The Bit coin exchange Mt. Gox was moving swiftly and in an uncontrolled way towards collapse! Its owner, Mark Karpeles, admits 850,000 bitcoins have gone missing last February 25, 2014 Tuesday. 750,000 of its customers’ Bitcoins are gone and more than 100,000 of its own specifically. One of the biggest bank robberies in history. Although no particular reason given for its insolvency, a variety of competing theories have been revealed ranging from incapacitating technical bugs, to the more probable old fashion surge of individuals withdrawing their money to their fear that the entity will become insolvent, to a massive hack that sucked its virtual vault of $350 million into the abyss.
The cryptocurrency exchange house is now bankrupt according to a statement released by other members of the Bitcoin Foundation. Assurance was made by the foundation public that the Bitcoin protocol is functioning properly. Most inventors and foundation members wanted Mr. Karpeles, CEO of Mt. Gox, the Tokyo-based site that once had been the favored place to purchase Bitcoins, has been pushed into a corner. He has been given the choice to either resign from the foundation or he will be eliminated from its board. Mr. Karpeles has resurfaced from hiding to announce the firm was filing for bankruptcy leaving thousands of investors with no guarantee that their money will be returned. He appeared in Japanese TV news in Tokyo. It was the first time he’d broken cover since his exchange, Mt Gox, shut its website on Wednesday. He started with a humbled bow for several minutes asked for forgiveness with a sincere sorry and comforted the numerous customers a little by saying that the money is not lost yet, just temporarily unavailable. Well he may be correct about that since lost and unavailable are two different things.
According to Kyodo News, the debts at Mt Gox piled up more than 6.5 billion yen ($65 million), surpassing its assets. The loss stained the currency’s image because the foundation has promoted Bitcoin as safe from counterfeit and theft. While Mt. Gox is already dead, its CEO Mr. Karpeles faces death threat! Karpeles and his staff have faced protests outside their offices. In a Bitcoin forum, one of the users wrote that he paid someone to kill Karpeles and one user wrote that he is a dead man.
According to a document leaked from Mt. Gox by Ryan Selkis, a bitcoin venture capitalist and blogger, and first published by Wired which the magazine said they could not validate as conforming to the law or to rules, said that in the event of a major theft, the contingency plan is to shut down the exchange for one month to restructure and rebrand the company. Due to a leak between the hot wallet and cold storage, robbery has gone unnoticed for years already!
Mt. Gox proposed a contingency plan to avoid all these mess. According to their crisis strategy, they will first reduce liabilities immediately as much as possible, shutdown Mt. Gox for a month to allow restructuring and re-branding, use all channels of communications like the social media to boost customer’s confidence and to give constant updates of the progress and to build a competent team and to establish the redesigning service and codebase while compensating for the debts they owe with the stakeholders.