Bitcoin coins are shown in this file photo. REUTERS/Jim
Mt Gox, once the world's biggest bitcoin exchange,
abruptly stopped trading today and its chief executive said the
business was at "a turning point" but gave no details.
Several other digital currency exchanges, including Bitstamp
and BTC-E, issued statements attempting to reassure investors
of both bitcoin's viability and their own security protocols.
The website of Mt Gox suddenly went dark on Tuesday with no
explanation, and 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.
Hours later, Mt Gox CEO Mark Karpeles told Reuters 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."
He did not give any other details.
Bitcoin investors deposit their holdings in digital wallets
at specific exchanges, so the Mt. Gox shutdown is similar to
a bank closing its doors - people cannot retrieve their
Tokyo-based Mt. Gox, 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 the
digital marketplace operator had long been lax over its
Mt. Gox halted withdrawals earlier this month after it said
it detected "unusual activity on its bitcoin wallets and
performed investigations during the past weeks." The move
pushed bitcoin prices down to their lowest level in nearly
On Sunday Karpeles resigned from the board of the Bitcoin
Foundation, the digital currency's trade group.
A document circulating on the Internet purporting to be a
crisis plan for Mt. Gox, said more than 744,000 bitcoins were
"missing due to malleability-related theft", and noted Mt.
Gox had $174 million in liabilities against $32.75 million in
assets. It was not possible to verify the document or the
exchange's financial situation.
If accurate, that would mean approximately 6 percent of the
12.4 million bitcoins minted would be considered missing.
A statement on Bitcoin's website said, "In the event of
recent news reports and the potential repercussions on
MtGox's operations and the market, a decision was taken to
close all transactions for the time being in order to protect
the site and our users. We will be closely monitoring the
situation and will react accordingly."
Investors in bitcoin, who have endured a volatile ride in the
value of the unregulated cyber-tender, said they still had
faith in the currency despite the problems at Mt. Gox.
"Mt. Gox is one of several exchanges, and their exit, while
unfortunate, opens a door of opportunity," said The Bitcoin
Foundation in a statement. "This incident demonstrates the
need for responsible individuals and members of the bitcoin
community to lead in providing reliable services."
Steve Hudak, spokesman for Treasury's anti-money laundering
unit, the Financial Crimes Enforcement Network (FinCEN), said
it is "aware of the reports regarding Mt. Gox" but had no
additional comment. To date it is the only U.S. regulatory
agency to have any oversight of Mt. Gox.
In a statement, Benjamin M. Lawsky, Superintendent of
Financial Services for the State of New York, said that while
all of the facts surrounding Mt. Gox are "not yet clear,
these developments underscore that smart, tailored regulation
could play an important role in protecting consumers and the
security of the money that they entrust to virtual currency
Lawsky said last month that he planned to issue rules for
businesses handling virtual currencies.
Bitcoin has been a roller-coaster of late, rising and falling
dramatically, sometimes on an intraday basis, and its price
varies greatly depending on the exchange.
The Mt. Gox bitcoin, which traded at $828.99 before Feb. 7,
when the exchange halted withdrawals, since plunged 83.7
percent to $135. Coins at Bitstamp, another large exchange,
at one point hit $400 on Tuesday, down 40 percent since Feb.
7. It had recovered lately to $517.
Mt. Gox was a founding member and one of the three elected
industry representatives on the board of the Bitcoin
Foundation. A bitcoin exchange since 2010, Mt. Gox is a
relatively old player, having grown quickly when there were
"I'm very angry," said Kolin Burges, a self-styled
"crypto-currency trader" and former software engineer who
came from London for answers after Mt. Gox failed to tell him
what had happened to his bitcoins, which at one point were
"It looks like that's disappeared," said Burges, one of six
protesters outside the Mt. Gox office, which was as deserted
as a nearby cafe that had formerly accepted bitcoins as
payment. In a statement last week, Mt. Gox said it had moved
office because of security issues.
Six leading bitcoin exchanges - which allow users to trade
bitcoins for U.S. 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, BTC
China, 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."
Bitstamp separately said its customers are safe and "nothing
is amiss," adding that it has "conducted a thorough audit of
our bitcoin accounts."
Venture capitalists, many of whom have invested in bitcoin
and related services, jumped to bitcoin's defense.
Fred Wilson, a partner at Union Square Ventures and a backer
of Coinbase, which allows consumers to easily buy and sell
bitcoins with wallets directly connected to their bank
accounts, wrote in a blog post that part of the maturation of
a sector "will inevitably be failures, crashes, and other
"The wonderful thing about a globally distributed financial
network is that if one of the nodes goes down, it doesn't
take the system down," he wrote, adding that he had bought
some bitcoin on Tuesday. "I always feel good buying when
there is blood in the streets in any market."
In Boston, Kyle Powers and Chris Yim, co-founders of Liberty
Teller, a company that operates a bitcoin automated teller
machine, were helping customers and answering questions at
their kiosk in South Station on Tuesday. Yim said he expects
a price dip in bitcoin, but not a long-term problem with the
Virtual currency exchanges "stand to benefit from the Mt. Gox
fallout," but there will be "increased expectations on the
transparency and disclosures they need to make to customers,"
said Jaron Lukasiewicz, co-founder and chief executive of
Coinsetter, a New York-based bitcoin exchange.
Democratic Senator Tom Carper of Delaware, who chairs the
Homeland Security and Governmental Affairs Committee, said in
a statement that the "disturbing news today from Japan is a
reminder of the damage potentially ill equipped and
unregulated financial actors can wreak on unsuspecting
consumers. U.S. policymakers and regulators can and should
learn from this incident to protect consumers."
Karpeles himself, while insisting on his own exchange's
reliability, has made no secret that bitcoin is, as he told
Reuters last April, a "high-risk investment".
"If you buy bitcoins, you should buy keeping in mind that the
value could be zero the day after."
The concierge at his home - an upscale apartment in the
Shibuya district - said he was not answering his intercom.
His mailbox was so stuffed with mail that the flap would not