Bitcoin Exchange Mt. Gox Disappears, Along With CEO

What really happened to Mt. Gox and why can\'t anyone find CEO Mark Karpeles?
Posted at 2:24 PM, Feb 25, 2014

Things might've just gotten real for virtual currency — and it's not a good thing. Bitcoin's largest exchange has disappeared from the Internet — and its CEO is MIA.

"Mt. Gox has gone totally dark. If you try to load their website, you will not find anything. Mark Karpeles, CEO of Mt. Gox ... He cannot be found. He has resigned from the parent Bitcoin Foundation." (Via Bloomberg)

"Folks say they don't expect to get their money back. The six other leading bitcoin exchanges are trying to distance themselves from Mt. Gox." (Via Fox Business)

According to the New York Times, the company lost almost 750,000 bitcoins to hackers, but the theft went unnoticed for years.  That's equal to about $350 million worth of bitcoins and about 6 percent of the 12.4 million coins in circulation.

No one knows exactly how the coins were stolen and the company has yet to respond to requests for comment. However, Wired believes it might have found a document with some answers.

The document is said to be an internal memo from Gox.  It shows Gox knew it was subject to theft but believed it could resolve it internally.  Then it admits it has become clear 744,408 bitcoins are missing and it went unnoticed for several years.

The document goes on to outline a four-part strategy:

- Immediately reduce liabilities with partners

- Shut down Mt. Gox for one month while it is restructured & rebranded

- Change communications strategies to a more open format with constant updates

- Announce a new team of trusted business people and talented developers.

The document says the coins were stolen through a leak in the hot wallet, which is connected to the web, that allowed hackers to exploit Gox’s cold storage. In theory, this should have been impossible because cold storage — by definition — is disconnected from the Internet. Though some believe the leak could have been caused by the hot storage automatically refilling itself from the cold storage.

If the document is real, we may see Mt. Gox return at some point — although some see the currency itself as fatally flawed. 

Om Malik, founder of Gigaom, says he’s not surprised it’s getting ugly. He points to the similar ambitions of virtual currencies Flooz and Beenz in the early 2000s.

They each had similar ambitions to Bitcoin only to flop when Flooz was investigated by the FBI and Beenz fell apart following the burst of the dot com bubble.

The CEOs of several other Bitcoin exchanges released a statement saying the actions of one company do not reflect the value of Bitcoin and the digital currency industry.  In the statement, they pledge to work together to re-establish trust in Bitcoin exchanges.

It remains unclear how many Bitcoins customers of Mt. Gox will be able to retrieve or when they will be able to retrieve them.