. Gox knowingly traded non-existent Bitcoins for two weeks, filing shows</title><url>http://www.theguardian.com/technology/2014/mar/14/mtgox-knowingly-traded-non-existent-bitcoins-for-two-weeks-filing-shows</url></story><parent_chain><item><author>Tuna-Fish</author><text>I&amp;#x27;ve been saying this for a while now, including on HN.&lt;p&gt;&amp;gt; The reason I tend to believe this scenario is because it&amp;#x27;s completely consistent with their behavior.&lt;p&gt;Another reason to believe this is that it is something that has happened &lt;i&gt;often&lt;/i&gt; in the past before modern banking regulations. Seriously, read history of banking in Netherlands or England, the idea:&lt;p&gt;&amp;quot;Oops, I just lost my customer deposits. I&amp;#x27;m probably going to get lynched now. But hey, if I just hide this until I make the loss back from fees&amp;#x2F;reckless trading, I&amp;#x27;ll be able to pay my customers back and avoid being lynched. It&amp;#x27;s a win-win.&amp;quot;&lt;p&gt;Is something that at least hundreds, if not thousands of bankers have had over the course of history. As far as we know, it never works.</text></item><item><author>sillysaurus3</author><text>One theory is that Mt. Gox became fractional reserve some time in the past, either by losing bitcoins or by spending them.  Then they were unable to replenish their supply, so it was a matter of time before a bank run.&lt;p&gt;The reason I tend to believe this scenario is because it&amp;#x27;s completely consistent with their behavior.  I watched them very closely, and there seemed to be no rhyme or reason for their behavior.  That is, unless they were missing everyone&amp;#x27;s bitcoin for some reason.  Then their behavior made perfect sense.&lt;p&gt;In that scenario, Mt. Gox would have knowingly traded non-existent Bitcoins for far, far longer than two weeks.&lt;p&gt;EDIT: I should mention that there&amp;#x27;s still no evidence whatsoever that malleability somehow led to the loss of &amp;gt;500,000 BTC.</text></item></parent_chain><comment><author>HockeyPlayer</author><text>&amp;gt; As far as we know, it never works.&lt;p&gt;Only because when it does work, you never find out.</text></comment>