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'Tragic violation of trust': Mt Gox loses over $300mn in bitcoin heist

Published time: February 25, 2014 09:07
Edited time: February 25, 2014 16:02
Reuters / Jim Urquhart

Reuters / Jim Urquhart

Mt Gox, once the world's largest bitcoin exchange, has lost 744,000 bitcoins, or 6 percent of total units in circulation. Technical glitches in February have forced the trading platform to consider filing for bankruptcy.

The value of bitcoin plunged to $440 after Japan’s Mt.Gox, vanished from the internet. Mt. Gox posted an update on its website on Tuesday stating that a “decision was taken to close all transactions for the time being,” on the grounds of “recent news reports and the potential repercussions on MtGox's operations.”

Initially, the website wend 'down', while Mt. Gox's Twitter page was wiped clean, and trading froze.

The bitcoin value has dropped to a 3-month low – at $441.22 the same level it was at on November 17, 2013. But by the end of November bitcoin had recovered, passing $1000.

Mark Karpeles, the chief executive of the Tokyo-based Mt Gox exchange, resigned from the board of the Bitcoin Foundation ‘effective immediately.’ In response to the resignation and the mysterious disappearance the Bitcoin Foundation issued a statement:

“This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry.”

The statement was supported by the CEO’s of bitcoins' biggest players- BTC China, Coinbase, Bitstamp.net, Kraken, Blockchain.info, and Circle.

Mark Karpeles, CEO of Japan's Mt Gox (Image from coindesk.com)

Bitcoin Foundation members told Business Insider they are worried Mt.Gox may be insolvent.

“We are shocked to learn about Mt.Gox’s alleged insolvency. While we are unable to comment on whether or not Mt.Gox's business operations employed operational best practices and reasonable accounting procedures, we can assure the public that the Bitcoin protocol is functioning properly.”

Earlier in February Mt.Gox identified a major glitch in its exchange that allowed users to withdraw the same bitcoin multiple times, and halted withdrawals for a two-week period.

Karpeles’ is the second high-profile resignation from the Bitcoin Foundation. In January, 24-year-old bitcoin millionaire Charlie Shrem, CEO of BitInstant, was arrested for using bitcoin for trafficking narcotics on the Silk Road website.

The New York-based bitcoin service suspended operations in July. Tyler and Cameron Winklevoss, who have recently announced their own bitcoin index, WinkdexWinkdex had invested $15 million Shrem’s company, but have since cut ties with the ousted CEO.

Comments (23)

 

Lash Lisson 28.02.2014 01:09

I warned MtGox on 18th Dec that there was a "hole" in their API.
I gave up waiting for a reply from them.

 

G Mitchell 26.02.2014 14:06

Holly Parks 26.02.2014 05:02

If Bitcoin is to endure it will need to be issued in denominations that can be traded to buy goods. With only 21 million to be mined and almost 12 million mined now if reaching its full potential you will have to make 1/1000, 1/100 coins for issue. You need that form of face to face exchange to become popular.

  



The amount of wholly incorrect claptrap on this article means it must be coming from GCHQ SIGDEV. Bitcoin is fungible. Go look up the word "Fungible" . It can do precisely what you say it cannot

 

Wayne Lambright 26.02.2014 08:19

To somehow flame that they were robbed seems suspcious. I'm a programmer and its taken me a some time to get my head around the in's and out's of bit coin, its complicated. I think mtgox is faking they did not know it was going on. Just my opinion.

View all comments (23)
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