Tuesday, February 25, 2014 3:40:59 AM
Bitcoin exchange Mt. Gox offline amid 'insolvency' charges
Troubled exchange's Web site and Twitter feed wiped clean as trading is apparently halted.
Embattled Bitcoin exchange Mt. Gox has largely vanished from the Internet amid accusations that the exchange is insolvent after a years-long theft that resulted in the loss of hundreds of millions of dollars.
The Web site for the Tokyo-based exchange has been wiped clean, as has its official Twitter feed. A screen shot posted by a Reddit user indicates that trading on the exchange has been halted.
The exchange's apparent shutdown was linked to an alleged hacking that went unnoticed for years, according to a purported internal Mt. Gox document circulating on the Internet. Labeled "Crisis strategy draft," the document reports that the exchange suffered a loss of 744,000 Bitcoins, about $350 million at Monday's trading, and outlines a scheme for restoring confidence in the exchange.
Ryan Galt, a Bitcoin blogger and former venture capitalist, said he received the unverified document from "an otherwise reliable source." Galt, who wrote that he would work "feverishly" to determine the document's authenticity, called the situation outlined in the document "catastrophic."
"I do believe that this is one of the existential threats to Bitcoin that many have feared and have personally sold all of my Bitcoin holdings," Galt wrote.
Related stories
Mt. Gox resigns from Bitcoin Foundation Board
I bought $20 worth of bitcoin at an ATM in Albuquerque
Bitcoin ATMs landing in the US
Meanwhile, a group of Bitcoin organizations issued a statement Monday in which they initially discuss the "insolvency" of Mt. Gox, once of the largest exchanges for the crypto-currency. The statement sought to reassure Bitcoin users of the industry's stability more than two weeks after the Tokyo-based exchange suspended customer withdrawals and a day after it resigned from the board of the Bitcoin Foundation, the organization that promotes the currency.
"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," read the statement, which was signed by the co-founder of Coinbase and the chief executives of Kraken, Bitstamp.net, BTC China, Blockchain.info, and Circle.
CNET has contacted Mt. Gox for comment and will update this report when we learn more.
Reports of halted trading and insolvency took the Bitcoin Foundation by surprise.
"We are shocked to learn about Mt. Gox's alleged insolvency," the foundation said in a statement. "While we are unable to comment on whether or not Mt. Gox's business operations employed operational best practices and reasonable accounting procedures, we can assure the public that the Bitcoin protocol is functioning properly."
The troubled exchange suspended customer withdrawals on February 7, claiming a fundamental flaw existed in Bitcoin that affected all transactions. While Mt. Gox said the Bitcoin Foundation should address the bug, the foundation countered that the issue lay with the exchange's wallet service and customer support procedures. Last week, Mt. Gox apologized for the issue and said it had developed a workaround that would allow it to resume service, but that has not yet happened.
The Bitcoin leader's statement, which was initially titled "Joint Statement Regarding the Insolvency of Mt.Gox," is now titled "Joint Statement Regarding MtGox":
The purpose of this document is to summarize a joint statement to the Bitcoin community regarding 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. 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. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.
We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.
In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China.
We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.
Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers. Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.
The following industry leaders stand by this statement:
Fred Ehrsam -- Co-founder of Coinbase
Jesse Powell -- CEO of Kraken
Nejc Kodric -- CEO of Bitstamp.net
Bobby Lee -- CEO of BTC China
Nicolas Cary -- CEO of Blockchain.info
Jeremy Allaire -- CEO of Circle
http://news.cnet.com/8301-1023_3-57619465-93/bitcoin-exchange-mt-gox-offline-amid-insolvency-charges/
Troubled exchange's Web site and Twitter feed wiped clean as trading is apparently halted.
Embattled Bitcoin exchange Mt. Gox has largely vanished from the Internet amid accusations that the exchange is insolvent after a years-long theft that resulted in the loss of hundreds of millions of dollars.
The Web site for the Tokyo-based exchange has been wiped clean, as has its official Twitter feed. A screen shot posted by a Reddit user indicates that trading on the exchange has been halted.
The exchange's apparent shutdown was linked to an alleged hacking that went unnoticed for years, according to a purported internal Mt. Gox document circulating on the Internet. Labeled "Crisis strategy draft," the document reports that the exchange suffered a loss of 744,000 Bitcoins, about $350 million at Monday's trading, and outlines a scheme for restoring confidence in the exchange.
Ryan Galt, a Bitcoin blogger and former venture capitalist, said he received the unverified document from "an otherwise reliable source." Galt, who wrote that he would work "feverishly" to determine the document's authenticity, called the situation outlined in the document "catastrophic."
"I do believe that this is one of the existential threats to Bitcoin that many have feared and have personally sold all of my Bitcoin holdings," Galt wrote.
Related stories
Mt. Gox resigns from Bitcoin Foundation Board
I bought $20 worth of bitcoin at an ATM in Albuquerque
Bitcoin ATMs landing in the US
Meanwhile, a group of Bitcoin organizations issued a statement Monday in which they initially discuss the "insolvency" of Mt. Gox, once of the largest exchanges for the crypto-currency. The statement sought to reassure Bitcoin users of the industry's stability more than two weeks after the Tokyo-based exchange suspended customer withdrawals and a day after it resigned from the board of the Bitcoin Foundation, the organization that promotes the currency.
"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," read the statement, which was signed by the co-founder of Coinbase and the chief executives of Kraken, Bitstamp.net, BTC China, Blockchain.info, and Circle.
CNET has contacted Mt. Gox for comment and will update this report when we learn more.
Reports of halted trading and insolvency took the Bitcoin Foundation by surprise.
"We are shocked to learn about Mt. Gox's alleged insolvency," the foundation said in a statement. "While we are unable to comment on whether or not Mt. Gox's business operations employed operational best practices and reasonable accounting procedures, we can assure the public that the Bitcoin protocol is functioning properly."
The troubled exchange suspended customer withdrawals on February 7, claiming a fundamental flaw existed in Bitcoin that affected all transactions. While Mt. Gox said the Bitcoin Foundation should address the bug, the foundation countered that the issue lay with the exchange's wallet service and customer support procedures. Last week, Mt. Gox apologized for the issue and said it had developed a workaround that would allow it to resume service, but that has not yet happened.
The Bitcoin leader's statement, which was initially titled "Joint Statement Regarding the Insolvency of Mt.Gox," is now titled "Joint Statement Regarding MtGox":
The purpose of this document is to summarize a joint statement to the Bitcoin community regarding 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. 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. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.
We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.
In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China.
We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.
Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers. Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.
The following industry leaders stand by this statement:
Fred Ehrsam -- Co-founder of Coinbase
Jesse Powell -- CEO of Kraken
Nejc Kodric -- CEO of Bitstamp.net
Bobby Lee -- CEO of BTC China
Nicolas Cary -- CEO of Blockchain.info
Jeremy Allaire -- CEO of Circle
http://news.cnet.com/8301-1023_3-57619465-93/bitcoin-exchange-mt-gox-offline-amid-insolvency-charges/
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
