Bitcoin exchange Mt Gox goes dark in blow to virtual currency

Tuesday 25 February 2014 15.39
Mt Gox said it was halting withdrawals indefinitely after it detected 'unusual activity'
Mt Gox said it was halting withdrawals indefinitely after it detected 'unusual activity'

Mt  Gox, once the world's biggest bitcoin exchange, went dark today, with its website down, its Tokyo office empty, and a cryptic comment from its chief executive that the business was at "a turning point."
              
The only activity at the company's Tokyo office was outside, where a handful of protesters said they had lost money investing in the virtual currency.
              
The digital market place operator, which began as a venue for trading cards, had surged to the top of the bitcoin world, but critics - from rival exchanges to burned investors - said Mt Gox had long been lax over its security.
              
It was not clear what has become of the exchange, which this month halted withdrawals indefinitely after detecting "unusual activity."

When asked whether Mt Gox was dead, its CEO, Mark Karpeles, said in an email: "We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties."
              
A document circulating on the Internet, and purporting to be a crisis plan for the exchange, said more than 744,000 bitcoins were "missing due to malleability-related theft", and noted Mt Gox had $174m in liabilities against $32.75m in assets. It was not possible to verify the document or the exchange's financial situation.
              
Tokyo investors in the frontier electronic currency, who have endured a volatile ride in the value of the unregulated cyber-tender, said the problem was with Mt Gox, not with the revolutionary bitcoin itself.
              
The Mt Gox homepage was not loading, although no error message appeared. 
              
The Bitcoin Foundation, the cyber currency's trade group, said in a statement, "Mt Gox is one of several exchanges, and their exit, while unfortunate, opens a door of opportunity. This incident demonstrates the need for responsible individuals and members of the bitcoin community to lead in providing reliable services."
              
On Sunday, Karpeles resigned from the board of the Foundation.
              
Six leading bitcoin exchanges - which allow users to trade bitcoins for US dollars and other currencies - distanced themselves from Mt Gox.
              
"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 companies - Coinbase, Kraken, Bitstamp, BTCChina, Blockchain and Circle - said in the statement. 

"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we're seeing today," they added.
              
Karpeles' resignation from the Bitcoin Foundation followed a number of technical issues, including a massive cyber attack from unknown sources that has been spamming bitcoin exchanges.
              
Mt Gox was a founding member and one of the three elected industry representatives on the board of the foundation. Mt Gox, a bitcoin exchange since 2010, is a relatively old player, having grown quickly when there were few alternatives.
              
Bitcoin has had a rocky ride, its dollar value soaring and crashing more like a highly speculative investment than a store of value. And oddly for a tradable instrument, its value varies greatly depending on the exchange.
              
The Mt Gox bitcoin, which traded at $828.99 before February 7, when the exchange halted withdrawals, has since plunged 83.7% to $135. 

By contrast, coins at Bitstamp, another large exchange, have fallen 40.5% over the same time to a low of $400 today, before recovering to $505.
              
Users say the problem with Mt Gox is isolated and not with the virtual currency even though bitcoin globally has taken a beating to its value and reputation since the problem surfaced.