Bitcoin exchange Mt Gox goes offline amid insolvency charges
Moneylife Digital Team 25 February 2014

The website of Mt Gox, one of the major exchange for Bitcoin, is not longer online amid reports it suffered a debilitating theft, a new setback for efforts to gain legitimacy for the virtual currency

Embattled Bitcoin exchange Mt Gox has largely vanished from the Internet amid accusations that the exchange is insolvent after a years-long theft that resulted in the loss of hundreds of millions of dollars, says CNET in a report.

 

According to media reports, the web site for the Tokyo-based exchange has been wiped clean, as has its official Twitter feed. The disappearance of the site follows the resignation Sunday of Mt Gox from the board of the Bitcoin Foundation, a group seeking legitimacy for the currency.

 

Mt Gox suspended cash withdrawals on 7th February, claiming there was a problem with the programme that powers the currency and allows it to be transferred between users or exchanged for goods and services. The value of the crypto-unit has been falling ever since.

 

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 Mt Gox, which is one of the world's oldest exchanges for the unit, says a report from AlJazeera.com.

 

Separately, several Bitcoin exchanges released a joint statement saying that funds under their control are held securely. The Bitcoin operators said they are working to "re-establish the trust squandered" by the failings of Mt Gox, which should not be considered a reflection of the value of Bitcoin or the digital currency industry.

 

Bitcoin was started in 2009 as a currency free from government controls. It had been inching toward broader acceptance despite wild swings in value in the past year. For most of the currency's history, each digital coin had been worth less than $10.

 

Last month, Reserve Bank of India (RBI) has cautioned users, holders and traders of virtual currencies (VC) like Bitcoin, Litecoin, BBQcoin and Dogecoin and is examining the legal and regulatory framework of VCs. In a press release, RBI stated that Bitcoin and other VCs are exposed to potential financial, operational, legal, customer protection and security related risks.

 

Earlier, RBI had said that VC including Bitcoin may pose several other risks to users, including the following:

 

  • VC being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in the permanent loss of the VC held in them;

 

  • Payments by VC, such as, Bitcoin take place on a peer-to-peer basis without an authorised central agency which regulates such payments. As such, there is no established framework for recourse to customer problems, disputes and charge backs etc;

 

  • There is no underlying or backing of any asset for VC. As such, their value seems to be a matter of speculation. Huge volatility in the value of VC has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value;

 

  • It is reported that VC, such as, Bitcoin are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of VC on such platforms are exposed to legal as well as financial risks;

 

  • There have been several media reports of the usage of VC, including Bitcoin, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.

 

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Comments
MOHAN
8 years ago
The bubble bursts
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