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How and why Mt.Gox should walk away

https://medium.com/p/e1f911bb20f7

by ksiegel • 12 years ago

5 1 12 years ago

ME

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fsk• 12 years ago

Problem is, if MtGox really is insolvent, there will be no bidders.

Why assume the liability for MtGox's debts?

Suppose MtGox has 50% of the assets needed to pay off all customers in full. Then, every customer is going to take a 50% haircut, one way or another. There's no way a non-insolvent exchange would take on that liability.

If there were no rumors of insolvency, they could get away with it for awhile. But all deposits will be withdrawn as soon as possible. That's the inherent problem with fractional reserve banking.

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