What is going on with Mt. Gox?

Mt. Gox has been until now the most relevant bitcoins exchange. You could buy them or sell them there, previously adding funds or giving them your bitcoins.

I say until now because since last Tuesday 25, Mt. Gox website shows the following message:

Mtgox

Since then, the bitcoin community has gone crazy with rumours and speculation, and on Wednesday this internal document from Mt. Gox saw the light: MTGox Situation: Crisis Strategy Draft.

There have also been some relevant statements like this one from Jesse Powell (Kraken’s CEO and well known in the bitcoin circle): Unilateral Statement Regarding Mt. Gox from an Insider.

With all these information we can get to these conclusions:

Mt. Gox firm was missing 744,408 bitcoins from their accounts for several years. Possibly since June 2011 where it was victim of an attack that took advantage of a security flaw in its system and brought down the value of a bitcoin to 1 cent.

740,000 bitcoins are worth a billion dollar more or less.

The company hid this, even many of its senior manager were unaware of it, and followed its course operating with only a fraction of its reserves.

In the last weeks there have been too many withdrawal requests so we had a “corralito” and, as the author of The Two-Bit Idiot states in his post, there was a meeting of investors in Mt. Gox where it was agreed to notify its users immediately, as well as other organizations such as the Bitcoin Foundation and Blockchain.info, of the colossal losses of the company.

These entities came soon to the pertinent regulatory authorities and began the draft of a joint statement condemning Mt. Gox.

And then Mt. Gox website turned white with the brief message shown before, causing the panic between thousands of investors.

Imagine being this guy with over 4700 bitcoins in there (more than $3 million) and find out about all these…

Idbm0bp

I had almost 8 bitcoins (~$5000) and, even if they just costed me $30 more than two years ago, it also hurts.

The fall of Mt. Gox is a big problem for Bitcoin with the large amount of bad press they are getting from journalist who don’t understand them well because this has not been the fault of Bitcoin, look at the following comparison made by Henry Young in a tweet:

#MtGox=Service #Bitcoin=Protocol. If Gmail closed would email be dead? No because Gmail is a service & email is a protocol. via @Henry_Young

— coɴsτ∀ɴτιɴε (@kkoolook) february 26, 2014

I hope that Bitcoin keeps expanding everywhere, along with secure trading platforms, because it is a big progress and will improve greatly our relation with money.

And that’s all I know so far, don’t forget that all these are just more or less credible rumours and there is no official statement yet, I hope it doesn’t take long. For all of you who had bitcoins there, I am sorry, I doubt we can recover them.   An important tip for the newcomers: Keep your bitcoins in your ewallet on your computer, nowhere else will be as safe as there. And remember to keep backups secure always.


UPDATE (feb 28):

#MtGox's lawyer making an announcement to the press at 6pm.. i.e. NOW! I am heading there. #mtgoxprotest

— Kolin Burges (@The_K_meister) february 28, 2014

This post was written more than 6 months ago, maybe I don't think the same way anymore