Business Technology

Monday 1 September 2014

Bitcoin exchange collapses in Japan after system hacked

Published 01/03/2014 | 02:30

  • Share
Mark Karpeles, chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo
Mark Karpeles, chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo
Mt. Gox CEO Mark Karpeles, sitting at second right,  attends a press conference at the Justice Ministry in Tokyo
Mt. Gox CEO Mark Karpeles, sitting at second right, attends a press conference at the Justice Ministry in Tokyo

MT Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan yesterday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

  • Share
  • Go To

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency.

Wearing a suit instead of his customary T-shirt, Mt Gox's French CEO Mark Karpeles  bowed in contrition and apologised in Japanese at a news conference at the Tokyo District Court, blaming his firm's collapse on a "weakness in our system", but predicting that bitcoin would continue to grow.

"First of all, I'm very sorry," he said. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Mt Gox said the exchange, used overwhelmingly by foreigners, had lost 750,000 of its users' bitcoins and 100,000 of its own. At the current bitcoin price of about $565, that would total some $480m – representing about 7pc of the estimated global total of bitcoins.

It also said there was a discrepancy of 2.8 billion yen ($27.4m) in its bank accounts when it checked on Monday. Junko Suetomi, a lawyer with Baker & MacKenzie, said she could not comment on the balances of foreign bank accounts held by the company.

Many bitcoin market participants have said Mt Gox's problems were specific to the company and were caused by what they said was a lax attitude by Karpeles, while bitcoin itself – free of any central bank control – was still a noble venture.

"If we could agree on legal regulation, we should let (bitcoin and regulators) co-exist," said Keiichi Hida, a bitcoin investor and member of the Japan Digital Money Association. He lost about 100,000 yen worth of bitcoins, but seemed unconcerned as he became interested in the virtual currency as a form of "study".

"We should make it a national project to have bitcoin used nationwide at the time of the 2020 Tokyo Olympics," he said.

Mt Gox deleted its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties. It had 127,000 creditors in bankruptcy, just over 1,000 of whom are Japanese. (Reuters)

Irish Independent

Read More

Editors Choice

Also in Business