Mark Karpeles, chief executive of Mt Gox, bows at the start
of a news conference at the Tokyo District Court in Tokyo.
Mt Gox, once the world's biggest bitcoin exchange, has
filed for bankruptcy protection in Japan, saying it may have
lost nearly half a billion dollars worth of the virtual coins
due to hacking into its faulty computer system.
The collapse caps a tumultuous few weeks in which the company
has remained virtually silent after halting trades of the
crypto-currency, shaking the nascent but burgeoning bitcoin
Wearing a suit instead of his customary T-shirt, Mt Gox's
French CEO Mark Karpeles bowed in contrition and apologised
in Japanese at a news conference at the Tokyo District Court,
blaming his firm's collapse on a "weakness in our system",
but predicting that bitcoin would continue to grow.
"First of all, I'm very sorry," he said. "The bitcoin
industry is healthy and it is growing. It will continue, and
reducing the impact is the most important point."
Angry investors have been seeking answers for what happened
to their holdings of cash and bitcoins on the unregulated
Gregory Greene, who estimated his bitcoin stake at $25,000,
filed a lawsuit in the US District Court in Chicago late on
Thursday, saying Mt Gox had failed "to provide its users with
the level of security protection for which they paid."
Baker & McKenzie, a Chicago-based law firm that
represents Mt Gox, declined to comment. It is not yet clear
if the firm is representing the exchange in this lawsuit.
Mt. Gox said the exchange, used overwhelmingly by foreigners,
had lost 750,000 of its users' bitcoins and 100,000 of its
own. At the current bitcoin price of about $565, that would
total some $480 million - representing about 7 percent of the
estimated global total of bitcoins.
"This may be telling for the level of traceability of the
transactions. Bitcoin has been telling us that it is more
traceable than cash. The question is, how much more and is
there the potential for real recourse in the case of theft,"
said Moshe Cohen, assistant professor at Columbia Business
School in New York.
Mt. Gox said there was a discrepancy of 2.8 billion yen
($27.4 million) in its bank accounts when it checked on
Monday. Junko Suetomi, a lawyer with Baker & MacKenzie,
said she could not comment on the balances of foreign bank
accounts held by the company.
Many bitcoin market participants have said Mt Gox's problems
were specific to the company and were caused by what they
said was a lax attitude by Karpeles, while bitcoin itself -
free of any central bank control - was still a noble venture.
"If we could agree on legal regulation, we should let
(bitcoin and regulators) co-exist," said Keiichi Hida, a
bitcoin investor and member of the Japan Digital Money
Association. He lost about 100,000 yen worth of bitcoins, but
seemed unconcerned as he became interested in the virtual
currency as a form of "study".
"We should make it a national project to have bitcoin used
nationwide at the time of the 2020 Tokyo Olympics," he said.
Mt Gox shut its website on Tuesday after freezing withdrawals
earlier this month in the wake of a series of technical
The exchange had liabilities of 6.5 billion yen ($63.67
million), dwarfing its total assets of 3.84 billion yen, the
company said. It had 127,000 creditors in bankruptcy, just
over 1,000 of whom are Japanese.
The company and Karpeles have said little in the days before
Friday's court filing, which is similar to Chapter 11
bankruptcy in the United States, except that they were
working with others to resolve their problems.
Another lawyer, Akio Shinomiya at Yodoyabashi and Yamagami,
said Mt. Gox wanted to file a criminal complaint against what
he said was a hacking attack, but had no specific means of
"Bitcoin has always been volatile and speculative, said
bitcoin user Ken Shishido, who had about a tenth of his
bitcoin holdings at Mt. Gox, but has seen the rest of his
bitcoins soar tenfold since he began trading 18 months ago.
"It's too bad that this happened, but we have to let it go.
And then we'll buy more."
Fortress Investment Group became one of the first big
investors to say it had lost money investing in bitcoin. In a
regulatory filing with the U.S. Securities and Exchange
Commission, the company said it incurred $3.7 million in
unrealized losses in 2013.