Saturday, March 01, 2014

Mt. Gox Goes Bankrupt After Losing $425 Million In Bitcoins

Via The Huffington Post:

The Mt. Gox bitcoin exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.

The exchange's CEO Mark Karpeles appeared before Japanese TV news cameras, bowing deeply.

He said a weakness in the exchange's systems was behind a massive loss of the virtual currency involving 750.000 bitcoins from users and 100.000 of the company's own bitcoins.

That would amount to about $425 million at recent prices.

Some countries have reacted sternly to bitcoin's emergence, but many people remain fans of its potential.

Vietnam's government said Thursday that trading in bitcoin and other electronic currencies is illegal, and warned its citizens not to use or invest in them.

Late last year, China banned its banks and payment systems from handling bitcoin, although people still use them online.

Thailand earlier put a blanket prohibition on using bitcoins, and Russia has effectively banned them.

There was still considerable appetite for bitcoin in China, where it has become attractive as an investment since tightly-regulated state banks offer very low interest rates on deposits.

Even some with money tied up in Mt. Gox were undaunted.

Huang Zhaobin, a 21-year-old student in Chengdu, said he had lost 50.000 to 60.000 yuan ($8.125 to $9.750) from the Mt. Gox closure.

"Actually this money itself is the benefit from bitcoin investment", said Huang, who plowed 10.000 yuan into bitcoins about three months ago.

"If it is legal, I will continue to invest for sure as it is the trend in the world".

In Singapore, Tembusu Terminals, a joint venture specializing in crypto-currencies, announced Friday its first bitcoin ATM in the city-state and plans for many more.

In Hong Kong, a group opened what it said was the world's first bitcoin retail store.

Yang Weizhou, analyst at Mizuho Securities Co. in Tokyo, said laws to regulate virtual currencies may have to be created by countries including Japan.

She said lawsuits from those who lost money were likely, and any court rulings would chart unexplored territory and help define the reach of virtual money.

The trend toward such technology for peer-to-peer payments wouldn't replace traditional money but was here to stay because of its convenience, she said.

"It is undeniable", she said. "One must separate the Mt. Gox problem from the overall concept".

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