The uncertainty and doubt surrounding the bitcoin cryptocurrency continues as the once popular bitcoin exchange Mt. Gox goes offline with nary an explanation. This disappearance comes just days after the embattled company’s CEO resigned from the Bitcoin Foundation.
Being a nascent currency, Bitcoin requires the involvement of many actors in the scene and not everyone of them can be trusted on equal footing. They say that it takes years to develop trust but only minutes to break it, almost irreparably. That might just be the case with Mt. Gox.
Mt. Gox is a bitcoin exchanger, letting users withdraw real money for their bitcoins. It was one of the earliest players in the bitcoin economy. In fact, it was one of the founding members of the Bitcoin Foundation, the organization that tries to standardize the digital currency. However, last year, Mt. Gox started to get involved in problems and controversies that seem to have come to a head today.
Early this month, Mt. Gox suspended withdrawals, supposedly temporarily. The official statement was that it was looking into technical issues that allowed certain entities to alter bitcoin transactions. Naturally, there have been rumors that Mt. Gox itself was experiencing financial troubles and was on the verge of insolvency. Then just two days ago, the Bitcoin Foundation acknowledged that Mt. Gov has stepped down from the Foundation’s board of directors, feeding the fires of speculation.
Now users are reporting that Mt. Gox is no longer reachable and that it no longer accepts new user registrations. Its official website now also shows a blank page. The worst part of this all is that it happened suddenly and without explanation, leaving Mt. Cox users hanging in the air. This incident has prompted several other major bitcoin exchanges such as Coinbase, Kraken, BTC China, and others, to issue a public statement denouncing Mt. Gox’s violation of trust and reassuring the public that the bitcoin economy as a whole is still safe and secure.
[UPDATE] A leaked “Crisis Strategy Draft” document reveals how bad things are. In it, Mt. Gox admits that it has lost 744,408 bitcoins through theft, which has gone unnoticed for several years. With the current Bitcoin exchange rate, this totals to roughly $338 million. The slides also reveal that the current unexplained disappearance is actually part of strategy to address the situation. While it claims that the steps are necessary to maintain the public’s faith in the Bitcoin currency, it sounds more like a rather sleazy way for the company to save face and go around the real problem.