Tuesday, February 25, 2014

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

The building that houses the Mt. Gox offices in Tokyo.

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.

For the rest of the story: http://www.wired.com/wiredenterprise/2014/02/bitcoins-mt-gox-implodes/

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