Though I agree somewhat with your argument, a true "legitimate market" requires full transparency by all parties without people trading on insider info.
In this case, however, only some parties knew that MtGox's internal accounting was broken. Therefore, the price run up may have been "illegitimate" for a limited time period based on this asymmetry of information.
You are right though that over the long term a market price is always "legitimate" by definition, because of the maxim "something is worth whatever someone is willing to pay for it."
In this case, however, only some parties knew that MtGox's internal accounting was broken. Therefore, the price run up may have been "illegitimate" for a limited time period based on this asymmetry of information.
You are right though that over the long term a market price is always "legitimate" by definition, because of the maxim "something is worth whatever someone is willing to pay for it."