Bitcoin exchange MtGox files for bankruptcy protection
On February 10 it issued a statement claiming that it had a problem with 'transaction malleability' - in essence, somebody could withdraw cash and then alter the ID of the transaction to make it appear that it had never occurred, then request it again. It called this a 'bug in the bitcoin software' but bitcoin's developer community pointed out that the issue had been known about for some time already, and that it was less a bug and more something which needed to be taken into account by developers when creating an exchange service. Other exchanges said at the time that they were unaffected.
With information and withdrawals both unforthcoming, bitcoins held by MtGox were being bought and sold on a secondary market for less than 20 per cent of the going price.
On Tuesday the exchange suddenly stopped all trading and Karpeles told Reuters that the company was at a 'turning point'.
A document circulating online purporting to be from MtGox suggested that 744,000 bitcoins had been stolen using the 'transaction malleability' flaw, but there has been no confirmation from the exchange - owned and operated by Tokyo-based Tibanne - over its authenticity.
If true, this would mean that someone, somewhere, has stolen six per cent of the 12.4 million bitcoins currently in circulation worldwide.
Yesterday it emerged that Japanese authorities are conducting a high-level investigation into the stricken Bitcoin exchange MtGox after it dramatically ceased trading earlier this week.
A string of high-level financial regulatory bodies in Japan are currently investigating the situation at MtGox, an exchange with as many as a million account holders, following its controversial halting of trading on Tuesday, according to Yoshihide Suga, Japan's chief cabinet secretary.
'At this stage, the relevant financial authorities, the police, the Finance Ministry and others are gathering information on the case,' he told reporters.
One Reddit user called fountainmass wrote earlier this week that he had lost over 10.5BTC: 'Like many, I had repeatedly tried to get my coins out, even before the issues were 'official'.
'Support requests seemed to fall on deaf ears. All I could do was try, and try again. In the end, all I really had left was hope - the sort of hope that bloody-minded people have when they refuse to believe the reality of the situation. Now, the only hope I have is naive and childish.'
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