Mt. Gox announces bankruptcy: Bitcoin sighs relief

Bitcoins

The cryptocurrency stays afloat despite a top Bitcoin exchange closing down.

Following the recent shutdown, Mt. Gox CEO Mark Karpeles has confirmed rumours that the Bitcoin exchange has been hacked by thieves. According to Karpeles 850,000 Bitcoin have been lost. This total approaches a value of $450 million (about £270 million) which a far higher figure than originally suspected.

At a Tokyo news conference Karpeles solemnly apologised to all invested parties confessing that, ‘'We have lost Bitcoins due to weaknesses in the system'. Once amongst the top Bitcoin trading firms, Mt Gox will file for bankruptcy and have resigned their place in the Bitcoin Foundation. Authorities from the USA and Japan will now proceed with investigations into possible criminal activity from within the firm.

Whilst the bad news spells certain doom for Mt. Gox, the Bitcoin market has survived well. After an initial drop following Mt. Gox’s disappearance the Bitcoin exchange rate has stabilised to roughly what it was a week ago. This shows resilience for the cryptocurrency against fears for it's future.

There's a feeling from within the Bitcoin community that Mt. Gox remains as an example of how not to do things. Mt Gox have been criticised for keeping Bitcoin keys in ‘lukewarm storage’, where they can be accessed via the web - when storing them offline would be a more stringent safeguard against hackers.

Speaking on the issue Andreas Antonopoulos of Bitcoin wallet Blockchain notes that Mt Gox, ‘was an amateurish and incompetently managed company…it will be replaced by competent operators who run better exchanges'.

 

 

image: © Zach Copley

Bank Workers CharityBank Workers Charity - Supporting bank workers

Register for Financial Markets News Alerts