Mt Gox Files Bankruptcy as Customers Lose Faith in Exchange - Update 3

Karloff

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Mt Gox Files Bankruptcy as Customers Lose Faith in Exchange - Update 3



Mt Gox's customers feel it'll be easier to get US$ out than Bitcoins, if the exchange crashes.

Update 3: "First of all, I am very sorry," said Mark Karpales at a news conference in Tokyo earlier today, as Mt Gox filed for bankruptcy protection. Over half a million worth of bitcoin has been lost, apparently to hackers. According to Mt Gox, 750,000 of its customers' coins have gone missing, as well as 100,000 of its own.

It has 127,000 creditors in bankruptcy.

The first US lawsuit has already been filed, in Chicago District Court. Plaintiff Gregory Greene, with a $25,000 wallet lost to Mt Gox, alleges that the company and Karpales were negligent, and committed fraud.

Source: Reuters [http://www.reuters.com/article/2014/02/28/bitcoin-mtgox-idUSL3N0LX3Y220140228]

Update 2: The CEO of Mt Gox, Mark Karpales, has said the bitcoin exchange is working hard to resolve its issues, and asks that his staff not be contacted for information. Further updates, Karpales promises, will be published via the Mt Gox site.

"As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan," says Karpales, "and working very hard with the support of different parties to find a solution to our recent issues."

Source: Guardian [http://www.theguardian.com/technology/2014/feb/26/mtgox-ceo-speaks-out-as-japanese-regulators-discuss-intervention]

Update: While not confirmed yet, early reports indicate that Mt Gox has shut down, probably for good. The site no longer exists, and neither does Mt Gox's Twitter account. A joint statement from other bitcoin providers says:

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.

Source: Ars Technica [http://arstechnica.com/business/2014/02/mt-gox-once-the-worlds-largest-bitcoin-exchange-shuts-down/]


Original Story: When Bitcoin exchange Mt Gox [http://www.escapistmagazine.com/news/view/132215-Bitcoin-Value-Plunges-as-DDoS-Strikes-Currency-Exchanges] announced that, due to DDoS attacks, trade was suspended, Mt Gox's customers began to worry. Would the exchange collapse? If it did, what would happen to its Bitcoin reserves? So Mt Gox's customers have been selling off the contents of their Bitcoin wallets, reasoning that, even if they can't get the cash right away, it will be easier to reclaim US$ from Mt Gox's wreckage than it will be to get Bitcoins back.

BTC-E [https://www.mtgox.com/] is comfortably in the $603 to $617 range. In other words, it's about 50% cheaper to buy cryptocurrency at Mt Gox right now, though of course the trade itself is still subject to Mt Gox's ongoing freeze.

It's all about bankruptcy, in the end. If the worst befalls, it's up to the courts to decide what happens next. Imagine trying to persuade a judge, whose grasp of technical issues may be shaky, the value of a cryptocurrency. The value of a US$ debt is a much more quantifiable proposition. Of course, Mt Gox might not go under; but its customers can't be sure.

Mt Gox [https://www.mtgox.com/img/pdf/20140217-Announcement.pdf] promises its customers it will have a workaround soon, and when that happens wallet withdrawals will be permitted. "Thank you again for your support, and we look forward to resume Bitcoin withdrawals as quickly as possible."

Source: Wired [http://www.wired.com/wiredenterprise/2014/02/mtgox-2/]

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Karloff

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This is certainly interesting. I wonder how it'll pan out in the end and if it'll affect the rest of these.. uh... money things. Only time will tell it seems.
 

Karloff

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Halyah said:
This is certainly interesting. I wonder how it'll pan out in the end and if it'll affect the rest of these.. uh... money things. Only time will tell it seems.
Not good, for one it'll flood the market with coins and second the loss of confidence will not go unnoticed.
 

Schadrach

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Huh, wonder how this will effect my assorted cryptocurrencies. Mine are all at either VirCurEx or CEx.io, with a bit of BitCoin also at blockchain.info.
 

Karloff

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BigTuk said:
Halyah said:
This is certainly interesting. I wonder how it'll pan out in the end and if it'll affect the rest of these.. uh... money things. Only time will tell it seems.
Not good, for one it'll flood the market with coins and second the loss of confidence will not go unnoticed.
So that means the bitcoin followers are in for a really nasty surprise if things don't improve for them. I wonder how that'll effect future attempts at making these cryptocurrencies.
 

Product Placement

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Asking as a novice, does this mean that you can now buy Bitcoins for roughly $300 at the Mt Gox and then sell them for $600 at the other markets?
 

UnderQuarantine

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Product Placement said:
Asking as a novice, does this mean that you can now buy Bitcoins for roughly $300 at the Mt Gox and then sell them for $600 at the other markets?
As of right now you can't make withdrawals so no. You basically buy these coins at half price and hope the company survives and will have doubled your money, or they go and you lose it all.
 

lacktheknack

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Somehow, over the last two months of Bitcoin's spectacular collapse, no one's said "market bubble".

Because I think that covers it perfectly.
 

Karloff

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Somebody tell me, after the last econocmic collapse because of "virtual money", who thinks the best currency is one that is not real?
 

Falterfire

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lacktheknack said:
Somehow, over the last two months of Bitcoin's spectacular collapse, no one's said "market bubble".

Because I think that covers it perfectly.
Really? Where have you been reading? I have seen the word bubble thrown around quite a bit with regards to both Bitcoin in particular and Cryptocurrencies in general.
 

lacktheknack

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Falterfire said:
lacktheknack said:
Somehow, over the last two months of Bitcoin's spectacular collapse, no one's said "market bubble".

Because I think that covers it perfectly.
Really? Where have you been reading? I have seen the word bubble thrown around quite a bit with regards to both Bitcoin in particular and Cryptocurrencies in general.
Mostly just here. Since I half no stake in cryptocurrency, I haven't sought out more info beyond the Escapist's coverage.
 

Mister Chippy

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lacktheknack said:
Falterfire said:
lacktheknack said:
Somehow, over the last two months of Bitcoin's spectacular collapse, no one's said "market bubble".

Because I think that covers it perfectly.
Really? Where have you been reading? I have seen the word bubble thrown around quite a bit with regards to both Bitcoin in particular and Cryptocurrencies in general.
Mostly just here. Since I half no stake in cryptocurrency, I haven't sought out more info beyond the Escapist's coverage.
Making fun of bitcoin is common practice on Reddit (although not on /r/bitcoin obviously) and bubble is used around every other word. It's speculative investment, made worse by the fact that you are speculating in something with absolutely no actual value whatsoever. Honestly it's a sillier bubble than when the dutch tulip debacle.
 

Karloff

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the whole thing is like the messed up idea of some eve online players i bet trying to bring that backstabbing into the real world..

its my conspiracy and im sticking to it !
 

Gorrath

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Mister Chippy said:
lacktheknack said:
Falterfire said:
lacktheknack said:
Somehow, over the last two months of Bitcoin's spectacular collapse, no one's said "market bubble".

Because I think that covers it perfectly.
Really? Where have you been reading? I have seen the word bubble thrown around quite a bit with regards to both Bitcoin in particular and Cryptocurrencies in general.
Mostly just here. Since I half no stake in cryptocurrency, I haven't sought out more info beyond the Escapist's coverage.
Making fun of bitcoin is common practice on Reddit (although not on /r/bitcoin obviously) and bubble is used around every other word. It's speculative investment, made worse by the fact that you are speculating in something with absolutely no actual value whatsoever. Honestly it's a sillier bubble than when the dutch tulip debacle.
Interesting, I had heard that the Tulip Debacle had mostly been debunked and that the rise and fall of prices weren't so much on the tulips themselves but on the futures contracts being turned into options contracts via Parliamentary ratification of new Guild rules. Is there some information about that situation which suggests it actually was a speculative bubble or am I just recalling my facts badly? The latter would be no surprise to me.
 

Karloff

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Can someone please just take Bitcoin out behind the shed and put it out its misery Old Yeller style? This is becoming embarrassing.
 

Kuredan

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When I heard this news and the continuing details, I imagined the owners of Mt.Gox with black robber masks, stripey clothes and large bags of coins with the Bitcoin logo on them being chased through the countryside by Japanese cops dressed like Bobbies equipped with truncheons, all the while Yakkity Sax is playing. Maybe a lady in a bikini would wander in, then a large gorilla, possibly Shriners with the little tiny cars? Anyone else?

Seriously though, the clusterfluff from this debacle would make a great movie. I mean, they closed their offices, moved, shut down their website, and there are reports that their PO boxed is stuffed with old mail. I can also imagine them huddling on the floor of a darkened room while someone is banging on the door. They respond "No, Eees noowhan hoome. Go avay pleeess!"
 

FalloutJack

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Scrumpmonkey said:
Can someone please just take Bitcoin out behind the shed and put it out its misery Old Yeller style? This is becoming embarrassing.
I believe this update constitutes 'Wish Granted'. What will your second and third wish be?

(Make it a good one and erase Bob Dylan.)
 

Karloff

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FalloutJack said:
Scrumpmonkey said:
Can someone please just take Bitcoin out behind the shed and put it out its misery Old Yeller style? This is becoming embarrassing.
I believe this update constitutes 'Wish Granted'. What will your second and third wish be?

(Make it a good one and erase Bob Dylan.)
Well i don't think Bitcoin is fully dead yet so I'll hold off on my wishes in case i end up with in some kind of "Monkey's Paw" situation.

Look internet, i know you think you're cool and hip and all investing your money "Outside the system maaaan" but you have effectively fallen into a worse trap than the investment and currency markets you thought you were getting away from.