Troubled exchange house disappears from the web and Bitcoin takes another nose dive.
The closest thing that the Bitcoin world has to a major bank like Citi or HSBC disappeared from the web Tuesday, sending the price of the cryptocurrency into a mid-day freefall.
Sometime on Tuesday the public facing website of Mt. Gox was wiped clean, and its Twitter account sanitized. According to a screenshot posted on Reddit by a user with access to Mt. Gox’s trading interface, trading has been halted.
According to a statement released by other members of the Bitcoin Foundation — the board on which Mt. Gox’s CEO once sat — the cryptocurrency exchange house is now “insolvent”. No reason was giving for its insolvency, though a variety of competing theories have been floated ranging from crippling technical bugs, to the more probable old fashion run on the banks, to a massive hack that drained its virtual vault of $350 million.
“We are shocked to learn about Mt. Gox’s alleged insolvency,” a statement from the foundation read. “While we are unable to comment on whether or not Mt. Gox’s business operations employed operational best practices and reasonable accounting procedures, we can assure the public that the Bitcoin protocol is functioning properly.”
A joint statement from many major Bitcoin players was quick to play down the idea that the demise of Mt. Gox and the subsequent Bitcoin crash is emblematic of a structural flaw in Bitcoin itself.
“This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry,” a statement from the CEOs of Coinbase, Kraken, Bitstamp.net, BTC China, Blockchain.info, and Circle read.
According to a document leaked from Mt. Gox by Ryan Selkis, a bitcoin VC and blogger, and first published by Wired which the magazine said they could not authenticate as being legitimate, said that in the event of a major theft — which it claims happened to the amount of $350 million — the contingency plan is to shut down the exchange for one month to restructure and rebrand the company. This document also claims that the Bitcoin theft has gone unnoticed for “years” due to a leak between the hot wallet and cold storage.
Despite assurances from major Bitcoin players and the Bitcoin foundation that the cryptocurrecy is fundamentally sound, Selkis, who calls himself an early adopter of the currency, has lost faith in its ability to be a safe storage of capital.
“I do believe that this is one of the existential threats to bitcoin that many have feared and have personally sold all of my bitcoin holdings through Coinbase,” he wrote on his blog.
The price of Bitcoin has fluctuated between $450 and $470 mid-day Tuesday according to pricing aggregator Preev.com