Recently, what was one of the first and largest Bitcoin exchange platforms, Mt. Gox, halted all withdrawals, shut down, and declared bankruptcy. The CEO, Mark Karpelès, was once a member of the board of the Bitcoin Foundation, but resigned his position on February 23rd. The Japan-based company began having issues on February 7th, when they halted all withdrawals, citing a bug in the bitcoin software that “makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur.”
After over three weeks of no withdrawals, Mt.Gox suspended all trading on February 24th and the website went offline shortly after. Leaked documents revealed the company was insolvent and had apparently lost over 700,000 bitcoins in a theft which had gone undetected for years. The company finally filed for bankruptcy protection in Japan on February 28th, and reported they had lost over 800,000 Bitcoins, worth around 473 million USD at the time of the filing. The company also filed for bankruptcy protection in the U.S on March 9th. Mt. Gox faces several law suits, including a massive class action lawsuit in the U.S.
More troubling news for the Bitcoin community came on March 23rd when another exchange, Vircurex, announced that they were freezing all user accounts as they neared financial ruin. Vircurex is based in Beijing and had suffered multiple hacking incidents last year, and large withdrawals in recent weeks leaves the exchange with two options according to the announcement. Vircurex stated that they froze accounts to prevent the exchange from going down completely. The announcement stated that: “Unfortunately we had large fund withdrawals in the last weeks which have led to a complete depletion of our cold wallet balance and we are now facing the option of either closing the site with significant unrecoverable losses for all or to work out a solution that allows the exchange to continue to operate and gradually pay back the losses.”
Despite Vircurex’s assurances to the contrary, the developments at Vircurex are eerily similar to Mt. Gox’s issues before it went down. Many coins on Vircurex are experiencing similar behavior to Mt. Gox, where the coins were worth more than on the other exchanges. Hopefully, Vircurex there are no more surprises left from Vircurex.
Vircurex and Mt. Gox are not the only exchanges to be having issues. Recently Flexcoin and Crypto-Trade have been forced to shut down, while Poloniex promises to pay investors back after suffering a cyberattack.
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