Topic: Major Bitcoin exchange website goes offline

[Pez]

Major Bitcoin exchange website goes offline



 A major bitcoin exchange has gone bust after secretly racking up catastrophic losses, other virtual currency companies said Tuesday — a potentially fatal blow for the exotic new form of money.

The website of Tokyo-based Mt. Gox was returning a blank page Tuesday. 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, and a withdrawal ban imposed at the exchange earlier this month.

Prominent members of the Bitcoin community — including San Francisco-based wallet service Coinbase and Chinese exchange BTC China — sought to shore up confidence in the currency by saying Mt. Gox's collapse was an isolated case of mismanagement. They said it had abused users' trust, but did not offer details on how.

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

Documents purportedly leaked from the company lay out the scale of the problem. An 11-page "Crisis Strategy Draft" published on the blog of entrepreneur and Bitcoin enthusiast Ryan Selkis says that 740,000 bitcoins are missing from Mt. Gox, which roughly translates to hundreds of millions of dollars' worth of losses, although figures are fuzzy given Bitcoin's extreme volatility.

"At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public," the draft said.

In a post to his blog, Selkis said that the document was handed to him by a "reliable source" and that several people close to the company had confirmed the figures. Reached by phone, he declined further comment. The Japanese government, meanwhile, has not announced any formal investigation.

The scandal may cost customers dear.

At the Tokyo office tower housing Mt. Gox, bitcoin trader Kolin Burges 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."

Mt. Gox CEO Karpeles did not immediately return several messages seeking comment. A security officer at the office tower said no one from Mt. Gox was in the building. Tibbane, an Internet company that Karpeles is CEO of, still has its name listed on the building's directory.

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

On bitcoin exchanges, the currency's value has fallen to about $470 from $550 in the past few hours, a figure already down more than 50 percent on the price of $1,200 per bitcoin reached on Mt. Gox three months ago.

The disappearance of Mt. Gox could be fatal for Bitcoin, which was started in 2009 as a currency free from government controls. Bitcoin's boosters say the currency's design make it impossible to counterfeit and difficult to manipulate, and the virtual money has won an eclectic mix of die-hard fans, including libertarians, tech enthusiasts and adventurous investors.

But the currency has struggled to shake off its associations with criminality, particularly its role in powering the now-defunct online drug marketplace Silk Road. Only last month another member of the Bitcoin Foundation, Vice Chairman Charlie Shrem, was arrested at New York's Kennedy Airport on charges of money laundering.

Authorities have been taking an increasingly hard look at Bitcoin and related virtual currencies including Litecoin, Namecoin, Ripple, and countless others. Some countries, including Russia, have effectively banned the currency. In other jurisdictions, authorities are weighing whether to try to tame the marketplace through licenses or other mechanisms.

Even if Mt. Gox doesn't drag Bitcoin down with it, there's fear that the exchange's demise will push officials to take an even more skeptical stance.

"I think this is disastrous from a (regulatory) standpoint," Selkis, the enthusiast, said in a message posted to Twitter. "The hammer will now come down hard."


Original article: Published February 25, 2014/ Associated Press

[Pez]

Bitcoin's Mt. Gox Goes Offline, Loses $409M -- Recovery Steps and Taking Your Tax Losses

Mt. Gox’s recent troubles are circulating like wildfire.  Its repercussions are being felt throughout the world.  Mt. Gox was the most public and well-known brand that represented Bitcoin’s exchange market.  The company’s shutdown is rumored to be caused by a “hack” or “security breach” that resulted in a loss up to 744,000 BTC or $409,200,000. (Based on the approximate value just hours ago from Coindesk.com)  This is truly an unfortunate event that has caused the international community to shake its trust in Bitcoin as evidenced by the massive price drop.  This is par for the course, when a pillar in the community falls in such a funeral pyre.  The best parallel would be the Bear Stearns’ failure during the 2008 global financial crisis.  Hopefully, Bitcoin won’t follow in the financial system’s footsteps post-Bear Stearns.

This Not The First Time

Mt. Gox was suspected to be hacked before to the tune of 400,000 Bitcoins (Today worth $220,000,000) in 2011.  At the time of the incident the bitcoins were only worth $9 million, Hackers attempted to sell $9 million worth of bitcoins simultaneous on the Mt. Gox network and it caused the market price crashing to zero, before Mark Karpeles, CEO of Mt. Gox, shutdown the exchange.  Mt. Gox was able to recover from this by publicly apologizing and by reimbursing the lost funds.  This was an amount that the company was able to reimburse, but the most recent breach eclipses the 2011 incident and the company is unable to make the same promise again.

The Forbes E-book On Bitcoin Secret Money: Living on Bitcoin in the Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or legal tender.

Mt. Gox is not the only company to face these problems.  Companies such as [url:http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/]MyBitcion lost 154,406 Bitcoins (Today worth $84,923,300) in an attack in 2011[/url] and Bitcoinica lost 43,554 (Today worth $23,954,700) in an attack in 2012.  There are a multitude of these incidents, so it is unfair to lay the blame solely on Mt.Gox.  Financial institutions are targets that constantly under attack by unscrupulous individuals.  It is a difficult position for any person or company to withstand.



Focusing On Next Steps

Insurance

Over one million people were Mt. Gox customers and they need to know what their immediate options are to deal with their financial losses.  First, it’s important to understand that Mt. Gox is not a bank and it does not protect its users with a system similar to the FDIC or Federal Deposit Insurance Corporation.  This means that there isn’t a neutral third-party protecting the money you held at Mt. Gox.  The FDIC provides insurance up to $250,000  on deposits in bank accounts to help assure us that our money won’t evaporate, if the bank shuts down like Mt. Gox.

Mt. Gox. could have provided the same service by purchasing a separate insurance policy on their BTC deposits.  The insurance would’ve been on behalf of the one million users that have lost $409.2 million overnight.  Unfortunately, Mt. Gox does not provide insurance or any assurances for a user’s account.  Thus, we’re left in the wind – cold and unprotected.

Lawsuit

Can we sue or file a claim against Mt. Gox?  Suing Mt. Gox would require an international lawsuit filed under Japanese law, where the company is headquartered and registered by the Tokyo Chamber of Commerce.  Realistically, it won’t be worth our time or money to go after the company.  It’s unlikely that there will be enough assets held within the company to pay off any substantial or meaningful portion of the lost bitcoins.  The legal fees would probably balloon into the millions and swallow what’s left of the fallen company.

What about the officers like Mark Karpeles, CEO?  It would really depend on how Japanese laws would handle the situation.  In the United States, we wouldn’t be able to pierce the corporate veil unless we were able to show gross negligence or some sign of personal fault.  Assuming we were able to obtain a judgment against officers like Mark Karpeles, it is still unlikely that we’d be able to reclaim any amount even close to the $409.2 million.

What Now? Taking Your Losses And Tax Benefits

The single silver lining here is that Americans that fell in this disaster will at least be able to use their losses to help lower their tax burdens.  United States tax law allows capital gain losses to be rolled forward without a statute of limitation.  Thus, your Bitcoin losses will be deductible forever until you’ve used them all.  This means that the $409.2 million is worth a potential $122.8 million in tax refunds.

We’ve already discussed in previous articles that bitcoins are classified as assets used as an investment by most of the Bitcoin community.  Thus, taking your capital gain losses is just part of that process.  You’re permitted to take up to $3,000 in capital losses per year to deduct against your personal income “above the line,” until you’ve exhausted all of your capital losses.  (This is a very good thing!)  I can’t say that this will give much solace to people that lost their accounts at Mt. Gox or the bitcoin community, but I hope that this gives them some measure of good news.

Conclusion

Mt. Gox’s failure is not the end of Bitcoin.  It is a single company failing in a large ecosystem.  The other major pillars in the community such as Coinbase, Kraken, Bitstamp, BTC China, Blockchain.info and Circle have issued public statements reiterating my thoughts.  Bitcoin has taken a stumble, but it is up to the community to determine whether this is a scrape they can recover from.  But, it’s important to realize that all wounds heal given enough time.



Original article: Forbs news  2/25/2014 @ 4:46AM

[Samker]

...

The website of Tokyo-based Mt. Gox was returning a blank page Tuesday. 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, and a withdrawal ban imposed at the exchange earlier this month.

...

It was to be expected given the warning from Fintech (21.02.) here: http://scforum.info/index.php/topic,8833.0.html

 

[Fintech]

I warned about that about long time ago but nobody doesn't believed me. Samker probably was then only to believe!

@Devnullius not react at all seriously to whole thing!     Nobody does not to say that I would not be warned!

[Pez]

You probably have forgotten me. I have wrote several articles as you probably seen before about the risk and way this cyber currency is a fraud. I have just only waited to see ware they should begin to get out the money and how to maximise it in the fraud.

I wonder how it now works for the company with the Cuban cigar that have write that they accept payment true BitCoin.
They ensure that it was fault prof due to the company that they worked with took all the risk in the transaction. Are they still shore about how serious there partner is? 

http://scforum.info/index.php/topic,8446.0.html

[Fintech]

Oh Sorry Pez  I have really forgotten you! I'm so Sorry for that!
You wrote when I had warned to peoples, from the same situation yet many times. I'll remembet that 
 
                                                                                       

Pez

[Pez]

I have now sent an open message to "truetobacco"

In there thread and also pm he to see what there response is regarding what have happen these latest weeks with BitCoin. Let see what kind of input wee get from him?

See her:
http://scforum.info/index.php/topic,8446.0.html

[Samker]

Bitcoin exchange Mt. Gox files for bankruptcy, claims it lost $473 million

The saga of the Mt. Gox Bitcoin exchange went to a new level today as the Japanese-based company announced it's filing for bankruptcy protection. The news comes a few days after the Mt. Gox website shut down operations.

The Wall Street Journal reports that in its filing today, Mt. Gox claims it has "lost" 750,000 Bitcoins from its customers, along with 100,000 of its own: http://online.wsj.com/news/articles/SB10001424052702303801304579410010379087576
Together, that means $473 million worth of Bitcoins, under their current exchange pricing, is now missing.

In a press conference in Japan, Mt. Gox owner and CEO Mark Karpelès put the blame on technical issues in the website that allowed unknown people or groups to make false withdrawals from the exchange. He said, "There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble."

It's likely that the owners of the Bitcoins that were put into Mt. Gox will never see them again. Many of them are questioning just how their money was lost. The story quotes Australian William Banks, who had 100 Bitcoins in the exchange, saying he felt it was "impossible" for Mt. Gox to just have that much of the currency disappear, adding, "It's just such an astronomical amount of coins to lose."

Mt. Gox, which launched in 2009 as a website for trading Magic: The Gathering cards, switched to Bitcoin trading later on and quickly became the largest exchange for the online-only currency. It's downfall has raised new and serious questions about the legitimacy of Bitcoin as a whole.

(NW)

[Fintech]

Bitcoin's vanish as an ash to wind!