March 11, 2014
Late last month, Bitcoin exchange Mt. Gox in Tokyo declared bankruptcy, claiming hackers had exploited a vulnerability in its transactions to steal 850,000 bitcoins (worth approximately $474 million). The flaw, called transactions malleability, was known for a while and it is possible that a malicious party could have taken advantage of it to withdraw funds.
It is also possible that funds were being mismanaged through the Mt. Gox exchange. Mt. Gox had problems for some time, as users complained they could not withdraw dollars from Mt. Gox for close to a year now. The website has gone off-line as authorities look into the situation.
There is much suspicion among bitcoin users around the shut down of the exchange. “I am extremely disappointed with the company but not surprised,” said investor Kolin Burges in an email. “I am thoroughly disgusted by the company and the way they have ruined so many people’s lives, as well as disgusted by their conduct through this whole situation. I will be doing anything I can to ensure that anyone at the company who was to blame for this faces justice for any crimes they might have committed. I will also do anything I can to investigate what was really going on there, but hopefully the courts and police of Japan will do a thorough job,” said Burges.
The issue of the latest theft appears too small to shut down one of the largest bitcoin exchanges in the world. In the news recently, anonymous hackers claim to have evidence that the bitcoin from Mt. Gox are not missing, but that customers were defrauded by Mt. Gox management.
The Bitcoin network has experienced major security breaches over the past year. November saw three major Bitcoin thefts: One involving more than $1 million in bitcoin from Bitcoin Internet Payment Services, a Denmark-based exchange that promoted itself as Europe’s biggest. There was a heist involving about $1.4 million from Australian online wallet service Inputs.io. Finally, the disappearance of a Chinese Bitcoin exchange with more than $4 million in it, revealing that exchange as a con. Since the Mt. Gox theft, Canadian Bitcoin bank, Flexcoin, announced it is going out of business, following a hack which saw 896 coins stolen.