For several weeks MtGox customers have been affected by bitcoin withdrawal issues that
compounded on themselves.
Publicly, MtGox declared that “transaction malleability” caused the
system to be subject to theft, and that something needed to be done by the core devs to fix it.
Gox’s own workaround solution was criticized, and eventually a fix was provided by
Blockchain.info.
The truth, it turns out, is that the damage had already been done.
At this point 744,408 BTC are missing due to malleability-related theft which went
unnoticed for several years. The cold storage has been wiped out due to a leak in the hot
wallet.
The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a
company. However, with Bitcoin/crypto just recently gaining acceptance in the public eye, the
likely damage in public perception to this class of technology could put it back 5~10 years, and
cause governments to react swiftly and harshly. At the risk of appearing hyperbolic, this could be
the end of Bitcoin, at least for most of the public.
We believe in the value of Bitcoin, its potential to change the world, and its principles of
transparency. Most importantly we care about the customers of MtGox and other bitcoin-based
businesses who will be affected.
The likely consequences will be larger than this localized financial damage, and we believe that
the benefits of keeping MtGox stable and running outweigh the risks. This isn’t about saving
MtGox anymore.
To avoid a chaotic situation, we propose:
1- Immediately reduce liabilities as much as possible with partners
With actual assets using arbitrage/ injecting new coins to erase them from the books. Informing and
asking selected Bitcoin main players to ask for their help. The MtGox price is low, making it possible
to erase a significant portion of the debt, but it needs to be done quickly. Injections in coin are most
useful (enough to run the exchange) but some cash is also needed to not run a fractional reserve.
2- Switch off the MtGox exchange temporarily (1 month) while announcing a restructuring and
re-branding
On a freshly branded static homepage, post a letter from Mark Karpelès stepping down as CEO of
MtGox, bringing in transition advisors, and citing poor organization and technology. Moving to a new
country (Singapore?) could be helpful.
3- Push the new branding (ready) and reset all SNS channels for communication:
Using Facebook, Twitter, etc with the new branding, we will give constant updates, changing the tone
of communications and informing stakeholders on all progress: new advisors, team members,
location, fee structure. We need to inspire confidence.
4- Set up a competent team and redesign the service and codebase:
Announce a new CEO, talented developers, and trusted business people to establish a new business
model. ( Finance, marketing strategy, IT, developers, Customer support). Build a low-cost, profitable
business again that gives customers a reason to stay (low fees, stability, etc) while we work off our
debts to stakeholders.
Part 1: To reduce liabilities
The stakeholders of MtGox are not the owners, but everyone in Bitcoin. This is sad
but the reality.
The current situation will negatively affect everyone who owns or operates in Bitcoin.
We will need to inject fresh coins inside the system in order to establish a basis to
eventually clear the books by running the exchange (perhaps 200,000 coins). 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.
Part 2: Shut down MtGox.com, launch new branding
Big focus on the future
Letter from the CEO
Admitting his errors and expressing desire to fix the situation by
stepping back as a CEO. Blaming the technology implementation
which was not sized and designed to deal with such level of
transactions or to deal with malleability.
It’s time to step up and face reality by bringing a transition of
respected advisors who will run things properly.
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. Try to reduce the impact and raise
stakeholder confidence, and eventually get Mark out.
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
Part 3: 1 month transition while updating the
industry
In order for stakeholders to follow up on MtGox progress, we will use SNS
platforms with constant positive communications.
- Every new milestone reached will be announced: Team members, new
marketing, progress on the technology implementation etc…
- The Customer support will stay operational to deal with people who
want to have access to their account/history
- During this period, the advisory board will be created, hopefully a new
CEO can be chosen and try to reset and secure the trading engine platform.
Expertise to find: Analysts, top class developers (crypto), IT security expert,
marketing, Bitcoin experts, economists, execs (CFO, COO, CMO, etc)
Part 4: MtGox becomes Gox
To avoid a bank run from customers, the daily amount of bitcoin and cash
withdrawals will be limited.
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.
The new branding is already complete, and new services such as the
Bitpocket wallet are already developed and ready for deployment.
With a new image, team, and offering we believe that it will be a
challenge, but is not impossible. The risks of not acting are incredibly
large and unpredictable.
Guugll Search
http://www.guugll.eu/gox-crisis-strategy-draft/
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