The Daily Item, Sunbury, PA

Oddly Enough

February 26, 2014

Bitcoin exchange goes dark

TOKYO (AP) — The website of major bitcoin exchange Mt. Gox is offline Tuesday amid reports it suffered a debilitating theft, a new setback for efforts to gain legitimacy for the virtual currency.

The URL of Tokyo-based Mt. Gox was returning a blank page. The disappearance of the site follows the resignation Sunday of Mt. Gox CEO Mark Karpeles from the board of the Bitcoin Foundation, a group seeking legitimacy for the currency.

At the Tokyo office tower housing Mt. Gox, bitcoin trader Kolin Burgess said he had picketed the building since Feb. 14 after flying in from London, hoping to get back $320,000 he has tied up in bitcoins with Mt Gox.

"I may have lost all of my money," said Burgess, next to placards asking if Mt. Gox is bankrupt. "It hasn't shaken my trust in Bitcoin, but it has shaken my trust in bitcoin exchanges."

A "crisis strategy" report shared widely online that purports to be an internal Mt. Gox document says more than 740,000 bitcoins are missing from the exchange, which froze withdrawals earlier this month. It says the theft went unnoticed for several years and turned on disguised withdrawals.

A theft of that magnitude would equate to losses of $350 million at current bitcoin prices, but in practice such a figure is highly uncertain because of Bitcoin's extreme fluctuations in value and its lack of broad acceptance as an alternative to money.

The cloud hanging over Mt. Gox is a possibly fatal blow to Bitcoin, which was started in 2009 as a currency free from government controls. Supporters have said Bitcoin's cryptography makes it immune to theft or counterfeiting.

On bitcoin exchanges, the currency's value has fallen to about $470 from $550 in the past few hours.

Several bitcoin exchanges and related organizations released a joint statement that said they are working to "re-establish the trust squandered" by the failings of Mt. Gox.

The bitcoin operators said funds under their control are held securely. Mt. Gox should not be considered a reflection of the value of Bitcoin or the digital currency industry, they said.

A second man protesting outside Mt. Gox's office in Tokyo said he was in arbitrage, which is a type of trading, but would only gave his first name, Aaron.

A security officer said no one from Mt. Gox was in the building. Tibbane, an Internet company that Karpeles is CEO of, still has its named listed on the building's directory.

"I have no idea" where they are, said Burgess. "I'm both annoyed and worried"

Bitcoin had been inching toward broader acceptance despite wild swings in value in the past year. For most of the currency's history, each digital coin had been worth less than $10.

New bitcoins are "mined" or generated by computers. They get harder to generate all the time, which means the inflow of fresh bitcoins keeps falling.

There are about 12.4 million bitcoins in circulation today, according to Blockchain, a public registry of bitcoin transactions. The maximum number of bitcoins that can be generated is 21 million and by 2032, 99 percent of those will have been created.

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