Large Bitcoin Exchange goes offline after alleged $350 Million Hack.

[WYP]

Earlier this month MtGox, one of the worlds largest Bitcoin Exchanges, had gone offline after they detected "unusual activity" which made their system "subject to theft", today it is alleged that the company has became "insolvent" after losing 744,408 Bitcoins due to hacking over the last two years.

The potentially stolen Bitcoins are valued as being worth $350 Million (£210 Million pounds), using Yesterdays value of the virtual currency.

The allegations come from this leaked document, from a Bitcoin entrepreneur Ryan Selkis, detailing MtGox's strategy for dealing with their current situation. It is unknown at this time if the document is legitimate.

Other leading Bitcoin exchange's are calling the recent activities of MtGox a "tragic violation of the trust of users", with Bitcoin advocates like Roger Ver calling MtGox "the worst-run business in the history of the world". Statement I agree with given how this company has had several problems in the past ranging from hacks to Government seizure of funds for operating without proper money transmission permits.

MtGox's CEO Mark Karpelès has resigned from the board of the Bitcoin Foundation and all tweets from the companies Twitter account has now been deleted, things are not looking good for Gox.

Today Mark Karples said to Reuters.com;

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

Until this announcement is made public MtGox has an unknown future, their users currently fear the loss of their investments which range from hundreds to the hundreds of thousands of pounds, with some users now protesting at Gox's head offices in Tokyo Japan demanding the release of their coins.

The potential loss of such a large fortune and the violation of the trust of so many Bitcoin users, the future of the online currency may also be in jeopardy.

The next few days and week will be interesting for Bitcoin, as MtGox try to salvage themselves from their current situation. All that is certain is that this will become a huge stumbling block for wider Bitcoin adoption.

Source - Wired, International Business Times & BBC NEWS

 

[MathiasBE]

God, man I pitty those people losing so much money, unlikely they will ever get it back..

 

[Remmy]

Just pointing out, your exchange rate is a few orders of magnitude out

$350 Million (£210 pounds)?!

 

[WYP]

Just pointing out, your exchange rate is a few orders of magnitude out

$350 Million (£210 pounds)?!

Changed, thanks for the eagle eyes there.

 

[cooperman]

Hack my ass hes gone with all that coin...

 

[d3rrial]

Bitcoin has gotten rid of a big tumor with this. I am glad that Mt.Gox has died and I am sorry for everyone that lost money, but this needed to happen.

 

[Snortan]

Bitcoin has gotten rid of a big tumor with this. I am glad that Mt.Gox has died and I am sorry for everyone that lost money, but this needed to happen.

Can you expand on that? serious question since I haven't read that much into bitcoins...

 

[CrazyTeeka]

My take on all this is crypto currencies are a good innovation.

But exchanges like MTGOX seeked to make profit off it.

As long as greedy exchanges exist, bitcoin will just be a bubble.

My serious advice is use with extreme caution.

 

[d3rrial]

Can you expand on that? serious question since I haven't read that much into bitcoins...

Mt.Gox has repeatedly handled customer funds negligendly, several million dollars were seized because they thought they were above national laws and they had horrifyingly bad IT security, which allowed attackers to clean out all of Gox's accounts, simply by stating that the withdrawal didn't go through to Gox's automated system, which then re-initiated the withdrawal, even tho it was successful before. This way they apparently lost around 750,000 bitcoins.

Within the last year, 5 times Gox has betrayed the trust of their users and lost many people money, but unfortunately Gox is featured very prominently in media and thus considered by Bitcoin newcomers to be a credible company, which it is very much not.

 

[Snortan]

I see. Thanks for explaining!

 

[d3rrial]

I see. Thanks for explaining!

You're very welcome.

If you have any questions regarding Bitcoin, feel free to ask me at any time. I have studied Bitcoin intensively and should be able to answer most questions

 

[Seb.F]

Gox was horrendous. The system is slowly recovering though now, which is good.

 

[Josh Weston]

Gotta say, with prices how they are, it's kinda tempting to invest in some more coins now. I mean...they should bounce back again. Hmm.

 

[Meladath]

No surprise really. Anyone who was really in the bitcoin scene knew that mtgox was a terrible terrible service, slow, unreliable, didnt get/move money 3/4 of the time for months. The only reason people traded there was because the price was higher, I guess greed breeds stupidity. I feel sorry for the people that lost money but, there are lots of much better exchanges, they put their trust in the wrong people.

 

[d3rrial]

No surprise really. Anyone who was really in the bitcoin scene knew that mtgox was a terrible terrible service, slow, unreliable, didnt get/move money 3/4 of the time for months. The only reason people traded there was because the price was higher, I guess greed breeds stupidity. I feel sorry for the people that lost money but, there are lots of much better exchanges, they put their trust in the wrong people.

I agree with you. Gox has shown to be very unreliable for more than a year now.

 

[dalewakelin]

Exchanges defeat the purpose of bitcoin.

 

[d3rrial]

Exchanges defeat the purpose of bitcoin.

Yes and No.

They're vital for the starting phase of Bitcoin, how else are you going to enable non-miners to get bitcoins while Bitcoin has not yet achieved full coverage of the market? True, they're centralized parts of a decentralized solution, but until Bitcoin has achieved dominance as a currency, exchanges will be necessary.

 

[dalewakelin]

Yes and No.

They're vital for the starting phase of Bitcoin, how else are you going to enable non-miners to get bitcoins while Bitcoin has not yet achieved full coverage of the market? True, they're centralized parts of a decentralized solution, but until Bitcoin has achieved dominance as a currency, exchanges will be necessary.

I think a service like a torrent software where you just see peoples country and can trade peer to peer instead of through a centralised business.

 

[d3rrial]

I think a service like a torrent software where you just see peoples country and can trade peer to peer instead of through a centralised business.

It's in the making, but it's a difficult thing to make. You have to take a lot of things into consideration to make sure that people aren't going to be scammed out of all their money.

 

[dalewakelin]

It's in the making, but it's a difficult thing to make. You have to take a lot of things into consideration to make sure that people aren't going to be scammed out of all their money.

Yeah, im just glad i took my money out of mt gox last month. BTC-e from now on.