A turning point? Bitcoin exchange Mt. Gox goes dark

The Mt. Gox website was offline on Tuesday amid reports it had suffered a debilitating theft – a new setback for efforts to gain legitimacy for the virtual currency.

The website of Tokyo-based Bitcoin exchange was returning a blank page.

The site’s disappearance follows the resignation on Sunday of Mt. Gox Chief Executive Officer Mark Karpeles from the board of the Bitcoin Foundation, a group seeking legitimacy for the currency.

At the Tokyo office tower housing Mt. Gox, Bitcoin trader Kolin Burgess said he had picketed the building since 14 February after flying in from London, hoping to get back $320,000 he had tied up in Bitcoins with the exchange.

Mt. Gox halted withdrawals earlier this month after detecting what it called “unusual activity”.

‘Turning point’

In an emailed response to a question about whether the Tokyo-based exchange was dead, Karpeles said: “We should have an official announcement ready soon-ish.

“We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.”

The digital marketplace operator said earlier this month that it had detected “unusual activity” and its office in Tokyo was empty on Tuesday, barring a handful of protesters saying they had lost money in the virtual currency.

Six leading Bitcoin exchanges distanced themselves from Mt. Gox in a statement, calling the exchange’s activities a “tragic violation of the trust of users of Mt. Gox.”

Channel 4 News Technology Producer Geoff White says Bitcoin fans will try to argue that the collapse of Mt. Gox is simply a wobble on the currency's journey to full-fledged legitimacy, but it's hard not to see it as a serious blow to its survival chances.

It comes at a time when bitcoin seemed to be inching towards respectability: US politicians had met with the more sober-headed proponents of the virtual currency; it had been discussed in meetings of financial leaders in the UK; some traditional currency traders even mulled setting up a Bitcoin fund. 

Over the years Mt. Gox had suffered repeated hacking attacks, adding extra velocity to the currency's roller-coaster exchange rates. But even so, it was considered one of the leading brokers.

The other Bitcoin exchanges have distanced themselves from Mt. Gox, and claimed its demise does not affect their viability. But ultimately, finance trades on trust: in the case of Mt. Gox, a technical flaw has been exploited by thieves to leave users out of pocket, and that's a recipe for a collapse in confidence.