Bitcoin Exchange Mt. Gox Causes Prices to Collapse

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Bitcoin has suffered its biggest setback since its launch in 2009 after exchange company Mt. Gox shut down on Tuesday and caused prices to collapse. The enterprise stopped all transactions, wiped out its website and Twitter posts and CEO Mark Karpeles resigned, which caused other businesses of the same kind to issue statements in which they distanced themselves from the disgraced exchange firm. At the same time, the situation with Mt. Gox also determined authorities to work side by side with regulators in order to protect customers.

Bitcoin exchange Mt. Gox restored the website after it disappeared for a while, but it only carried a message that stated the action of shutting down occurred in order to “protect the site and our users.” At the same time, the support page does not work and an unverified document which circulates online states that Mt. Gox has been robbed of 744,408 bitcoins, amount which is worth around $350 million. Re/code reported that, according to a spokesperson for the group, Mt. Gox “will file bankruptcy in private discussions with other members of the bitcoin community.”

The virtual currency’s prices quickly dropped over 23 percent on Tuesday, and today one bitcoin is worth $580.71, but its value continues to fluctuate. The unconfirmed report worried businesses like Mt. Gox and caused BTC China and Coinbase to issue a joint statement blaming Mt. Gox, but protecting the industry.

“As with any new industry, there are bad actors that need to be weeded out, and that is what we are seeing today,” the companies said.

The price of the virtual currency on Mt. Gox had fallen to about $100 before the company’s website became inaccessible, and the worth has been fluctuating ever since.

Mt. Gox’s Resonant Fall

Bitcoin entrepreneur Ryan Selkis leaked a document which shows that Mt. Gox’s demise is just a matter of time, but it could mean the end of the virtual currency, “at least for most of the public.” However, the veracity of the document has not been yet proved.

The long-running theft which deprived Mt. Gox of almost 750,000 bitcoins allegedly represents six percent of the amount of bitcoins in existence and Karpeles’ unofficial statement to Reuters shows that the company is, indeed, “at a turning point.” According to the former CEO of Mt. Gox, the bitcoin exchange cannot provide more information because “this also involves other parties,” but since the problems have caused prices to collapse and people to fear they will never receive the money which is rightfully theirs, possible actions could be taken in the future.

Authorities Take Notice

Japan’s Chief Cabinet Secretary Yoshihide Suga stated that the government is currently gathering information through the Financial Services Agency, the police and the Ministry of Finance and Homeland Security and Governmental Affairs Committee Chairman Tom Carper mentioned in a statement that his staff is working closely with federal agencies to make sure the current situation will not happen in the United  States.

Although neither Mt. Gox nor its executives have been formally accused of any criminal activity and the staff carries on with the office work, the bitcoin exchange company’s problems have caused prices to collapse and dramatically fluctuate.

By Gabriela Motroc

Sources

CoinDesk

The Wall Street Journal

CNBC

Quartz

CoinDesk

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