Catharsis Ours

Unknown · 2014-02-26T01:12:41+00:00

Consider bitcoin hit a high of 1242 on november 29 , 2013 - value of bitcoin allegedly lost from that all time high rises to........... and also consider , withdrawals had been problematic for months , so using this number to consider losses is fair as many couldn't obtain their funds from Mt Gox ....

924,554,000.736

Almost a billion when you also add in lost fiat of 55 million !

http://www.reddit.com/r/Bitcoin/comments/1yxh57/btce_we_dont_even_know_who_they_are_dont_trust/

( After Mt Gox will distrust spread to the other two major exchanges ? Keep your eyes on Bitstamp and BTC - e , where volumes have been quite high the past couple of days... )

[–]bitcoinisawesome 13 points 1 hour ago

Bitstamp and BTC - e statements regarding Mt Gox troubles.........

https://btc-e.com/news/199

BTC-e Statement regarding MtGox possible insolvency

25.02.14 17:31 from admin

Dear BTC-e.com participants,

We are concerned by MtGox shutdown and would like to assure you that:

1. MtGox losses do not affect account balances or the operation of BTC-e in any way.

2. We confirm the Bitcoin system operation and its exciting prospects, and MtGox bankruptcy has not been caused by any underlying technical problems of Bitcoin. Bitcoin international peer-to-peer network and cryptocurrency are independent of actions of a single market participant. Bitcoin protocol continues to function exactly as it should. The cryptocurrency maintains its stability and the network will continue to develop and exist as long as required by its users.

3. At BTC-e we are constantly monitoring Bitcoin accounts and FIAT reserves. At BTC-e we continue to maintain all clients’ assets in full – both Bitcoin and FIAT.

4. BTC-е has no vulnerabilities during client transactions as we use safe and proven transaction protocols. All transaction issues reported by our clients undergo a thorough check.

The safety of client funds and transactions is of ultimate importance for the company, and this is the reason why we have been an industry leader for the last three years.

1. BTC-е is at its peak of financial strength with the record levels of clients and capital adequacy. The company plans to start publishing financial statements, verified by an external audit, on a regular basis.

2. The highest levels of security are already in place at BTC-e, and the company regularly uses external professional advice to further increase the security of our clients.

3. BTC-e is the only exchange to offer a modern trading platform, MetaTrader 4, to its clients, and many other exciting projects and further upgrades are in the pipeline.

The company plans to soon begin to publish publicly available statements certified by external auditors.

https://www.bitstamp.net/

Statement by Bitstamp regarding Mt Gox insolvency

Bitcoin Is Still Working and Still Has a Bright Future The worldwide peer-to-peer payment system and crypto-currency known as Bitcoin is not dependant on any one actor. The Bitcoin protocol continues to work exactly as designed. Bitcoin remains strong despite the failure of any one exchange and will continue to grow and thrive as long people desire that it do so. Losses Limited to Balances at MtGox It is important to underscore that the losses of fiat currency and Bitcoin are limited to those balances that were in MtGox’s care. The MtGox exchange can best explain how this happened. Bitstamp Customers are Safe and Our Business is Solvent We at Bitstamp have conducted a thorough audit of our bitcoin accounts, as well as the fiat currency reserves we maintain in the bank. Bitstamp maintains all of its customers’ bitcoin and cash deposits and nothing is amiss. Bitstamp is Not Subject to the Transaction Malleability Vulnerability Bitstamp uses a different protocol to handle problems in closing out its transactions and is not vulnerable to the “transactional malleability” issue that was apparently exploited at Mt. Gox. Additionally, we manually double-check every transactional problem encountered by our customers. Bitstamp’s Future We are taking steps to provide Bitstamp’s customers with the utmost confidence in our operations: 1. Bitstamp is financially stronger than ever. We have the most customers, and the most solid capital base, than we have ever had. 2. Bitstamp has retained the best available security and compliance advisors to assist us in protecting our clients. 3. Bitstamp prides itself on industry-leading compliance with its AML and KYC procedures. 4. Bitstamp is now performing quarterly financial audits and will post our financial reports on our web site. Press inquiries please contact: press@bitstamp.net

http://news.yahoo.com/mt-gox-receives-subpoena-federal-prosecutor-wsj-022110716--sector.html

(Reuters) - Bitcoin exchange Mt. Gox has received a subpoena from federal prosecutors in New York, the Wall Street Journal reported, citing a person familiar with the matter.

Mt. Gox, once the world's biggest bitcoin exchange, abruptly stopped trading on Tuesday and its chief executive said the business was at "a turning point," sparking concerns about the future of the unregulated virtual currency.

The subpoena was sent this month and asked Mt. Gox to preserve certain documents among other things, the Journal said. (http://link.reuters.com/tep27v)

http://www.coindesk.com/bitcoin-derivatives-market-btc-sx-suspends-trading-amid-turmoil-partner-mt-gox/

Bitcoin Derivatives Market BTC.SX Suspends Trading Amid Turmoil at Partner Mt. Gox

Pete Rizzo (@pete_rizzo_) | Published on February 25, 2014 at 19:44 GMT | Companies, Exchanges,Investors, News

UK and Singapore-based bitcoin-only margin trading platform BTC.SX has suspended its services “until further notice”, an email sent to the company’s customers on 25th February and obtained by CoinDesk reveals.

Launched in private beta last May, BTC.SX cited the “closure” of its main exchange partner as the reason for the decision in the official correspondence, but did not name Mt. Gox specifically.

Founder and CEO Joseph Lee later confirmed to CoinDesk that the business partner in question is embattled bitcoin exchange Mt. Gox, which abruptly shut down its website on 24th February.

Even as a business partner, Lee was not given prior word about Mt. Gox’s shutdown and potential rebranding.

“We did not receive any advanced notification of their shutdown,” Lee stated.

The result was that the company was forced to stop services temporarily and inform its community of the decision.

The search for new partners

BTC.SX had traded price movements against only Mt. Gox prior to the halt in services, as Lee said just “a small handful” of exchanges could handle its volume. Lee said customers had been prompting the company to find new partners, but that Mt. Gox’s sudden service halt has escalated this process.

In terms of a business relationship, Lee indicated his company did not work closely with Mt. Gox. He said he only met with a company representative at their office two years ago, before BTC.SX was set up.

Lee went on to state that the company is in the process of trying to diversify its future risk and restart services, and further that it could have operations up and running within the next few months.

Said Lee:

“We are in the process of integrating with other exchange partners. This was scheduled for completion in April, but that timescale will now be bought forward in light of recent events.

Spreading our counterparty risk by integrating other exchanges has been on our radar for a while.”

In its email, BTC.SX moved to calm any fears bitcoins would be lost in the suspension, confirming that “all customer balances are secure”, and that it plans to “honor any withdrawal requests”.

Furthermore, customers with open positions will have their deposits refunded in full. The company said:

“We apologise for any inconvenience caused, we are working hard to integrate new exchanges and offer our service again as soon as possible. We will keep you informed of any update, all refunds will be processed in due course, thank you for your patience during this time.”

Ongoing issues

The announcement follows the company’s announced maintenance on 21st February, when it closed to complete “technical operations”, which it claimed were successful.

And we’re trading! Maintenance complete. Thank you for your patience.

5:37 AM - 21 Feb 2014

At the time, BTC.SX indicated it was “one of only a few liquid ways to trade the price movement at Mt. Gox”, although trade size was limited. However, the halt of trading on Mt. Gox stopped trading entirely.

“Every position we place must have a corresponding order placed out to market. Despite the issues in recent weeks we were still able to place orders to market at MtGox up until today,” Lee said.

Notably, BTC.SX was not affected by the DDoS attacks that hampered trading on Mt. Gox, according to its official blog.

Next steps

BTC.SX was originally backed by $150,000 in private capital, and was seeking additional investment. Past statements indicated that it saw its derivatives platform as a key part of building the bitcoin ecosystem.

The company used leveraged positions, meaning users effectively bet BTC against bitcoin fluctuations, which were gauged against the US dollar. The site then lent customers money to bolster their positions.

On 21st January, BTC.SX revealed that it had brokered $35m in trades, and that it had more than 3,000 active users. It had passed the $13m mark in December, suggesting trading increased markedly over the last few months.

Still, while he is disappointed in the setback the service halt inflicts on his business, Lee suggested that if Mt. Gox were to successfully rebrand, he would consider establishing new business ties with the exchange.

“I would love to work with them closer as a partner if they can resolve their outstanding issues,” he said.

http://www.coindesk.com/mt-gox-statement-claims-made-conscious-decision-halt-transactions/

Mt. Gox Statement Claims it Made Conscious Decision to Halt Transactions

Nermin Hajdarbegovic | Published on February 25, 2014 at 17:16 GMT | Companies, Exchanges, Mt. Gox, News, US & Canada

The recent revelations regarding Mt. Gox have been attracting a lot of commentary from everyone other than the exchange itself.

However, the troubled exchange has finally issued a brief statement, albeit one which is unlikely to reassure investors.

It is now becoming apparent that Mt. Gox is about to make an announcement, and that it might be rebranded. However, a new brand identity is probably the least of its worries: for all intents and purposes, the exchange appears to be insolvent and defunct. Its latest statement reads:

Dear MtGox Customers,

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.

Best regards, MtGox Team

The statement does not explain why Mt. Gox decided to pull the plug suddenly at01:59:06 UTC on Tuesday. In addition, customers hoping to find answers from Mt. Gox support will be disappointed, too – the support page simply states: “No help desk at support.mtgox.com.”

It is important to bear in mind that the exchange didn’t simply halt trading and issue the statement shortly after its decision – it went completely offline and has not issued any statements until today.

If the aim of the latest statement was to reassure customers, investors and the bitcoin community in general, it falls short of explaining what is happening behind closed doors and does not address concerns raised by many publications and bitcoin insiders. In an email, CEO Mark Karpeles made an unofficial statement to Reuters claiming that bitcoin exchange is “at a turning point”.

He added that the Japan-based company “should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.” However, these new plans are yet to emerge.

Regulators starting to take notice

The industry reaction to the virtual disappearance of Mt. Gox has been swift. Other exchanges and bitcoin businesses including Blockchain.info and Coinbasedid their best to distance themselves from the exchange, issuing a joint statementyesterday (February 24th).

Regulators are taking notice, too. Homeland Security and Governmental Affairs Committee Chairman Tom Carper has issued a statement on the matter, claiming that US policymakers and regulators can and should learn from the Mt. Gox incident to protect consumers:

“For months, our Committee has been calling on law enforcement, industry, and relevant regulators to come to the table and engage in meaningful dialogue to provide clear rules of the roads for entrepreneurs, investors, and consumers. Without these rules, businesses can’t be successful and consumers can’t be protected. If today’s news is true, it is a sad violation of consumer trust, whether through malicious action or simple incompetence. Regardless, it’s unacceptable.”

The chairman stressed that his staff is working closely with federal agencies to determine what lessons can be learned from the failure and to make sure that it does not happen in the US. “Our Committee will continue to work closely with relevant U.S. government entities to steer the boat away from nefarious actors – and it’s up to legitimate, law abiding industry partners to row the boat into law abiding waters,” he added.

Fellow US regulator Ben Lawsky, New York’s Superintendent of Financial Services, also waded into the debate.

In a statement via email he maintained that while all the facts are not yet clear “these developments underscore that smart, tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms.”

Both Carper and Lawsky are clearly throwing the ball to bitcoin industry leaders, if not indirectly passing blame.

It seems the lesson learned from the Mt. Gox demise will be a painful one, but will all regulators will reach the same conclusions?

Mt.Gox "Closes All Transactions" Again "To Protect Site And Users"

Submitted by Tyler Durden on 02/25/2014 10:44 -0500

More humor from Mt.Gox, which has once again "temporarily" suspended all transactions. Can it just make it permanent already, and get it over with?

Just released statement from the doomed exchange named after Magic: The Gathering.

Dear MtGox Customers,

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.

Best regards,
MtGox Team

Meanwhile, here is an artist's rendering of what Mt.Gox' logo should have been all along:

h/t @ButtCoin

http://www.reddit.com/r/Bitcoin/comments/1yvdcd/heres_a_summary_of_what_has_happened_over_the/

Here's a summary of what has happened over the past few hours - everything from leaked documents to MtGox disappearing (self.Bitcoin)

submitted 5 hours ago* by reditalian

I posted this in /r/BitcoinMarkets but I think it will be useful here.

If you've just woken up, you're probably thinking what the fuck is going on. Here's a summary of what occured in the last few hours, in order:

1.) MtGox allegedly lose 750,000 Bitcoins, according to an ALLEGED leaked document by MtGox, titled "Crisis Strategy Draft". TwoBitIdiot, who leaked the document, is a known person within the Bitcoin community ;

2.) He then decides to leak the document to the public 1 - 2 hours later confirming this number, and within the document it says they are to rebrand as http://gox.com and lie their way out of this mess ;

3.) After the document is leaked to everyone, MtGox halts trades immediately (Around 5 minutes after the leak) ;

4.) At this point, http://gox.com is still a parked domain, and not long after starts to redirect tohttp://mtgox.com (EDIT: More information on the domain situation from chris45215, which basically confirms that MtGox were indeed planning to relaunch as Gox.com as explained in the leaked document. Further info on Domain Investing ) ;

5.) After around 30 minutes, Coinbase, Blockchain, Circle and Kraken simultaneously release identical articles titled "Joint Statement Regarding the Insolvency of Mt.Gox" (EDIT: Since then, some of the articles have removed the word "insolvency", but not all of them ) ;

6.) A further 5 minutes later, http://mtgox.com is taken completely offline ;

7.) And now we are here, with not a single word from MtGox.

http://www.reddit.com/r/Bitcoin/comments/1yv6ph/some_words_for_my_friends/

Some words for my friends (self.Bitcoin)

submitted 7 hours ago* by evoorhees

Hello friends,

MtGox is gone. So let's prepare ourselves.

On Tuesday, and for the rest of the week, all hell will break lose in the media. It will be blamed on MtGox, it will be blamed on Bitcoin, it will be blamed on the "bug," and it will, more than anything, be blamed on the "lack of regulation." Pundits and "experts" of all types will weigh in on the calamity. It will be world news in a matter of hours.

Get ready, because it will be an ugly week.

For all of you who lost money, my heart goes out to you. Some people lost a little, some lost a fortune. It will make people sick, and depressed, and full of grief. Personally, I had over 550 BTC in Gox. I will never get any of that back. If misery loves company, then we'll be enjoying a grand feast today.

I should have known better, of course. I take responsibility for leaving those funds with an entity that had proven incompetence repeatedly. I chose to ignore even my own warnings, for nothing more than the sake of convenience.

Gox is still at fault, to be sure, but I have learned the lesson. I hope it is not such an expensive lesson for others. And for all you observers, please take a moment to consider it as well.

Be mindful, however, that the wrong lessons are not learned, for that would be the true tragedy, indeed.

Let me suggest that the lesson is not that Bitcoin is broken. Bitcoin is fine.

Similarly, the lesson is not that security is impossible. Those who know what they are doing, can achieve it and help others to do so.

The lesson is not that nobody can be trusted. There are countless good men and women in this community who are worthy of trust, and some of the very best people I've ever met.

And finally, the lesson is not that we ought to seek out "regulation" to save us from the evils and incompetence of man. For the regulators are men too, and wield the very same evil and incompetence, only enshrined in an authority from which it can wreck amplified and far more insidious destruction. Let us not retreat from our rising platform only to cower back underneath the deranged machinations of Leviathan.

The proper lesson, if I may suggest, is this: We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow's finance, and we put ourselves at risk in doing so.

We are at risk from accidents. We are at risk from fraud, from corruption, and from evil. We are at risk from journalists seeking headlines and from politicians seeking power and glory. We are at risk from the very market we are trying to build - a market which cares not about our portfolio, our ambitions, or our delicate sympathies.

For all these risks, devastation will befall us repeatedly. Some of us will be discouraged. Some will be ridiculed and insulted. Some will be tricked, or swindled. Some of us will be crushed or caged. We will be set upon by all manner of antagonists, repeatedly, for a long time.

So why do we do it? Why do we build these towers that fall down upon us? Why do we toil and strain and risk our precious time, which is the only real wealth we possess?

Because the world needs what we're building. It needs it desperately. If that matters to you, as it does to me, then hold to that thought. You will see through the smoke, and your wounds will heal.

So shake it off, brothers, for this won't be the last calamity endured before the win.

Tonight, my heart is with you all.

Tomorrow, my head is down. My eyes are open. And I am building.

Toward peace and freedom,

-Erik Voorhees

http://globaleconomicanalysis.blogspot.com/2014/02/bye-bye-mt-gox-bitcoin-exchange-website.html

( Check volume at BTC-e , Bitstamp and BTC - China - all three seeing volume well above usual volumes numbers..... I think we shalll learn somewhat soon how safe all of the big Exchanges actually are . which will either bring goo news or more bad news. )

Tuesday, February 25, 2014 1:46 AM

Bye Bye Mt. Gox: Bitcoin Exchange Website Appears to Have Been Deleted; Value of MtGox Bitcoins Plummets to $135

The "MtGox" bitcoin exchange site that handled a vast majority of bitcoin transactions is now unavailable at best.

More likely, money at Mt. Gox has vanished by fraud.

Yesterday, Reuters reported Mt. Gox's CEO resigns from Bitcoin Foundation.

Today the Wall Street Journal notes Bitcoin Exchange Mt. Gox's Website Appears to Have Been Deleted

The website of embattled bitcoin exchange platform Mt. Gox was unavailable Tuesday and appeared to have been deleted.

Attempts to reach the Mt. Gox homepage yield an answer from the server but display no data, indicating the server is functioning but that the site has no content.

The Tokyo-based bitcoin exchange has frozen bitcoin withdrawals since the beginning of February, stoking fears of bankruptcy from its investors and those in the broader bitcoin community.

Value of MtGox Bitcoins Plummets to $135

Also consider MtGox bitcoin plunges as website disappears

The website of Tokyo-based bitcoin exchange MtGox went down on Tuesday after the value of the virtual unit sank to about a quarter of that on other platforms and Japanese regulators said they were unable to step in.

Visitors to the www.mtgox.com domain got a blank page when they tried to log on, more than two weeks after the firm suspended cash withdrawals as claims swirled of a bug in the software underpinning bitcoin.

Consternation has grown since MtGox stopped processing external transactions on February 7, claiming there was a problem with the program that powers the currency, and allows it to be transferred between users or swapped for goods and services.

The value of the unit on the exchange has gone into freefall since then. Around midday on Tuesday, a bitcoin was worth $135, compared with the $522 quoted by the CoinDesk bitcoin price index, which tracks the price of the currency on major exchanges.

In January a bitcoin was worth more than $900 at MtGox, one of the world's oldest exchanges for the unit.

MtGox, which has not responded to repeated AFP requests for comment, issued a statement last week saying it had moved its headquarters within Tokyo due to "security problems" and was still working on "re-initiating bitcoin withdrawals".

It did not give details of the security problems.

"The move, combined with some other security and technical challenges, pushed back our progress," the firm said Thursday in their most recent public statement.

Earlier this month, the company brought down its system and stopped processing client requests to withdraw money held at its "wallet", citing a problem with the technology.

Problem with technology or a problem with fraud? I strong suspect the latter.

Rise and Collapse of Bitcoin

Bitcoin rose from pennies to over $1200. But that was only good if you collected it.

Bitcoin Wisdom has some live charts. Here is the Mt. Gox exchange.

It is quite possible that Mt. Gox bitcoins are nearly worthless. If so, some paper millionaires lost it all.

I will also toss out another idea that I have not seen discussed: The bitcoins are still at Mt. Gox, and people are panic selling to fraud perpetrators who purposely shut down the site to induce a panic.

Either way, it's a mess.

I was never at ease with the idea of bitcoins, and this fiasco certainly makes me happy I am not involved with Mt. Gox.

Mike "Mish" Shedlock

http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-implodes/

Bitcoin Exchange Mt. Gox Goes Offline Amid Allegations of $350 Million Hack

BY ROBERT MCMILLAN
02.24.14
11:57 PM

The building that houses the Mt. Gox offices in Tokyo. Photo: Ariel Zambelich/WIRED

Mt. Gox, once the world’s largest bitcoin exchange, has gone offline, apparently after losing hundreds of millions of dollars due to a years-long hacking effort that went unnoticed by the company.

The hacking attack is detailed in a leaked “crisis strategy draft” plan, apparently created by Gox and published Monday by Ryan Selkis, a bitcoin entrepreneur and blogger (see below). According to the document, the exchange is insolvent after losing 744,408 bitcoins — worth about $350 million at Monday’s trading prices. The plan paints a bleak picture of the exchange’s finances and outlines an arbitrage scheme to restore the exchange to solvency. “The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company,” the document states.

WIRED couldn’t confirm the authenticity of the document. Reached Monday night, a Gox representative declined to comment on the document and referred us to the company’s webpage, before abruptly hanging up. But the website went offline a few hours after the company suspended trading on its exchange, and if the document is indeed authentic, the situation it described could reverberate across the world of bitcoin and possibly hamper the future of the digital currency.

Bitcoin insiders had been bracing for the worst from Mt. Gox for weeks, but the magnitude of the apparent theft — which would be the largest bitcoin heist ever — and the company’s alleged plan to replenish its stock of bitcoins took even seasoned bitcoiners by surprise. “Gox is the worst-run business in the history of the world,” said Roger Ver, in an instant message interview. Ver is a bitcoin advocate who lives across the street from Mt. Gox’s Tokyo offices and tried to help out the troubled exchange the last time it was hacked, back in 2011.

“Gox is the worst-run business in the history of the world”
–Roger Ver, bitcoin advocate

A coalition of bitcoin businesses — including bitcoin wallet-makers Coinbase and Blockchain — quickly put out a statementas news of the hack spread. “This tragic violation of the trust of users of Mt. Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of bitcoin and the digital currency industry,” they said. “There are hundreds of trustworthy and responsible companies involved in bitcoin.”

As WIRED reported earlier, Gox has been in trouble since U.S. authorities seized $5 million of the company’s U.S. assets last year. Gox had been operating in the U.S. without the proper money transmission permits. Since that seizure, customers had reported months-long delays in receiving cash for their bitcoins, and earlier this month, Gox suspended all withdrawals, blaming a bug in its bitcoin wallet software.

Now, according to the alleged leaked document, it looks like hackers had been exploiting that bug for two years, and even removing bitcoins from supposedly secure “cold” wallets that the company had stored offline. Typically, cold wallets are disconnected from the internet and cannot be emptied by online attackers. However, the “cold storage has been wiped out due to a leak in the hot wallet,” the document states.

Gox’s collapse is another black eye to a virtual currency that’s been struggling to go legit. Last month, the Charlie Shrem, the CEO of U.S. bitcoin exchanger Bitinstant was arrested on money laundering charges. Both Shrem and Gox CEO Mark Karpeles had been board members with the Bitcoin Foundation, the digital currency’s lobbying and software development group. Both have now stepped down. But according to the alleged Mt. Gox document, the bitcoin world faces even bigger problems that the loss of these two men. “This could be the end of bitcoin,” the document reads, “at least for most of the public.”

http://www.coindesk.com/mt-gox-loses-340-million-bitcoin-rumoured-insolvent/

Mt. Gox Allegedly Loses $350m in

Bitcoin (744,400 BTC), Rumouredto

be Insolvent

Pete Rizzo (@pete_rizzo_) | Published on February 25, 2014 at 07:21 GMT | Companies, Exchanges, Mt. Gox, News

UPDATE (25th February, 13:47 GMT): Domain investor Andy Booth has confirmed the sale of www.gox.com to Mark Karpeles.

UPDATE (25th February, 09:28 GMT): The source code on Mt. Gox’s website now reads “put announce for mtgox acq here” leading some to speculate on the motives behind the document leak:

http://MtGox.com  now reads "put announce for mtgox acq here"  Zero-evidence speculation: leak was by insider wanting cheap #bitcoin

4:09 AM - 25 Feb 2014

A document has surfaced suggesting that troubled Japan-based bitcoin exchangeMt. Gox will close for one month as part of a four-step rebranding plan, and that CEO and former Bitcoin Foundation board member Mark Karpeles will step down from his executive position as part of the process.

The bitcoin price has been tumbling all morning amid the news, hitting a low of $419 so far this morning.

Entitled “Crisis Strategy Draft,” the document suggest the company’s increasingly dire financials are greatly impacting the decision. By Mt. Gox’s own estimates, they say, it has only 2,000 BTC and approximately $22.4m in fiat currencies in its possession.

The document was first reported by Ryan Galt, aka the Two-Bit Idiot, who later confirmed to CoinDesk:

“Several sources familiar with the situation confirmed the legitimacy of the loss claims and the authenticity of the ‘Crisis Strategy’ document.”

The document is branded with the current Mt. Gox logo and a redesigned version, and claims to have detailed inside knowledge of Mt. Gox and its financial affairs, but appears to be written by a team external to Mt. Gox’s current management.

The document is publicly available for viewing here and embedded below this article.

According to the leak, Mt. Gox has lost close to 744,408 BTC or $350m at current prices, and faces an unconfirmed additional $55m in fiat liabilities. The company suggests that theft related to transaction malleability has been ongoing for several years, but was not reported by the company.

We can assume now that withdrawals will not recommence, at least not in the foreseeable future. Customers with Mt. Gox accounts will not be receiving their bitcoins or possibly even other currencies in what is effectively an insolvency, though no-one in an official position is using that word.

At Japan time on the eve of the statements, Japan’s finance and banking regulator the Financial Services Agency (FSA) said it would not be intervening in the issue as it did not view supervision of digital currency exchanges as part of its obligations.

Seeking capital injection

Rumors of the proposal first began circulating on 24th February, when the document was posted on the popular digital currency blog The Two-Bit Idiot. Sources close to the company suggest the document is real, and that it is part of a plan by Mt. Gox to raise investor capital.

The document paints a vivid picture of potential investors who are seeking to raise the necessary capital to continue operations, or at least use whatever remains of Mt. Gox’s brand value to begin a new venture.

coindesk bpi chart — The CoinDesk BPI shows bitcoin’s dramatic price drop following this morning’s revelations.

While admitting Mt. Gox’s image is “broken”, it notes that throughout the recent bad press customers have continued to deposit funds and trade on the exchange.

The document also evokes sweeping rhetoric aimed to tie Mt. Gox’s fate to that of the broader bitcoin community: “The likely consequences will be larger than this localized financial damage, and we believe that the benefits of keeping MtGox stable and running outweigh the risks. This isn’t about saving MtGox anymore.”

They suggested the demise of its brand could set bitcoin back “five to 10 years”, and that governments should and would react “swiftly and harshly”. “At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public,” the document reads.

Mt. Gox, through intermediary sources, declined to comment on the validity of the reports at press time.

High-profile responses

Coinapult founder and bitcoin entrepreneur Erik Voorhees posted a lengthy and emotional commiseration on Reddit, claiming he had 550 BTC stored with Mt. Gox himself and “will never get any of that back”. He wrote:

“I should have known better, of course. I take responsibility for leaving those funds with an entity that had proven incompetence repeatedly. I chose to ignore even my own warnings, for nothing more than the sake of convenience.”

While laying the blame firmly at the feet of Mt. Gox, he affirmed that bitcoin itself was not at fault and security was not impossible, and implored others to continue “building a new financial order.”

“It won’t be the last calamity endured before the win,” he continued.

Several high-profile bitcoin companies, including Coinbase and Blockchain.info, moved swiftly to distance themselves from Mt. Gox and launch into a strident defense of bitcoin itself in a joint statement:

Joint Statement Regarding the Insolvency of @MtGox -> http://blog.blockchain.info/2014/02/25/joint-statement/ … #bitcoin @Coinbase @Kraken @circlebits @Bitstamp @btcchina

10:10 PM - 24 Feb 2014

Rebranding process

The leaked proposal recommends a full rebranding of the company and even a possible relocation to another jurisdiction, like Singapore.

Firstly, it calls for the immediate reduction of liabilities through the injection of new bitcoins and the purchase of coins at depressed prices on its own exchange, in what sources told CoinDesk amounted to a bailout of the embattled exchange.

It paints a wishful picture of brand continuity without promising much to customers, maybe to neutralize any anger bound to arise from a hard shutdown and keep stakeholders’ hopes somewhat alive.

“Customer support will stay operational to deal with people who want to have access to their account/history”, it says, while maintaining that few, if any, staff employed at the current company would remain, particularly CEO Karpeles.

“New branding, means that there are future-forward plans already in the works, and customers will see that MtGox actually has a plan in motion.”

It continues: “The MtGox price is low, making it possible to erase a significant portion of the debt, but it needs to be done quickly.”

Reducing liabilities

The document notes that protecting the image of bitcoin itself is a primary concern, since a failure on Mt. Gox’s scale will be a disaster for digital currency in mainstream eyes.

To reduce this damage, it appears to put out a plea to high profile members of the bitcoin community to inject funds in the order of 200,000 BTC into the exchange, saying “the costs of not doing so are incalculable at this stage.”

“Support from Bitcoin big players and core community – long term, high leverage: Coins for equity, coin donations, and cash injections to buy coins at the cheap MtGox price are some options among many.”

“Bet on future profit to refill the lost coins – Long term, low leverage: Regardless of malleability and regulatory issues, MtGox’s main problems are massive robbery and poor bitcoin accounting. However, the business as an exchange is highly profitable and healthy when run properly.”

Mt. Gox becomes Gox

The document suggests stakeholders would eventually see some kind of return, without saying when or indeed what the return might be. Should the company re-open with a new image, the strategy would be to limit withdrawals both in bitcoin and cash to prevent a bank run.

Note the timeframe (italics are for emphasis):

“With the profit, a meticulous analysis will be made over the coming years to clean the bitcoin balance sheet while running the exchange and generating revenue to pay back stakeholders. New offerings such as additional currencies, low trading fees, etc will give customers a reason to stay with MtGox.”

Management reshuffle

Removing Mt. Gox’s management team seems to be a priority and, ironically, this is an area the Japanese authorities seem willing to regulate: “In Japan, a CEO cannot resign until a new CEO is nominated. In that case customers knows that MtGox is still around and working, but under new management.”

It continues: “Try to reduce the impact and raise stakeholder confidence, and eventually get Mark out.”

One strategy the document puts forward is a “Letter from the CEO”, essentially a mea culpa from Mark Karpeles that admits Mt. Gox’s technology was inadequate to deal with the task of maintaining a bitcoin exchange, both in transaction volumes and response to the the malleability issue.

Mounting evidence

Though doubts remain among certain high-profile sources, at least two of the company’s four listed strategy points seem to have already been confirmed.

For example, Part Three of the four-part plan called for the company to rebrand as Gox.com, a process that it said would require it to “reset all SNS channels for communication”, which is consistent with Mt. Gox deleting its entire history of Twitter posts just yesterday.

Further, a search of the Internet domain registration database WHOIS seems to confirm Mt. Gox’s intention to rebrand as Gox.com. The resource shows that the domain Gox.com has been purchased by Mt. Gox parent company Tibanne Co Ltd, and is currently owned by Karpeles (http://www.whois-search.com/whois/gox.com).

MtGox Situation: Crisis Strategy Draft by twobitidiot

http://www.coindesk.com/mt-gox-trading-halts-bitcoin-businesses-move-assure-investors/

Mt. Gox Trading Halts As Bitcoin Businesses Move to Assure Investors

Daniel Cawrey (@danielcawrey) | Published on February 25, 2014 at 04:14 GMT | Bitstamp, BTC China,Circle, Coinbase, Exchanges, Mt. Gox, News

Hours after Japan-based bitcoin exchange Mt. Gox suddenly halted trading activity, the company’s website is now completely offline. Notably, the news follows other troubling signs that all is not right with the exchange, such as its sudden removal of its entire Twitter feed.

Bitcoincharts market section shows the last trade on Mt. Gox occurred at 01:59:06 UTC, which is 8:59 EST.

When users logged into the bitcoin exchange’s website they were experiencing the following error message when trying to buy or sell bitcoins:

Not long after the suspension in trading activity and subsequent outage, leaders within the digital currency space joined together in a bid to restore confidence in bitcoin and distance themselves from the embattled exchange.

The US-based hosted wallet Coinbase published the statement first, which later appeared on other websites connected with the messaging. The post, titled “Joint Statement Regarding MtGox“, reads:

“The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox.

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. There are hundreds of trustworthy and responsible companies involved in bitcoin.

We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.

In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China.

We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.

Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers. Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading. It does not appear to any of us that MtGox followed any these essential requirements as a financial services provider.”

The statement also names the following bitcoin industry veterans as supporting this position.

Fred Ehrsam — Co-founder of Coinbase
Jesse Powell — CEO of Kraken
Nejc Kodrič — CEO of Bitstamp.net
Bobby Lee — CEO of BTC China
Nicolas Cary — CEO of Blockchain.info
Jeremy Allaire — CEO of Circle

The outage of Mt. Gox and the subsequent joint release of this statement follows unconfirmed reports about the future of Mt. Gox’s viability as a bitcoin exchange.

Bitcoin Community Gangs Up On "Bad Actor" As Mt.Gox Site (And Feed) Disappears

Submitted by Tyler Durden on 02/24/2014 22:24 -0500

UPDATE: Mt. Gox website and feed is now offline

Much as we are not surprised, given our previous discussion of the end of major Bitcoin exchange Mt. Gox, this evening's release by Coinbase must be the final nail in the final coffin of the Tokyo-based firm...

The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox. ... As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

And scene...

Via Coinbase blog,

The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox.

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. 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.

We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.

In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China.

We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.

Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers. Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.

The following industry leaders stand by this statement:

Fred Ehrsam — Co-founder of Coinbase

Jesse Powell — CEO of Kraken

Nejc Kodric — CEO of Bitstamp.net

Bobby Lee — CEO of BTC China

Nicolas Cary — CEO of Blockchain.info

Jeremy Allaire — CEO of Circle

Interestingly, Coinbase's original title of their post was a little more aggressive...

which contained this line...

This is the first public declaration that the exchange — which has been facing major issues in terms of allowing users to withdraw funds — is insolvent.

which was rapidly removed and replace with this less aggressive one...

We thought this "new logo" for Mt.Gox summed it all up...

MtGox unveils new logo 

10:34 PM - 24 Feb 2014