Financial News

  • 26 February 2014, 7:21

Bitcoin Turmoil After Mt Gox Exchange 'Theft'

The Bitcoin exchange industry has moved to reassure holders of the virtual currency amid reports 6% of Bitcoins in circulation, worth roughly $375m (£225m), have been stolen.

The once-mighty Mt Gox exchange reportedly lost them in a cyber attack, with an apparent internal document suggesting more than 740,000 Bitcoins are missing.

The Mt Gox website is currently offline with trading suspended and withdrawals have been frozen.

The Tokyo-based exchange has not commented on the claims but its chief, Mark Karpeles, quit the board of the Bitcoin Foundation - an advocate for the virtual currency - on the eve of the shutdown.

He has not been seen in public since and his whereabouts remain unknown but in an email to the news agency Reuters he purportedly said: "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."

The firm's Tokyo office is said by witnesses to be largely bare while a handful of angry investors are camped outside demanding news of their money and questioning whether the business remains solvent.

One of them, Bitcoin trader Kolin Burgess, said he had picketed the building since February 14 after flying in from London, hoping to get back $320,000 he had tied up in Bitcoins with Mt Gox.

"I may have lost all of my money. It hasn't shaken my trust in Bitcoin, but it has shaken my trust in Bitcoin exchanges."

The fate of his holding is unclear as Bitcoins are traded in an unregulated, decentralised marketplace.

But news of Mt Gox's apparent collapse prompted six other Bitcoin exchanges to release a joint statement distancing themselves from Mt Gox - insisting it should not be considered a reflection of the value of Bitcoin or the digital currency industry.

It said: "This tragic violation of the trust of users of Mt Gox was the result of one company's actions.

"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 confirmed its issues in private discussions with other members of the Bitcoin community.

"There are hundreds of trustworthy and responsible companies involved in Bitcoin.

"These companies will continue to build the future of money by making Bitcoin more secure and easy to use for consumers and merchants."

The signatories - Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle - released their statement two days after the reported cyber attack on Mt Gox.

Bitcoin's value - which has fluctuated wildly in recent times - fell 20% amid the shutdown at Mt Gox and is about two thirds below its peak of $1,100 at just above $410.

At its height, analsyts say Mt. Gox accounted for 80% of Bitcoin trading but its dominance started to slip a year ago as rumours circulated about the strength of its security protocols.

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