Prediction: MtGox will rescue itself from insolvency by rolling out Litecoin in August

I am going to go out on a limb and predict that MtGox will announce Litecoin support sooner than anticipated — possibly by the end of August.

There is clearly trouble at mtgox, which started when the US closed gox’s dwolla account for failure to register itself as a money services business; and things got worse with the coinlab lawsuit. The lawsuit seems to have blown over. But more recently USD withdrawals have gotten veeeery slow. Like, months slow. Customer support is evasive as to why.

So, we have a slow motion bank run. It manifests itself by 20% higher bitcoin prices at mtgox than the other large exchanges. There are essentially two BTC/USD exchange rates: Gox and everyone else.

There was a milder version of this unpleasantness back in April. I remember the sickening feeling of “uh oh… what’s happening at gox” that finally prompted me to buy btw with dollars at a much worse rate than the other exchanges, and pull out. Better a bad trade than a total loss, I figured.

So when will the real bank run happen?

I am going to out on a limb and predict that it won’t. Everything is going to be fine!

Mtgox is going to pull a rabbit out of a hat, and stay solvent.

Mtgox has been flirting with litecoin support for months now. Plenty of time to accumulate a sizable position. Or to work out a behind the scenes deal with a litecoin whale like burnside of litecoinglobal, to buy a massive amount of litecoin at a discount in exchange for inside information on when litecoin will go to gox.

What to do?

It’s tricky.

I have a defensive litecoin position, although I’m bearish on litecoin for the medium to long term. But I think if litecoin goes on mtgox sooner than anticipated it could double or triple in a few days. The trick will be not to get caught up in the hype and sell before it crashes, or at least reverts to the $2-$3 range — which could happen if gox dumps its stash to rescue itself from insolvency on the USD side. I think $7USD is a good price, but don’t wait for it to get that high beforecashing out… sell some on the way up.

Let’s see how this plays out, and fingers crossed.

Note to my readers: I wish I had a better intuition on what effect a litecoin spike will have on litecoin denominated securities, particularly litecoinglobal (which owns btct.co). I have been thinking this through for over a week, and I can’t make up my mind whether litecoin stocks are a buy if litecoin is appreciating, or we will see dumping. Please comment if you have any ideas.

UPDATE: According to

GigaOm reporting that Feds seized $2.9Million from Dwolla account siezure

the box seizure was 3M USD, fairly small and probably not enough to force a dollar shortage. I am sticking to my guns anyway. Something is wrong at gox. Maybe a partial cold wallet theft that was covered up, with mtgox trying to make up the difference in trading profits? Something. And we will see litecoin soon.

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About thomashartman1

I am a crypto currency enthusiast, trader, and software developer. Contact: thomas AT standardcrypto DOT com.
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10 Responses to Prediction: MtGox will rescue itself from insolvency by rolling out Litecoin in August

  1. Luke says:

    Proof read yo article.

  2. Sam says:

    Interesting theory, I’ll be curious to see if it becomes true. I think everyone will agree that things are not right at Gox as you’ve pointed out.

  3. Even an elaborate, thoughtful intution is still just a hunch. And what you have here is basically a conspiracy theory. Mt.Gox as the “Gnomes of Zurich” I think they will actually stay on the straight and narrow instead of pulling any stunts. It would benefit them most in the long term if they actually

    • were transparent and aboveboard, even while risking insolvency.

      • thomashartman1 says:

        I totally agree, on all points.

        And yes, it’s a conspiracy theory. I think it’s important to have a sense of humor about these things.

        “Just because you’re paranoid doesn’t mean they’re not following you.”

  4. Randy says:

    I guess you where wrong :(
    Still no news from mtgox

    • thomashartman1 says:

      Yup, I was wrong, it’s just more delays.

      The longer mtgox takes to pull the trigger the less of an impact it will have.

      Oh well.

  5. BB says:

    August 5th, 2013
    “LiteCoin Update We hate to apologize yet again for the delay in implementing Litecoin, but the fact of the matter is that it depends on a variety of factors, including completing all of the above before we launch. We’re looking forward to the rollout, but at this point are reluctant to speculate on when. We are sorry to keep Litecoin enthusiasts hanging.”

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