Bitcoin prices tumble over Mt Gox fears

Bitcoin prices tumble over Mt Gox fears

Mt Gox, one of the leading Bitcoin exchanges, ceased trading and took its website offline yesterday, shortly after the CEOs of a number of leading Bitcoin companies issued a joint statement saying that Mt Gox had committed a “tragic violation of the trust of users”.

Although the Japanese based Bitcoin exchange has remained tight lipped, the source code of the Mt Gox website suggests an acquisition may be afoot with the message, “put announce for mtgox acq here”.

According to a document allegedly leaked from the company, Mt Gox has suffered the theft of 744,408 BTC or $350m at current prices, and faces an unconfirmed additional $55m in fiat liabilities.

If confirmed, this suggests that so called “transaction malleability” issue highlighted by Mt Gox on 7th February, combined with some “poor bitcoin accounting” has had far reaching implications for their company, stretching over several years.

The introduction to the allegedly leaked document, which calls for leaders in the industry to help Mt Gox “reduce liabilities as much as possible with partners”, says:

The cold storage has been wiped out due to a leak in the hot wallet. The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company. However, with Bitcoin/crypto just recently gaining acceptance in the public eye, the likely damage in public perception to this class of technology could put it back 5~10 years, and cause governments to react swiftly and harshly. At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public.

Uncertainty over the future of Mt Gox exchange has caused Bitcoin prices to fall worldwide, with exchanges hitting sub $500 for the first time since the price explosion of November 2013.

Rob Wodgate, author of the Bitcoin & Litecoin Survival Guide, said “Bitcoin is bigger than any one exchange, and there are multiple players in the market who are committed to ensuring that any undertow from Mt Gox is limited.”

“No doubt this will knock public confidence, especially with those who have been directly affected, but it’s a stark reminder of the importance of limiting your holdings in any hot wallet service – something readers of the Bitcoin & Litecoin Survival Guide are well aware of.”

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