Mt.Gox files for bankruptcy protection

Bitcoin exchanges have proved to be even less competent than the banks (AP)

Mt. Gox, one of the world’s largest exchanges for digital currency Bitcoin, has filed for bankruptcy protection and warned it may have lost over £280 million worth of Bitcoin.

On Tuesday the company’s website appeared to go offline, coinciding with the circulation online of an apparent internal document claiming an error had allowed hackers to steal more than 740,000 Bitcoin, worth around $350 million at Monday’s prices.

Chief executive Mark Karpeles initially released a statement “working very hard with the support of different parties to find a solution to our recent issues” but today at a press conference in Tokyo he announced that the company had filed for bankruptcy protection with the Tokyo District Court.

Karpeles revealed that 850,000 bitcoins worth about $480m (£286m) have gone missing following cyber attacks, blaming "a weakness in our system". Karpeles, originally from the US, did a traditional Japanese bow to show his contrition.

Kolin Burges, a London-based Bitcoin trader who has been picketing the Tokyo offices of Mt. Gox, said he was “disgusted” with the company’s handling of the issues.

He said: “I am extremely disappointed with the company but not surprised. I am thoroughly disgusted by them and by the way they have ruined so many people's lives, and I'm disgusted by their conduct throughout this whole situation.”

Mr Burges said he had 311 Bitcoin, worth over $170,000 at today’s prices, on Mt. Gox that he is unable to access.

Mr Burges said: “I trust the authorities of Japan will do a thorough job of investigating the situation and prosecuting any crimes committed.”

Earlier this week it was revealed Japanese authorities are probing Mt. Gox, while New York prosecutors are

The bankruptcy protection filing prevents investors from suing to recover their money while the company works to get back on its feet. Mt. Gox has some 127,000 creditors and debt of 6.5 billion yen ($63.67 million), dwarfing assets of 3.84 billion yen.

Following the news Japan's Finance Minister Taro Aso said: " No one recognizes them as a real currency. I expected such a thing to collapse.”

Mt. Gox’s troubles sent the price of Bitcoin down 3.8% to $554.53, according to news site CoinDesk, although the price is still higher than Tuesday’s low when Mt. Gox first went offline.