The world of Bitcoin has been chaotic of late. Mt. Gox has gone offline roughly a day and a half after its chief executive resigned his post as one of the board members of the Bitcoin Foundation.
Visiting the website of Mt.Gox leads users to a blank website. There are no error messages but behind the white browser, one might get a hint of the darkness that has been puzzling Bitcoin holders using the exchange. Mt. Gox has not issued a statement as of reporting.
"We are shocked to learn about Mt. Gox's alleged insolvency. While we are unable to comment on whether or not Mt. Gox's business operations employed operational best practices and reasonable accounting procedures, we can assure the public that the Bitcoin protocol is functioning properly," the Bitcoin Foundation said in a statement.
In an attempt to assure Bitcoin owners amid speculations of the insolvency of Mt. Gox, a joint statement was released by major Bitcoin exchanges.
"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," Coinbase, Bitstamp, BTC China, Kraken, Circle, and Blockhain said in a joint statement.
"We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age," the organizations added.
The joint statement is an attempt of the companies to remain poised despite the possible signs that the Bitcoin bubble might burst. Even the wording of the title was engineered to PR perfection. It was first titled "Joint Statement Regarding the Insolvency of Mt.Gox" and later revised to show "Joint Statement Regarding MtGox":
"In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China," the statement further explained.
A document titled "Crisis Strategy Draft" has been posted on Scribd by a certain user going by the name twobitidiot. First reported by the New York Times, the document suggest of theft and is essentially a draft for crisis management.
"At this point 744,408 BTC are missing due to malleability-related theft which wentunnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet," portion of the document that appears to be prepared by Mt. Gox said.
Mt. Gox chief executive Mark Karpeles stepped down Sunday from his seat as one of the board members of the organization that has been the primary mover to promote, standardize, and protect the virtual currency.
"Effective immediately, Mt. Gox has submitted their resignation from the board of directors. We are grateful for their early and valuable contributions as a founding member in launching the Bitcoin Foundation. MtGox Co. Ltd. (Japan) held one of the three elected industry member seats. Further details, including election procedures, will be forthcoming," the Bitcoin Foundation stated.
Karpeles move might not come as a surprise with Mt. Gox dealing with pressing technical problems that resulted to holding of Bitcoin withdrawals. Oddly, Mt. Gox also deleted all of its Twitter followers, leaving 28,000 followers and all of Mt. Gox account users very puzzled.
The Tokyo-based company first pointed into a software bug of Bitcoin that allowed transactions to be altered. The anomaly in the software can allegedly be used to take out double the amount requested. It also left the system prone to attacks.
"The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved," Mt. Gox stated.
These allegations have been denied by the Bitcoin Foundation and instead pointed to the wallet software of Mt. Gox, the company's customer service, and transaction processing.
Aside from the halted withdrawals, Mt. Gox has revealed in its latest update Thursday that it has security issues to deal with.
"Thank you for your patience this week while we are working on re-initiating bitcoin withdrawals. In addition to the technical issue, this week we have experienced some security problems, and as a result we had to relocate MtGox to our previous office building in Shibuya," Mt. Gox said [PDF] in a news release. "As much as we didn't want to only provide an 'update on an update,' this is the current status. We are committed to solving this issue and will provide more information as soon as possible to keep everyone in the loop."
Mt. Gox has not responded to inquiries, leaving Bitcoin owners restless. As of reporting, the Bitcoin high value at Gox is $337.98 and lowest at $13.72. These numbers can be frightening for Bitcoin owners when you compare it to values of the virtual currency at other exchanges. At Bitstamp for example, the range is between $629 and $514.02.
As lost of confidence on Mt. Gox mounts, players in the Bitcoin market are getting worried that they cannot get their virtual money. The silence of the company even worsens the situation.
"...discount at Mt Gox reflects the markets ongoing belief that bankruptcy is a high possibility. They have a considerable customer base that remains prevented from getting their money out," said Boston University finance professor Mark Williams.
The Bitcoin has its own set of believers and skeptics but now that Mt. Gox has fallen, the signs are pretty discouraging, when you know that your virtual money, can be exactly like that, just a figment of imagination or a bad memory.
