MT GOX FILES FOR BANKRUPTCY IN JAPAN AFTER COLLAPSE OF BITCOIN EXCHANGE

The bitcoin exchange has debts of £38m and assets of just £22.6m, it reported on Friday

• Alex Hern  theguardian.com, Saturday 1 March 2014

MtGox CEO Mark Karpeles bows in apology at a press conference at the Justice Ministry in Tokyo Friday night, Feb. 28, 2014. Photograph: i/AP

MtGox filed for bankruptcy protection in Tokyo on Friday, with the world’s former biggest bitcoin exchange blaming “a weakness in our system” for its collapse.

The exchange’s CEO Mark Karpeles, bowing, apologised at a news conference for causing trouble to so many people, and said that he intended to launch a criminal complaint against the hacking attack which caused the site’s downfall. However, he added, he had no specific means to do so.

Mt Gox had liquid liabilities of 6.5bn yen (£38m), dwarfing its total assets of 3.84bn yen (£22.6m), the company said. It had 127,000 creditors in bankruptcy, just over 1,000 of whom are Japanese.
The news conference is Karpeles’ second public statement since MtGox deleted its website on Tuesday, following a terse comment released on Wednesday.

The “weakness” referred to by Karpeles is thought to be an issue related to “transaction malleability“, a loophole in the bitcoin system which was exploited by malicious actors to get free bitcoins from the site.

“MtGox filing for bankruptcy is not the end of bitcoin but it is the beginning of the end of bitcoin in its current form,” says currency trader Alistair Cotton of Currencies Direct. 

“Over the last year we’ve seen ever-increasing usage and with it huge volatility in value and blows from banks and regulators. These are growing pains as the currency evolves in front of our eyes and the MtGox bankruptcy is part of that.”

http://www.theguardian.com/technology/2014/feb/28/bitcoin-mtgox-bankruptcy-japan