Bitcoin Exchange Mt. Gox Files Bankruptcy

2/28/14 11:35AM EST

Bitcoin Exchange Mt Gox Files Bankruptcy Bitcoin Exchange Mt. Gox Files Bankruptcy

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Investors in digital currencies beware: Mt. Gox, previously the world’s largest bitcoin exchange, has filed for bankruptcy. This comes in the wake of the organization losing an estimated 850,000 of the virtual coins, worth nearly half a billion dollars.

Mt. Gox CEO Mark Karpeles told the Japanese Asahi News Network in a press conference, “We have lost bitcoins due to weaknesses in the system.” Despite his company’s failures, Karpeles still sees a promising future for the growth of the virtual currency.

In the meantime, investors and bitcoin holders are still trying to uncover the truth behind the collapse of the exchange and find out what happened to their money. The Tokyo-based exchange was used primarily by foreign investors, who lost a combined 750,000 bitcoins, while Mt. Gox lost 100,000 of its own.

With an average price of $565 for a single bitcoin, the loss of 850,000 represents about $480 million, according to current prices on the CoinDesk Bitcoin Price Index.

This past Tuesday, Mt. Gox stopped all transactions and took down its website, marking the most critical blow to the bitcoin industry to date. In filing bankruptcy, few Mt. Gox investors have hopes of recovering their investments. Still, part of the process involves the development of a restructuring plan and the payment of any claims recovered to Mt. Gox creditors, a process that could take several years.

Bitcoin, a virtual currency free of any centralized banking control, still has potential as an industry. Many are quick to point the finger at CEO Karpeles himself, who is alleged to have maintained a lax attitude about the company and did little to control the effects of hackers.

As Mt. Gox continues with its filing of bankruptcy, similar to that of Chapter 11 in the United States, investigators in both Japan and the U.S. are exploring the possibility of criminal activity related to the Mt. Gox collapse.

 
 
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