By Kalix Poul
The former largest Bitcoin exchange in the world, Mt. Gox from Tokyo, stopped trading at three o’clock last night. Whoever visits the website sees only a white page. Shortly before, a document was released allegedly confirming Mt. Gox’s bankruptcy. At the moment it cannot be said whether this is the truth. However, it would be a corollary of the events of the past few weeks.
Dear MtGox Customers,
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.
Best regards,
MtGox Team
Now to the article:
The only certain information is that Mt. Gox took his website offline at three o’clock Central European Time. You can see a white page, the green https of Mt. Gox still exists. This means that the site is still registered.
This shutdown crowns a chain of previous events that spark suspicion that Gox is insolvent: Last Thursday, Mt. Gox left his office and has moved into another one that is rumored to only exist virtually. A few days ago, the managing director Mark Karpeless resigned from his seat in the Bitcoin Foundation; shortly thereafter, Mt. Gox deleted all tweets.
Last night, a well-known user in Bitcoin circles, The Two-Bit Idiot, leaked a document that was not verified, but is based on a source he believes is trustworthy. He first wrote that the document confirmed that Mt. Gox had lost 750,000 bitcoins through transaction malleability – which is more than the bitcoins offered for sale. Shortly thereafter, The To-Bit Idiot published the document entitled “MtGox Situation: Crisis Strategy Draft”. This calls the mentioned 750.000 lost bitcoins and sets up a contingency plan to save not just Mt. Gox, but bitcoin as a whole. In a first step, the lost coins are to be partially replaced by arbitrage purchases. After that, Mt. Gox will go offline for about a month and possibly emigrate to another country. After the bug has been fixed, Mt. Gox should reopen under the name “Gox”, with new employees, a new management and a new service orientation. Perhaps the most terrifying thing about the document, if it is genuine, is the comparison of deposits and debts: Mt. Gox has a good $ 32 million and 2,000 Bitcoin, but owes customers $ 55 million and 744,408 Bitcoin. That makes a difference of well over $ 100 million. Almost too much to be believable.
About five minutes after the apparent leak, Mt. Gox stopped trading. Most recently, 0.986 Bitcoin was traded at $ 135.
Around thirty minutes later, several well-known US Bitcoin companies, including Coinbase and Blockchain.info, published a press release regarding the bankruptcy of Mt. Gox, in which they state that the events at Mt. Gox are due only to the mistakes of a single company. Everything is fine with Bitcoin itself, there are hundreds of honest Bitcoin companies. The companies involved in the press release announce that they will shortly disclose that they will keep all customer deposits safe.A little later in the press release the word “insolvency” is deleted, the message no longer provides any further information about what is going on with Mt. Gox. Interesting moments of development and useful information regarding Bitcoin in general can be viewed on site BD.
Five minutes later Mt. Gox is completely offline, only the mentioned white side can be seen.
Whether this is a perfectly placed fake that is supposed to depress the price, or whether Mt. Gox actually crossed the Jordan, we will probably only find out in the coming days. One of the Bitcoin core developers, Jeff Garzik, tweeted that it was “zero evidence speculation”: an insider leaked to get cheap coins. What is certain, however, is that this event will find a strong and probably rather negative media response. It is not yet clear whether it will harm or benefit trust in Bitcoin in the medium and long term.
Over the past few days, around 16 percent of Bitcoin trading has been conducted on Mt. . If 750,000 bitcoins were really stolen or lost, this would correspond to almost 4 percent of all available bitcoins. If a company of this size were to go bankrupt in the “real” financial sector, this would be a clear case for “too big too fail” and the state would step in and involve the taxpayers in the rescue. In the Bitcoin economy, after all, this doesn’t happen.
For those who had money lying on Mt. Gox, this is bad news. We do not want to and cannot give a tip here. There are some discussions for class actions, both in the German-speaking Bitcoin forum and in the German area on bitcointalk.org, but a cross-border lawsuit against a company that is so indebted seems to me, purely subjective, not necessarily promising.
We at Bitcoin.de can only assure you at this moment that all Bitcoin currently stored with us are 100 percent secure. As in the past 2.5 years, we apply the same high standards of security, trust and competence to ourselves as should apply to all companies outside of the Bitcoin economy that keep customer deposits.
