Bitcoin In Crisis: Mt Gox Exchange Goes Offline

Mt Gox, once the most popular bitcoin exchange in the world, has disabled its website, amidst rumours of insolvency.

The exact reason for the downtime is unknown, and it is not clear if Mt Gox will ever come back online. It has yet to issue any statement.

The news has dealt a heavy blow to the reputation of virtual currency, with the  CoinDesk Bitcoin Price Index slipping below $500 for the first time in a month. In response, six major Mt Gox competitors have issued a joint statement, in which they defend the industry as a whole.

“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,” says the statement.

Earlier this month, Mt Gox temporarily stopped all withdrawals, while it was investigating “unusual activity”. A few days later it resumed exchanging virtual currencies into cash, but refused making transfers to third party bitcoin wallets, blaming a “transaction malleability” flaw in the peer-to-peer protocol. This version of events was later contested by lead Bitcoin developer and Foundation chief scientist Gavin Andresen.

Bad actors

Mt Gox was established in 2010 as Magic: The Gathering Online Exchange – a platform for trading collectible game cards, but its focus soon shifted to a more lucrative business – transactions in digital currency.

By 2013, it grew to become the largest Bitcoin exchange in the world, processing as many as two thirds of all BTC transactions. Mt Gox also served as one of the founding members of the Bitcoin Foundation.

On Sunday, Mt Gox CEO Mark Karpeles resigned from the Bitcoin Foundation, following a disagreement with its members. And at around 2am on Tuesday, the exchange halted all trading as the website suddenly went offline, with the customers unable to get in contact with the Tokyo-based exchange.

All messages on MtGox’s official Twitter feed have also been deleted.

At this point, most of the available information comes from a joint statement signed by the heads of five exchanges: Coinbase, Kraken, BitStamp, Circle, and BTC China, as well as wallet service Blockchain.info.

“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” says the statement.

“We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfil the promise that Bitcoin offers as the future of payment in the Internet age.”

The original version of the statement described the state of Mt Gox as “insolvency”, although it was quickly redacted across several websites. Unrelated sources later told Re/code that the company was indeed planning to file for bankruptcy.

A report published in Wired on Monday suggests that over the past few years, hackers had relieved Mt Gox of hundreds of millions of dollars. It is based on a document called “crisis strategy draft” that seems to originate from the exchange, and outlines the plan to recover 744,408 missing bitcoins.

“The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company,” states the document, whose ownership has not been confirmed.

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