The poster does not seem like a malevolent person at all, but he was clever enough to post the $0.0101 bid order before other buyers in line knew what happened, and the commenters on the Bitcoin forum are clearly jealous. Well played, toasty.
He didn't place the $0.0101 order. "I also decided against this, when I realized that whoever placed the gigantic sell order was probably doing so for the exact same reasons and I knew how that would make me look."
What do you mean, "stole"? He placed a buy order, and was matched to someone selling. How on earth is that "stealing"? You can claim the sell orders were illegitimate, but you can't say the same of his buys, without ascribing to every user the responsibility to never be involved in any trade that anyone could possibly call shady.
If I own a grocery store, the onus is not on me to determine whether the person offering me money in exchange for goods came by that money legitimately. They give me money, I give them goods. That's the extent of my responsibility in the transaction.
I dunno. It seems like he understood that the sell order was fraudulent (from his post -- "If there was an attacker in the system . . .," a hypothesis in support of which he calls the very trade he just participated in). Since he had a belief that he was buying hot goods, it seems reasonable to expect him to abstain.
This is the case in physical realms too. For instance, if you buy a stereo for a hugely marked down price out of the back of a guy's car and the cops find out about it, you may get charged. You will certainly have to give it back to the original owner, and if they don't catch the crook, you are the one who is out the money. Even if you don't get caught, you probably wouldn't tell your friends because this is not the sort of thing decent people do.
I read it as he was watching a market free fall and was looking to capitalize on it. He had no way of knowing if the sell order was fraudulent. It could have been someone trying to drastically crash the value of BTC, but still a legitimate owner.
Buying them through MtGox wasn't the same as buying bitcoins out of the back of some guy's car.
What about people who had standing buy orders? They could never had known about the market free-fall and conditions surrounding their eventually accepted orders.
Exactly. If I see the price of Apple drop precipitously, I might think that somebody is manipulating the market, but I'd be a fool not to buy it at $5/share.
Also, what if it wasn't an attack? What if someone with a lot of bitcoins was running a malconfigured script? We've seen flash crashes in the real world caused by automated trading; why would btc be any different?
Or, what if it wasn't an attack, and someone was really trying to sell his bitcoins, either because he needed the money/thought that was a rational thing to do, or because he wanted to drop the market price for whatever reason.
I think that the OP considered the above possibilities and acted rationally. However, he also considered the possibilitiy of this being an attack/theft/hack and acted NOT like a dick.
Yeah, I think initially there was that. But after he bought he began to suspect there was fraudulent activity. And he still transferred the money out. The problem was not the buying, it is suggesting the MtGox is responsible for providing him with a free lunch now.
> wasn't the same . . .
No, but there was a commonality in that foul play was suspected. The point of the car analogy is not the appropriateness of the forum, because MtGox is unquestionably an appropriate forum. It's about how much evidence you have to suggest that something is amiss.
So if I get word that Anonymous is planning on doing another blitz trying to create a rumour that Steve Jobs has died, would I be wrong to short Apple? It doesn't matter whether the forces moving the market are legitimate or not; you can't be faulted for playing it. What you're advocating might be moral, but it's not in keeping with the principles of a free market.
According to the misappropriation theory of inside trading, it seems you would be doing something illegal. Or perhaps you could be convicted of acting as an accessory to securities fraud. Whether it's moral or in keeping with the spirit of capitalism I guess depends on your interpretation of those two things. Personally I don't think capitalism has a finders-keepers rule when participants buy stolen goods, but you may read it differently.
FYI, the information I'm basing this on comes from a similar case in the Wikipedia article:
"""
In 1997 the U.S. Supreme Court adopted the misappropriation theory of insider trading in United States v. O'Hagan, 521 U.S. 642, 655 (1997). O'Hagan was a partner in a law firm representing Grand Metropolitan, while it was considering a tender offer for Pillsbury Co. O'Hagan used this inside information by buying call options on Pillsbury stock, resulting in profits of over $4 million. O'Hagan claimed that neither he nor his firm owed a fiduciary duty to Pillsbury, so that he did not commit fraud by purchasing Pillsbury options.[16]
The Court rejected O'Hagan's arguments and upheld his conviction.
The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of the information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.
"""
Of course, IANAL and I could be wrong, but it sounds like the same sort of thing. Information is created about a company by a third party, and someone else uses that information to make trades.
Then again, these two situations are also not analogous, because this guy's trades on MtGox were based on public information (namely that the value of bitcoins was falling precipitously). So he might not have done anything technically illegal, were this a real exchange. However, his trades would probably have been rolled back in a real exchange (assuming the trades were enough to move the market like this), so that still supports my overall perspective that he should not expect to get away with the money.
There's no inside information, it was all public. That case doesn't apply unless he knew something that only Mt Gox "employees" should know.
And I've never seen him say he should keep the money (he said they didn't even ask him the money back), he just disagrees with the decision of rolling back by force, which affects the whole Bitcoin market, not just himself.
No he didn't. He withdrew them as proof of concept. Right now it's not even clear who he should give them back to. Furthermore, unless he caused the selloff there was nothing wrong with putting in his $0.0101 order. I suspect the bitter people on the bitcoin forum are the ones who had $0.01 orders in and assumed that fractional values would be rounded down the the nearest cent. They were hoping to make some easy money from others' misfortune and are angry because they were outwitted.
The 643 he has are 'worth' $10K at the $17/btc rate. That would be triple the $3000 he 'had in his account' so either way that would be not a bad return on $3K.
Raises other questions about whether clients can 'conspire' to hold records of sales (vs rolling back the transactions). In real 'cash' situations you have to give back the actual currency, in a bitcoin world its a rollback of the sell record, but now you've created Heisencoins have you not? Sold by some accounts, not sold by others?
Interesting to watch the intersection of the protocol and the reality.
I'm thinking of doing some bitcoin trading myself. It's like finding a free herd of sheep; eating them would be naughty and possibly illegal, but I'm seeing good opportunities in fleecing them and selling woolly sweaters to keep out the chill.
How can you fault a guy who does what traders try to do every single day? The fault is only with Mt Gox here and this isn't the first shady thing they've done (apparently even changing jurisdictions to avoid getting sued over previous abuses). Mt Gox are scum bags and deserve to be shut down at the very least.
