Tokyo-based Mt.Gox takes bite out of Bitcoin

The crypto-currency firm's website crashed just over two weeks after it stopped external transactions.

Last updated: 25 Feb 2014 09:12
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Bitcoin was worth $135 midday on Tuesday, compared with $522 quoted by CoinDesk Bitcoin Price Index [AP]

Tokyo-based Bitcoin exchange Mt.Gox's website has gone down following a dip in the unit's value to a quarter of that on other platforms.

Visitors to www.mtgox.com could only see a blank page when they tried to log in on Tuesday and Japanese regulators were unable to step in to fix the glitch.

A spokesman for the Financial Services Agency of Japan, which regulates financial institutions such as banks, insurers and brokerage houses, said it was "not in position to take action" over the problem.

Mt.Gox suspended cash withdrawals on February 7, claiming there was a problem with the programme that powers the currency and allows it to be transferred between users or exchanged for goods and services. The value of the crypto-unit has been falling ever since.

Around midday on Tuesday, a Bitcoin was worth $135, compared with the $522 quoted by the CoinDesk Bitcoin Price Index, which tracks the price of the currency on major exchanges.

In January, a Bitcoin was worth more than $900 at Mt.Gox, which is one of the world's oldest exchanges for the unit.

How it works

Volatility has long been a part of the experimental digital currency, which does not have the backing of a central bank or government and falls outside of traditional financial regulatory frameworks.

Units are generated by a complex computer algorithm, designed by one or more unnamed people in 2009, with a global cap on the eventual number of Bitcoins set at 21 million units.

Proponents say the currency is an efficient and anonymous way to store and transfer monetary value and to avoid the risks inherent in any currency dependent on the viability of a government.

But some economists say the project is mired in difficulties, including large fluctuations in value caused by speculators and a supposed vulnerability to online thieves.

Others say the currency's anonymity is attractive to underworld figures looking to use it for illegal transactions.

The US FBI busted a drug ring in October, after Bitcoin was used on the Silk Road website to buy both drugs and guns.

'Implemented a solution'

Mt.Gox issued a statement last week saying it had moved its headquarters within Tokyo due to "security problems" and was still working on "re-initiating Bitcoin withdrawals".

Bitcoin value drops after FBI shuts down underground website

"The move, combined with some other security and technical challenges, pushed back our progress," the firm said on Thursday in their most recent public statement.

Mt.Gox said it had "implemented a solution" to the problems and insisted customers' assets were safe, but has not been able to announce the completion of its repair work.

Bitcoin supporters say the digital currency itself is safe and insists the problems lie with Mt.Gox, which they claim cannot process a high volume of transactions.

Mt.Gox CEO Mark Karpeles resigned this week from the board of the Bitcoin Foundation, which advocates for the virtual currency, and Mt.Gox clients have staged small protests outside the firm's headquarters.


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