Mt. Gox files bankruptcy in US and faces more hacks

Mt. Gox follows a bad February with a worse March: The controversial Bitcoin exchange filed for bankruptcy in the US (after already filing in Japan), and hackers accessed founder Mark Karpeles' Reddit account and released alleged Mt. Gox balance sheets.

Kyodo/Reuters
Mark Karpeles, CEO of MtGox, bows at the start of a news conference at the Tokyo District Court, Feb. 28. MtGox, once the world's biggest Bitcoin exchange, filed for bankruptcy protection on Feb. 28 in Japan, and on Monday in the United States.

Mt. Gox’s failure was reinforced on two more fronts over the weekend: the Bitcoin exchange filed for bankruptcy in the United States on Monday, while hackers infiltrated Mt. Gox founder Mark Karpeles’ Reddit and Mt. Gox account, and posted alleged balance sheets.

Marketwatch reported a Chapter 15 filing on Monday morning, 11 days after the Tokyo-based company filed for bankruptcy in Japan. Chapter 15 filings are for failed companies with parties in multiple countries.

Mt. Gox has been in hot water after it realized more than $480 million in Bitcoin was missing from its transactions. This is likely due to a long-term hack where attackers slowly siphoned money from transactions. In response, the Bitcoin exchange halted transactions in mid-February, then temporarily shut down the website, inciting outrage from its investors. Mr. Karpeles admitted the theft on Feb. 28. Due to encryption technology embedded in the currency, there isn’t much confidence that swindled investors will get their money back.

Despite the developments, little information has been released as to how this massive breach occurred. Now the outraged community is beginning to take matters into their own hands. Hackers announced Sunday morning they had taken over Karpeles’ private Reddit account and personal blog, according to Forbes, writing “It’s time that MTGOX got the bitcoin communities wrath instead of [the] Bitcoin Community getting Goxed.” "Goxed" refers a term used by the Bitcoin community when technical glitches slowed the service.

The unidentified hackers allege that Karpeles pocketed some of the money that was reportedly stolen from Mt. Gox users. The hackers also uploaded a 716 megabyte file to Karpeles’ personal website that they say is a record of the compromised transactions. Experts say if it proves to be legitimate, it doesn't necessarily prove that Karpeles stole the money himself, but it does prove there are clear accounting discrepancies.

Despite the ongoing woes, Bitcoin as a currency has stayed relatively stable, and has even become more prevalent in the US. Bitcoin ATMs opened in Seattle, Austin, and Boston last month.

Newsweek kept Bitcoin in the headlines earlier this month. In the cover story of its first print edition since 2012, Leah McGrath Goodman, the magazine’s finance editor, claimed to have found the elusive founder of Bitcoin, Satoshi Nakamoto. However, the 64-year-old California man the reporter claims is Mr. Nakomoto neither confirmed or denied that he is the creator of Bitcoin, though says he was a part of developing the currency at one point.

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