Last night, Tokyo-based Bitcoin exchange Mt.Gox went offline, feeding rumors that the troubled company was planning to announce bankruptcy. Shortly after the site went down, a document titled “Crisis Strategy Draft” surfaced on Bitcoin forums, seemingly originating from Mt.Gox. The document claims that 744,400 BTC (roughly $350 million) were stolen from the site by hackers using the transaction malleability glitch.
The document claims that Mt.Gox is down to a mere 2,000 BTC, and states that the exchange “can go bankrupt at any moment, and certainly deserves to as a company.” The action plan outlined in the document calls: for asking “selected Bitcoin main players” to help offset losses; closing down Mt.Gox for one month for “restructuring and re-branding”; the resignation of CEO Mark Karpeles; and the implementation of an entirely new codebase for the rebranded “Gox” site.
Further adding to concerns about Mt.Gox’s future was the joint release yesterday of a “Joint Statement Regarding the Insolvency of Mt.Gox” (some of the versions dropped “Insolvency” from the title). Signed by the founders and CEOs of Coinbase, Kraken, Bitstamp, BTC China, Circle and Blockchain.info, the statement refers to the current situation as a “tragic violation of the trust of users of Mt.Gox” and claims that Mt.Gox is a “bad actor” that needed to be “weeded out.” The statement didn’t specifically address any of the rumors about Mt.Gox other than to say “Mtgox has confirmed its issues in private discussions with other members of the bitcoin community.”
Earlier in the week, Japan’s Financial Services Agency (FSA) told the Wall Street Journal it was unlikely to intervene in the Mt.Gox situation, as virtual currencies fall outside of their regulatory jurisdiction.
The question of whether or not Mt.Gox is actually insolvent is still open. In an email to Reuters this morning, Mt.Gox CEO Mark Karpeles stated:
“We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.”
Karpeles resigned from the industry trade group Bitcoin Foundation on Sunday.
Interestingly, Bitcoin prices have largely recovered from last night’s drop, with trading currently averaging around $520. The resiliency of the price in the wake of Mt.Gox’s seeming failure and the loss of such a huge about of BTC may reflect a position held by many in the Bitcoin community, claiming that Mt.Gox’s ongoing woes were little more than a drag on the virtual currency market.
