If that happens and you need to go to court, good luck proving that an exchange stole your coins. We haven't even seen Mt. Gox play out yet. Suppose they actually stole everyone's coins. Can someone prove it wasn't a hacker or a software bug? Time will tell.
That wasn't the question, the question was what's to stop them and the answer I objected to was "Nothing"; that's false, the law is not nothing. What's to stop most bad behavior... the law.
You're free to think that, I'm free to think you're wrong. MtGox is in Japan, Coinbase isn't; the contexts are different.
No... what stops most bad behavior is _consequences_. The law applies to everyone, but the consequences for breaking them don't.
We will see what(if any) consequences are placed upon MtGox. Personally, I still can't see how MtGox will be found liable of anything. Bitcoins aren't protected under any law and nobody said it was okay to trade your hard-earned government-backed fiat for some magical interwebz money. It might as well be fairy wings & unicorn tails. Don't get me wrong, I'm into crypto-coins and willing to lose up to 7k on them... but I fully understand that my coins could disappear in the next 5 mins due to any number of reasons and I have absolutely nobody to blame but myself.
> Bitcoins aren't protected under any law
False. Just because something is new doesn't mean existing laws don't apply to it. Bitcoins are property and property is protected by law regardless of when said item was invented. We don't have to create new law to cover every new invention man decides to own.
In the eyes of the law, I don't think bitcoin is your property anymore than buying a special weapon on Eve Online with fiat-money is your legal property. Maybe it should be, maybe it will be, but today that's not the case.
Or maybe I'm completely wrong... Has anyone sought legal action on financial loss related the value of an item inside Eve Online? Or any virtual item in any system?
A straight scam I understand, but say you purchased a bunch of rare swords & armor in some online game then next month the server crashes and all players lose their virtual items and the gaming company goes bankrupt. Is the company liable?
If they found themselves in a situation in which they are certain to go out of business as soon as people find out that they are in trouble, that motivation would cease to exist. It would come down to ethics, reputation, pressure from investors, etc.
This is in no way rigorous but consider User Interface design as a rule of thumb. Gox had an ugly unintuitive site. Coinbase on the other hand has a polished UI. This attention to detail suggests that the people who operate Coinbase are very different from those who operated Gox.
With Mt. Gox I am more inclined to think their problems stemmed incompetence rather than malevolence.
Assuming they don't just leave the country
False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.