Fate of Mt. Gox Unclear after Suspension of Bitcoin Trading

Mt. Gox, until recently the biggest exchange of the virtual currency Bitcoin, appears to have shut down operations a day after reports that its chief executive (CEO), Mark Karpeles, resigned from his position as a board member with the Bitcoin Foundation at the weekend.

It was unclear what has become of the Tokyo-based exchange, which earlier this month halted withdrawals indefinitely after detecting ‘unusual activity’. On 24 February, Mt. Gox took down all of its previous posts on Twitter.

The
New York Times
reports that on Monday evening, several leading Bitcoin companies jointly announced that Mt. Gox intended to file for bankruptcy after months of technological problems and what appeared to have been a major theft.

The statement from the CEOs of Bitcoin companies such as Coinbase, Circle, Blockchain.info and Payward, said that the “tragic violation of the trust of users of Mt. Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry.”

A document circulating in the Bitcoin world alleged that Mt. Gox had lost 744,000 Bitcoins in a theft that had gone unnoticed for years, representing about 6% of the 12.4m Bitcoins in circulation. According to reports, the document suggests that the exchange has US$174m in liabilities against US$32.75m in assets.

The
Times
also reported that New York firm SecondMarket has announced plans to create a new exchange that could draw major global names from the banking sector into the virtual currency market for the first time. SecondMarket made its name several years ago by creating a platform for buying and selling shares of companies such as Twitter and Facebook before they went public.

According to a
Reuters
report, while Bitcoin globally has recently seen both its value and reputation decline, users say the problem is with Mt. Gox, not with the virtual currency itself.

“I think the community will remain very tolerant of teething problems, or whatever you want to call them,” a Tokyo-based investor told
Reuters
, adding that who noted he had a ‘negligible’ amount of bitcoins with Mt. Gox. “The whole structure is still in its infancy, so there’s just certain things that come with the territory as long as you keep people in the loop.”

A statement issued by the Bitcoin Foundation read: “Mt. Gox is one of several exchanges, and their exit, while unfortunate, opens a door of opportunity. This incident demonstrates the need for responsible individuals and members of the Bitcoin community to lead in providing reliable services.”

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