tl;dr: Mt Gox had a lot of coins stolen in 2011 and has been running a fractional reserve ever since. Mark tried to delay the inevitable insolvency by creating a bot to manipulate the price, and eventually tried to cover it all up by blaming "transaction malleability" attacks.
One of many plausible explanations. It's going to be really interesting seeing how this actually plays out.
Bitcoin folks need to understand that fractional reserve banking doesn't mean holding less in assets than you have in liablilities; it simply means that you hold less cash (or very liquid assets) than you have liabilities. What the author of this post describes is just fraud, not fractional reserve, and while libertarian types love to conflate the two, they are emphatically not the same thing.
Well "fraud" implies deception. I think the argument that "libertarian types" make is that very few people understand how money works at a high level (namely that the money supply can increase up to the money multiplier), and perhaps that the people who administer high level finance deliberately set things up to benefit themselves at the cost of the "common man." I don't think many people argue that fractional reserve banking literally constitutes fraud in the traditional civil or criminal justice system.
Murray Rothbard is probably the most influential example. He argued that fractional-reserve banking is fraud and should be effectively outlawed by regular tort law (not by government regulation).
That article was interesting about the utilitarian Mises vs the natural law Rothbard, but it was completely wrong about the 100% reserve clause Rothbard insisted as essential being necessarily enforced by the state.
It sounds like the writer has not heard of Rothbard's proposed anarchocapitalist systems, polycentric laws and competitive arbitration and enforcement organisations.
Yeah, here's the relevant quote where he gets it wrong, or at least uses misleading wording:
> Mises openly rejected the idea that government should have any role in setting a specific percentage of gold and silver or other assets, including bank deposits, in relation to their issuance of what he called fiduciary media, but which hard money advocates refer to as fiat money. In contrast, Rothbard called for 100% reserves.
Im sorry but what is there to "play out"? The show is over. There is a bankrupcy filed protection that will decide what to give to whom but thats about it. We will never find out the truth. Even after extensive investigation, if any, you dealing with anonymous wallets over period of years that been sicking coins out of gox. Definite answer who did it, who knew it, even how they did it, will never come.
There's likely still a whole criminal investigation to come. Plenty of people to interview, records to review, pieces to put together. I think it's pretty likely that more information will come out.
I was watching Freakonomics the other day (well, part of it, anyway), and they were talking about how the Japanese police will only really investigate crimes when they have a clear chance of getting a conviction. Take that as you will, but it seems to be that even if there's an investigation, that doesn't mean that anything will necessarily come out of it.
That and the Japanese police also will try to get a conviction even if it means convicting someone with little evidence. Combined with their seeming incompetence at investigating cyber crime this does not bode well for the MtGox investigation. The Japanese police have a 99% conviction rate with prosecutors being fired for threatening to kill suspects if they don't confess. The Japanese system of "Justice" strives for convictions, not justice.
One of many plausible explanations. It's going to be really interesting seeing how this actually plays out.