Mt. Gox, the Japan-based exchange for Bitcoin digital currency, has had more than its fair share of well-documented problems. The final blow may have been now been struck. The exchange, one of the biggest for Bitcoin, has declared bankruptcy.
The Washington Post has a detailed list of all the problems the exchange had before the bankruptcy filing was made public on Friday, from a failure to comply to money laundering laws to an inability to handle the high volume of trading, a situation that had the value of Bitcoins swinging from high points to low ones. Late last month, withdrawals were suspended and online activity went dark, sending red flags around the world.
The exchange, which has been notoriously silent since this latest round of problems, issued a statement today saying that, as suspected, lots of bitcoins are gone with the wind. The company says $446 million worth were lost. An addition 100,000 bitcoins “disappeared,” bringing losses up over $500 million.
“We first express our most sincere regrets and apologies for this situation and for causing so much inconvenience to all our users and other interested parties,” the statement says, also going into detail about the various restrictions the government has now imposed on its operations.
“At the start of February 2014, illegal access through the abuse of a bug in the bitcoin system resulted in an increase in incomplete bitcoin transfer transactions and we discovered that there was a possibility that bitcoins had been illicitly moved through the abuse of this bug,” the statement also says. The company continues to investigate what happened to all the missing funds.
The company is being sued here in the States by people who say the company showed negligence in the face of the security threat and fraud by shutting down and hanging on to investor monies.
But for its part, there are other exchanges ready to do business in bitcoins, so the digital currency itself will survive.
“Bitcoin is still in a ‘Wild West’ phase of development, and it’s not really ready for ordinary users,” WaPo says. “But over time, this process of trial and error should make the surviving businesses in the Bitcoin economy more sophisticated and trustworthy.”