Yes. I'm shocked this hasn't happened already, since this seems like a textbook instance of where the unrestricted free market should correct ignorant or malicious behavior by a bad actor.
Just because the free market works well (on the whole) doesn't mean it works instantly. We're seeing the correction underway, and this thread is part of it: people are identifying a bad actor, having sensible discussions about the problem and alternatives, and are transitioning to more suitable actors while those being abandoned over time are discovering the error of their ways and either correcting the problems or are getting/pushed out.
You'd rather place the process in the hands of people no more competent or interested than those already involved? and do so by threat of force?
Mt Gox is already bleeding to death; it's just in slow motion because the same problems that make people wont to leave make it hard to leave. The over-valuation of BTC at Mt Gox (until recently) is evidence of capital flight through BTC due to their USD withdrawal problems; it's apparently turned around just now since the new BTC restrictions are even worse (and there's some fiat currencies--like the Yen--where you can still get money out.)
Either way, MtGox has been consistently out of line with market price, in a market with plenty of arbitraging, indicating that they have problems and people know it.
I don't know how to get easy numbers on exchange volume over time, but I do know that Mt Gox has fallen from the obvious top exchange to a solid third over the time I've paid attention (maybe half a year.) Why they still have any decent volume, I don't know; inertia, people still cashing out or waiting for Mt Gox to improve, suckers lured by the arbitrage opportunity, perhaps the Japanese domestic market (they're the only Yen exchange). I know I wouldn't touch the place with a 29.5 foot pole.
Keep in mind that if the market was free, US and EU would be full of bitcoin ATMs and there would be several working exchanges in every country. So if someone had a slightest problem with MtGox, they'd easily switch to another exchange already.
However, in reality there are huge obstacles to moving fiat money around and the market is simply not allowed to improve liquidity how it desires.
I'm not sure if you're being sarcastic or not but why do you believe the "US and EU would be full of bitcoin ATMs and there would be several working exchanges in every country" if the market was "free" ?
That seems an incredibly preposterous statement to me. Also why isn't the market free exactly?
Sometimes I feel bitcoin people live on a different plane of reality.
If you are a merchant slightly interested in Bitcoin, your concern number 1 is "is it legal? Won't my taxman hit me with huge fines so I have to close the shop just because I did something suspicious?"
If you are a guy building an exchange your concern number 1 is "won't I go to jail for 'laundering' money for some guy who then goes and buys drugs elsewhere with coins he bought through my service". Also: FinCEN tells you to get "money transmitter" licenses in 48 states which is VERY EXPENSIVE, so only a few guys are allowed to even try.
If you are a guy with an ATM, your concern number 1 is "won't they confiscate it for investigation for several months and put me in jail meanwhile for aiding terrorists and child pornographers?"
There's a lot of pending demand to do anything related to Bitcoin. And the reason it's not serviced yet is a big legal concern and very-very-very harsh law enforcement behaviour. If you are a suspect, you've already lost. Even if you are free to go later, you already lost time, money, opportunity, some property etc. You simply can't do business in such landscape.
Free market would mean that there's no uber-controller over the entire property of the whole multi-state country. If every shop owner is free to own his piece of land how he wants and resolving disputes directly with anyone who's concerned, then you could see many more bitcoin ATMs and other businesses. But currently you are at a permanent risk of well-equipped guys with guns coming to you and taking your stuff and yourself, just for doing something innocent which is not yet explicitly allowed.
A free market isn't just one with lower amounts of regulation but also one where regulation is applied indiscriminately to all participants. Many bitcoin exchanges have only been viable because a they did not yet have the same regulation applied to them as is applied to "fiat" exchanges. There are necessary regulations for how exchanges or ATMs work, what sort of reporting they need to do, and what sort of safeguards are in place to protect customers from fraud and loss. And there is a lack of financial professionals who believe in bitcoin enough to help adequately build these systems, and of course far more importantly, a huge lack of demand from the general population.
By your logic, if His Majesty The King applies his laws equally to everyone, then it's a free market?
Any organization which is tax-funded has inequality and discrimination built in. Some are net tax payers, others are net tax receivers. Then, net tax receivers dictate why it's good and honest for them not to pay, but receive and why it's good and honest for them to extract payment from others. And under what "regulations". Obviously, tax-funded regulations cannot be applied indiscriminately to all participants.
Free market is not about equality. It's about ability to protect property against anyone's opinion. Bitcoin and the internet themselves are a fine example of a nearly free market: no matter what you think of me and no matter what I think of you, we both can avoid each other and no one can take each other's coins. But if we don't have such technology and have to keep our cash in a bank, then we both depend on someone's opinion how the money should be used and how much we can spend and where.
The problem with MtGox is that they are preventing the switch. In a totally free market, that would be the standard scenario--as soon as an exchange got large enough, it could (and would) simply halt outbound transactions because there wouldn't be any regulations requiring it to switch (and economically, at that point it would be better to prevent outbound transactions than to compete for new business).
One of the problems with people advocating for a free market is that they don't understand what it really means: might makes right.
1. What exactly does MtGox prevent? I never used it, never relied on it and almost all of my friends don't care about MtGox. Yet all of us were able to buy, sell, trade and write software for Bitcoin without a problem.
2. Free market for me is about protection, not aggression. Bitcoin network is a free market in a sense that everyone's property is very cheap to protect and very expensive to extract. No matter what I think about how government should work, your BTC is safe and same for my BTC regarding your opinions. We simply have no other way, but to stop arguing and start cooperating voluntarily or just ignore each other. With BTC scripts we can fully insure our contracts without any need for neither "law", not its "enforcement". You can be very-very rich guy, but it still will be more expensive for you to steal my coins than just to trade honestly.
1) MtGox currently prevents outbound transfers of Bitcoins, and limits conversions into real currency.
2) Using your own personalized definition of free market changes the discussion. "Free market" isn't about protection or aggression, or power of any kind. The common definition is that that the market is free of external influences, so that market forces determine all outcomes. Indeed--by the common definition of "free market" Bitcoin is the absolute opposite--it's the pinnacle of socialized currency: everyone owns the currency and everyone is responsible for protecting it. BTC scripts don't eliminate the law or its enforcement, they become the law. (Law is simply regulation--in whatever form it takes place. For example, in the US law is both statutory, case-based, and practice-based, depending on the context.)
</snark>