Will Mt.Gox Users Ever Get Their Money Back?

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Feb. 28 (Bloomberg) -- Boston University Executive-In-Residence Mark Williams discusses Bitcoin and Mt.Gox's demise on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Boston.

As a former regulator and commodity trader, i'm wondering what you make of the role of a trading operation like my.

Gox in bitcoin.

It is not even a trading operation.

No controls.

It's a mess.

Clearly it represents to the market that are there other exchanges out there in bitcvocoin world that are run this way?

Investors lost tons of money.

As a bank examiner in the past, i wonder what kind of specific legal protections are legal requirements banks have that are different than what these kind of exchanges have that might have served as a model?

The banks themselves have a control system with internal policies and procedures.

They have an external auditors that come in and they also have regulators that come in and find them if they are not complying with the high standards.

Compare that to what we have in bitcoin world.

We have exchanges, many of them with different levels of standards and we also see that there is no control environment in place.

We had cyber hackers come in for up to two years to steal these coins buried not only did they still customer coins, but they still 100,000 coins specifically from the owner of gox.

What is the likelihood that these people will ever get their money back?

There is no regulation and there are no safeguards so why should they?

Right, that is the sad story.

There is no consumer protection whatsoever.

Without that protection, these investors could lose everything.

Most probably they have lost everything.

Bitcoin itself is not traceable.

Once these transactions are done, they are irreversible.

It's anonymous so clearly is hard to track down the culprits and it is hard to get the money back.

It also seems that establishing the most basic legal principle is virtually impossible because of the weight bitcoin is operating.

There is no location in place for such currency.

That's correct.

There is no legal structure over the top of it as well as any sort of regulation over it.

The chance of getting money act is quite low.

What's interesting about this story is the fact that this is really bitcoin being tested in the real world.

Although the protocol is claiming to be strong, the infrastructure around the protocol, the industries that support the structure up your to be weak.

That chain is only as strong as its weakest link and that is what we see with mt.

Gox.

I don't really care about the guy that lost the money because i'm a mean person.

I do care about the structure.

This points out the risk with bitcoin and how it is different than other things because of its anonymity which is what makes it attractive that it creates an inherent risk in the product.

Cannot ever get away from that?

Three things have to happen -- it has to be regulated, there has to be a high standard set.

This currency is nation less.

It has to be a global high standard and thirdly, we've got to get away from these anonymous coins.

Look what has happened here.

Criminals were very efficient and fast to transfer the value without the customers even knowing and now the customers have zero ability to get that money back.

Thank you, mark williams.

We will continue to follow that case as it unfolds.

This text has been automatically generated. It may not be 100% accurate.

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