Business

Mt. Gox files for bankruptcy protection after losing $473M worth of Bitcoins, has $63M in debt

A physical Bitcoin on a variety of currency

Above: A physical Bitcoin on a variety of currency

Image Credit: Zach Copley

The rumors were true: Mt. Gox lost a boatload of Bitcoins.

The former popular Bitcoin exchange, which shut down suddenly this week to “protect the site” and its users, announced this morning that it is officially filing for bankruptcy protection, the Wall Street Journal reports.

In a Tokyo District Court this morning, Mt. Gox representatives said that the exchange lost nearly all 750,000 of its customers’ Bitcoins, as well as 100,000 of its own. At current Bitcoin values, the loss is worth around $473 million. It’s unclear what exactly led to Mt. Gox’s fall, but it’s reportedly a combination of hacks and bumbling management.

The site previously used to handle around 80 percent of Bitcoin transactions, and according to its lawyer, it currently holds around $63.6 million in debt.

“There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble,” Mt. Gox founder Mark Karpelès said during a news conference at the court, per the WSJ.

Karpelès spent much of the week in hiding as Mt. Gox crumbled, and at the same time others in the Bitcoin industry quickly distances themselves from Mt. Gox’s failure. Karpelès resigned on Sunday from the board of the Bitcoin Foundation, which helps to guide and promote Bitcoin, following reports of the massive loss. Additionally, competing Bitcoin exchanges Coinbase, Kraken, and Bitstamp.net condemned the site’s shutdown.

As Mt. Gox’s situation comes into focus, the questions around what it all means for the wider Bitcoin community remain. Bitcoin prices have fallen around 4 percent since yesterday, according to Coindesk, but they’re still worth a hefty $550.97 per coin. The Mt. Gox fiasco is a warning shot to other exchanges, but it also serves as a big blow to Bitcoin’s mainstream perception — something that may be difficult to repair.

Catch a brief glimpse of Karpelès at this morning’s conference from this Asahi News Network segment (it’s entirely in Japanese):


We're studying conversion rate optimization. Take our quick survey and we'll share the results with you.