How safe is Mt Gox

Digital currency : Bitcoin exchange Mt.Gox is broke

The digital currency Bitcoin is plunging deeper into the crisis: The once largest trading platform, Mt.Gox, has filed for bankruptcy. Large amounts of bitcoins have disappeared.

Mt.Gox has debts of around 6.5 billion yen (46.6 million euros), according to a press conference in Tokyo on Friday, as the Japanese news agency Kyodo reported. Mt.Gox boss Michael Karpeles also admitted that bitcoins might have been stolen in an online attack by strangers at the beginning of February.

According to the information, bitcoins to the value of 11.4 billion yen (81 million euros) and deposits to the value of 2.8 billion yen (20 million euros) that were intended to purchase the digital currency disappeared last Tuesday. Since the beginning of February, users have not been able to access their accounts at Mt.Gox. Karpeles apologized to the users.

According to a paper published on the Internet, there could be more than 740,000 bitcoins missing at the current value of over 300 million dollars. In a chat protocol published among other things by "Fox Business", Karpeles had admitted that the document was "more or less" serious.

Closure of Mt.Gox triggers a crisis of confidence

The Bitcoin exchange had ceased operations on Tuesday. In the meantime, only a blank white page appeared at the web address www.mtgox.com. Then Karpeles published a few lines there denying rumors of an escape from Japan and promising to work on a solution.

Bitcoins, also known as “hacking currency”, have been around since 2009. They are generated in complicated computing processes on users' computers, but can also be bought on the Internet using established currencies such as dollars or euros. They are mainly used for payments on the Internet. In the past year, the price had temporarily risen above $ 1000 per Bitcoin. Most recently, the price was quoted at $ 570.

The Mt.Gox closure plunged the currency into a crisis of confidence. Several other Bitcoin exchange operators distanced themselves from Mt.Gox.

Fed chief Yellen: We have no control

Investigations into the collapse of Mt.Gox have already started in Japan. "The government will take action if necessary as soon as we have reviewed the situation," said a government official on Wednesday. According to the "Wall Street Journal", US authorities are also investigating the case. US federal attorneys in New York are said to have requested documents from the company.

The new US Federal Reserve chief Janet Yellen thinks it is difficult to exercise control over the ailing digital currency. The Fed has no authority to regulate, said Yellen on Thursday evening before the banking committee of the US Senate. She described Bitcoin as an innovation that takes place outside of the banking sector. However, it is appropriate that the US Congress deal with legal issues relating to digital currencies. (dpa)

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