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Things are not getting much better for MtGox, the once-largest Bitcoin exchange on the internet. The company has reportedly been subpoenaed by federal investigators in the United States, and their CEO has asked employees for their silence.
MtGox CEO Mark Karpeles issued a statement on Wednesday to reassure customers that he’s at work on resolving complications that have caused panic among the Bitcoin community in recent days.
“As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” the chief executive wrote.
Earlier this week on Monday, a leaked internal MtGox “crisis strategy” document suggesting that the exchange site had been hacked and hundreds of millions of dollars’ worth of the cryptocurrency stolen began to circulate online. The MtGox website went dark soon after, and all tweets from its Twitter account disappeared at once.
According to the Wall Street Journal, however, federal investigators aren’t likely to have much difficulty getting dirt on MtGox. Late Tuesday evening, WSJ reporter Christopher Matthews said a person familiar with the matter confirmed to the paper that MtGox received a subpoena from federal prosecutors in New York.
In my opinion Mt. Gox is simply a dirty company. I trade bitcoins, have been doing so for over a year now. There are several other exchanges on the internet that take their customers much more seriously than Mt. Gox ever did. Basically what happened was, there was a "quirk" in Bitcoin's protocol which allowed some hackers to trick exchanges into withdrawing more money than they had.
It is important to note the difference - this was not a problem with bitcoin itself it has been known about and was designed intentionally, but basically it means that exchanges must keep their records in a certain way and also use proper trading software or else exploits can be used. I.e. A person could attempt to withdraw 100$ in bitcoin over and over again (by clicking the button, sending multiple requests) and ultimately every once in a while they would be successful in withdrawing more than they had from the exchange...When this came out, mostly all bitcoin exchanges went down for maintenence and in less than 24 hours they all had a fix, no coins were stolen, and business was going as usual. Mt. Gox on the other hand froze all withdrawals, and pretty much paused it's market for 2+ weeks and NOW they are trying to claim all the money is gone.
In my honest opinion, this was simply a heist.