News / Economy

Investors Worried After Largest Bitcoin Exchange Goes Dark

FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
David Byrd
Japanese officials are studying ways to regulate the virtual currency Bitcoin after a prominent Tokyo-based trading house shut down suddenly on Tuesday. The unexpected closure of the Mt. Gox exchange is the latest setback in the currency’s attempts to gain worldwide acceptance.
 
In a packed news conference, Japan’s Chief Cabinet Secretary Yoshihide Suga said authorities - including the Japanese Financial Services Agency, Finance Ministry and the police - are looking into Bitcoin trading in Japan.
 
“Regarding the concerned issue, I am aware that the related ministries, such as the Financial Services Agency, the Economic Ministry and the Finance Ministry, are gathering information. If necessary, I believe they will act on this once they have the grasp of the situation. But at this point, they are still gathering more facts and information,” said Suga.
 
The sudden disappearance of Mt. Gox - once one of the largest Bitcoin exchanges - has dealt a blow to the credibility of the virtual currency.  Earlier this month, Mt. Gox imposed a ban on withdrawals. On Sunday, CEO Mark Karpeles resigned from the board of the Bitcoin Foundation, which seeks wider acceptance of the currency.  Tuesday, the Mt. Gox website was blank, with only a brief statement to investors.
 
Reports emerged that the company had lost more than 750,000 Bitcoins due to what was called transaction malleability. Hackers were able to discover that they could track Mt. Gox’s software by creating a Bitcoin transaction and then changing its identifying codes. Funds were taken from Mt. Gox, but because its computers were looking for the old identifying code, the losses went unnoticed.
 
Several other Bitcoin exchanges issued statements Tuesday that said they are working to reestablish the currency’s credibility. 
 
Nonetheless, Bitcoin’s future remains questionable.  Emily Spaven, the Managing Editor of Coin Desk, told the Associated Press that Mt. Gox’s failure will probably lead to more government oversight of the virtual currency.
 
“I think what we’ll see from this is that governments will try and enforce some kind of regulation because, as we’ve discovered, there’s around $350 million worth of bitcoins that have been stolen.  So that’s a lot of money to go missing, so I’m pretty sure that governments will try and step in to protect their citizens from suffering something like this again,” said Spaven.
 
Moshe Cohen, an Assistant Professor of Finance and Economics at the Columbia Business School, told AP that this incident could have one of two results for Bitcoin.
 
“One of two things will happen: either the Bitcoin community will convince us that it is a one off, and a new form of maybe partially regulated exchange can solve these problems and take the good and get rid of the bad, or people will start losing faith,” said Cohen.
 
Several large firms- including Overstock.com, Zynga, the online retailer TigerDirect and the National Basketball Association’s Sacramento King’s team - have announced they will accept Bitcoins. Billionaire Richard Branson has announced his Virgin Galactic will accept Bitcoin for space flights.
 
As of this writing, Bitcoin’s value was nearly back to where it was when the Mt. Gox crisis began. It may be that Mt. Gox’s will help Bitcoin in the long run by eliminating an unsound player from the virtual currency game.

You May Like

Obama: I Will Do 'Everything I Can' to Close Guantanamo

US president says prison continues 'to inspire jihadists and extremists around the world' More

Sierra Leone Educates on Safe Ebola Burials

Also, country is improving at rapid response to isolated outbreaks, but health workers need to be even faster, officials say More

Religion Aside, Christmas Gains Popularity in Communist Vietnam

Increasingly wealthy Vietnamese embrace holiday due to its non-religious glamor, commercial appeal More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.