Mt. Gox issues statement: Oldest bitcoin exchange offline amid rumours of £250m theft
The supposed demise of the Japan-based exchange has rocked the bitcoin community
Tuesday 25 February 2014
Mt. Gox, the oldest bitcoin exchange, appears to be on the verge of collapse following a series of allegations that the company is insolvent. The news has rocked the online cryptocurrency community, drawing comparisons with the bankruptcy of investment bank Bear Stearns in 2008.
Mt. Gox’s website was taken offline following a joint statement issued by six other major exchanges denouncing the company. Prior to this the Twitter feed operating by the exchange was deleted and its CEO, Mark Karpeles, quit the board of industry body Bitcoin Foundation.
“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,” reads the joint statement, which was edited following its publication to remove any reference to insolvency. “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.”
Mt. Gox has since issued a statement on their website saying: "In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly."
The first sign of troubles for Mt Gox emerged earlier this month year after the exchange suspended all bitcoin pay-outs. This was in reaction to the discovery of a flaw in how the site’s protocols for handling exchanges of the currency. This vulnerability, known as “transaction malleability”, has affected several sites and is thought to have been the method by which thieves stole more than 4,000 bitcoins (at the time worth £1.6 million) from Silk Road 2, a website that offered services similar to the notorious drug marketplace Silk Road.
The crypto-currency community has been shaken by the news with many Mt. Gox customers fearing that their assets have been lost for good. A widely circulated document that is supposedly a leaked internal memo reports that that the company has suffered a theft of 744,000 BTC (£230 million, or 6 per cent of all coins in existence) that has gone “unnoticed for several years”.
The same document proposes a four step plan to save the exchange, including taking down the website temporarily, re-branding the site, and appointing a new CEO. Since the document was leaked online bitcoin owners have uncovered the existence of a new website URL for the site, suggesting that a re-launch of the exchange is planned.
Rehabilitation seems unlikely however, with members of the bitcoin community expressing a grim satisfaction in the demise of a site they see as demeaning the currency. Those who had bitocins stored the exchange have been more equivocal in their celebration.
Speaking to The Independent about the exchange’s difficulties Emily Spaven, Managing Editor of bitcoin news site CoinDesk, described the events “another nail in the coffin for Mt. Gox”, adding that she did not think the events would affect “bitcoin as a whole.”
“The news about Mt. Gox has already caused the price of bitcoin to drop, but we've seen bitcoin recover from bigger price decreases in the past,” said Miss Spaven. “Bitcoin has proved its resilience time and time again and I believe it won't be long before we see the price rebound once more.”
“It's just a shame that people with such inexperience are behind Mt. Gox. If managed correctly, the company could have taken bitcoin awareness and acceptance to the next level, but as it stands, they've done the ecosystem a massive disservice.”
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