Mt. Gox Gone? Apparent Theft Shakes Bitcoin World 695
mendax was one of many readers to write with news about the apparent shutdown of Bitcoin exchange Mt. Gox, in the wake of massive theft. "The New York Times is reporting that Mt. Gox, the most prominent Bitcoin exchange, 'appeared to be on the verge of collapse late Monday, raising questions about the future of a volatile marketplace.' 'On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin's existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation.' Maybe the U.S. Dollar isn't so bad after all." Forbes goes further, and says flatly that Mt. Gox has shut down; Wired calls it an implosion. Reader electron gunner links to the alleged leaked document which outlines the exchange's crisis strategy. Watch this story for updates, since there are bound to be new developments.
The paper trail (Score:2, Interesting)
https://blockchain.info/address/1Drt3c8pSdrkyjuBiwVcSSixZwQtMZ3Tew?offset=0&filter=0
Mt.Gox has a long history of problems, Bitcoin not (Score:5, Interesting)
Re:Where's the bailout? (Score:5, Interesting)
Actually MtGox is looking for a bailout as their main recovery strategy, according to the document. They argue that their insolvency would destroy bitcoin as a currency and therefore it's in everyone's best interests, Bitcoin exchange and end user alike, to donate to them until they're solvent again.
Long Term Con? (Score:5, Interesting)
Sounds to me like someone was running a long term con here. Act like a legitimate business for a few years, get people to trust them. Maybe think of them as a bank and a safe place to actually cash, not bitcoins. Then once that trust is built up and you have a nice supply of money sitting in some off shore bank. Vanish like a thief in the night.
Re: Vive le Galt! (Score:5, Interesting)
Comment removed (Score:3, Interesting)
Re:Sad (Score:4, Interesting)
I agree. I still like the idea of bitcoins. I still think there might be a future in it once all the bugs have been gotten out of the system. The reason that we still need the exchange-places is because, like it or not, bitcoin are not a legitimate currency. As long as they are not recognized as one you will all ways need someone willing to take the risk of converting bitcoins in to cash.
People wanted bitcoins to be free from any kind of government oversight or interference. Well that is never going to happen. As long as there is anything acting like money you are going to need some kind of oversight to keep things like this from happening. Bitcoins are a great idea if everyone is on the same level and is honest about it. But not all people are honest.
As we have seen the need for exchanges have turned out to be the weak point in the bitcoin system. Until that need is eliminated or is under some kind of regulation, you will always having someone gaming the system and stealing from other people.
Regulation is a must, not an option.
money laundering with bit coins? (Score:1, Interesting)
Re: Vive le Galt! (Score:1, Interesting)
Re:This kind of thing is why FDIC exists (Score:5, Interesting)
> Maybe this will be an object lesson for the libertarian
I'm sure it will be, but not the lesson you are thinking of.
Some attributes of this problem:
* The currency itself is not affiliated with the crashing "bank". so you have seen exchange rates dip somewhat, there is no fundamental crash for the cryptocurrency
* Numerous exchanges and other pseudo-exchanges have stayed open and operational for this whole saga, allowing liquididty in and out of the cryptocurrency
* Use/Exchange of cryptocurrency does not require blind trust in the fundamental sense, so those who kept their balances in trust exchanges minimal to nil, lost nothing
* This "crash" was not sudden or mysterious. Those with the slightest modicum of common sense got out long ago. Other's with a taste for danger kept in or bought in up to the last minute. But just like playing with penny stocks, the risk was very high.
* MtGOX itself was a form of ponzi scheme. You could also have a ponzi scheme based on chicken eggs, or bottle caps. This does not mean that eggs themselves are a ponzi scheme, and neither are bitcoins.
On the other side of the coin, any form for exchange is backed with trust. So long as people continue to trust in the cryptographic and stability of the network itself. Those appear to remain strong, and merchants accepting the currency semi-directly continue to operate.
The lesson learned: crypto currency can sustain major scandals denominated in itself and not be fundamentally broken. Also, its possible for exchanges and reserve banks to prove solvency cryptographically, and doing so will become the "FDIC" equivalent for the crypto currency world.
What's the big news? (Score:2, Interesting)
With repeat bad press and slander you can fell any bank in existence. If I told you $bank was on the verge of bankruptcy and if I not only repeat it often enough but also have some kind of reputation in financial circles, $bank IS bankrupt.
Re:Vive le Galt! (Score:4, Interesting)
It's the best system to do that to date. If you have a better one that is better at it, then by all mean propose it. Don't propose systems that have already been proven to be worse then the current system.