One of the largest bitcoin exchanges goes offline (update)

25 Feb 20141 Share

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One of the world’s largest exchanges of bitcoin, MtGox, has gone offline for supposed security reasons in what appears to be increasingly perilous times for the digital currency.

Users of the website have been left worried for their bitcoin wallets, having found found nothing but a blank page on the MtGox website with no explanation for its stoppage.

There have also been suggestions that the estimated 750,000 bitcoins used in the exchange has been lost, with an estimated value of €273m.

The exchange, whose origins are in Japan, has been criticised for holding user’s funds and formally halted all withdrawals of the currency on 7 February.

The company issued a statement on 10 February, stating that a significant loophole was found in the site’s coding.

“A bug in the Bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur,” said the statement.

“Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue.”

In defence of Bitcoin

However, other bitcoin exchanges have come out against MtGox and have issued a joint statement distancing themselves from the exchange as one of the currency’s ‘bad actors’ that has essentially and allegedly swindled people of their funds.

“This tragic violation of the trust of users of MtGox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin.

“These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants.  As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. MtGox has confirmed its issues in private discussions with other members of the Bitcoin community.”

The currency is in a state of flux with the height of its popularity and potential use in mainstream business seeming likely, only for it to be dealt a serious blow with the head of one exchange being arrested on suspicions involving illegal activities and Apple losing faith in the online currency.

Update – 17:23

MtGox has since released a brief statement sbout the site's closure: "In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly."

Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com