Bitcoin exchange Mt. Gox goes offline amid turmoil

11:55 AM, Feb 25, 2014   |    comments
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(USATODAY.com) - Questions swirled early Tuesday about the future of embattled Bitcoin exchange Mt.Gox after reports that its chief executive had resigned from the board of a key advocacy group and its website appeared to have been disabled.

Bloomberg reported that Mark Karpeles, chief executive officer of Mt.Gox, the Tokyo-based Bitcoin exchange that froze withdrawals earlier this month, submitted his resignation from the board of directors at Bitcoin Foundation, the group that manages the currency.

In a statement posted on its website, the foundation said a "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 New York Times reported that a number of leading Bitcoin companies jointly announced that Mt. Gox was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years, the Times reported.

The Wall Street Journal was among the first to report that the mtgox.com website was not able to be accessed.

At the Tokyo office tower housing Mt. Gox, bitcoin trader Kolin Burgess said he had picketed the building since Feb. 14 after flying in from London, hoping to get back $320,000 he has tied up in bitcoins with Mt Gox.

"I may have lost all of my money," said Burgess, next to placards asking if Mt. Gox is bankrupt. "It hasn't shaken my trust in Bitcoin, but it has shaken my trust in bitcoin exchanges."

Mt. Gox was one of the first exchanges for the virtual currency that has been inching toward broader acceptance despite wild swings in value.

When it froze withdrawals earlier this month, the company cited a software bug that allowed people to "use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur."

"The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party," Mt. Gox added in a statement on its website.

Several Bitcoin exchanges released a joint statement saying that funds under their control are held securely.

The Bitcoin operators said they are working to "re-establish the trust squandered" by the failings of Mt. Gox, which should not be considered a reflection of the value of Bitcoin or the digital currency industry.

On Bitcoin exchanges, the currency's value has fallen below $490 from about $545 where it opened trading Tuesday. At one point it traded as low as $418. For most of the currency's history, each digital coin had been worth less than $10.

Calls and e-mails to Tibanne Co., the Tokyo-based parent of Mt.Gox that is also headed by Karpeles, weren't immediately answered, Bloomberg reported.

The Associated Press contributed to this report.

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