Bankrupt exchange Mt. Gox finds 200,000 missing bitcoins

Bankrupt bitcoin exchange Mt. Gox said it found 200,000 bitcoins, which were previously thought stolen, in disused electronic wallets. Another 650,000 bitcoins still remain unaccounted for.

The Tokyo-based company said in a statement posted on its website Thursday that the 200,000 bitcoins were identified Mar. 7 after “old format” wallets were searched as part of Mt. Gox’s bankruptcy proceedings.

he online exchange for the virtual currency was unplugged in late February as rumours of its insolvency swirled, adding to doubts about the viability of bitcoins overall.

It then filed for bankruptcy protection in Tokyo and said nearly all its 850,000 bitcoins were missing, most likely as a result of theft. About 750,000 of the bitcoins belonged to people who used the Mt. Gox exchange.

At current prices, the rediscovered bitcoins have a market value of about $120 million.

Mt. Gox’s problems have been a setback for bitcoin, a virtual currency that has grown in popularity since its 2009 creation as a way to make transactions across borders without third parties such as banks.

The restoration of some of the missing virtual currency is potentially good news for bitcoin enthusiasts who invested at Mt. Gox but also raises further questions about the running of the exchange.

Mt. Gox’s statement said the 200,000 bitcoins had been moved to offline wallets. It didn’t specify the type but offline wallets include USB sticks and paper documents.

News Source:www.theglobeandmail.com

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Mt. Gox safe from U.S. suits in bankruptcy case

Mark Karpeles, chief executive officer of the bitcoin exchange Mt. Gox, gets into a taxi after leaving the Tokyo District Court on Feb. 28. Mt. Gox has filed for protection from creditors in both Japan and the United States. | BLOOMBERG.

WILMINGTON, DELAWARE – Mt. Gox Co., the bitcoin exchange that filed for bankruptcy in Tokyo after millions of dollars’ worth of virtual currency vanished from customer accounts, won a temporary halt to lawsuits it faces in the U.S.

U.S. Bankruptcy Judge Harlin Hale in Dallas agreed Monday to shield the company’s assets from creditors and halt two suits, both of which are in their early stages. The company will return to court April 1 to seek to extend the protection until the Japanese case is resolved.

The Tokyo-based exchange filed for bankruptcy in Japan last month after losing bitcoins worth about $473 million at the time. The company said in its U.S. filing that almost 750,000 customer bitcoins and 100,000 of its own, about 7 percent of all bitcoins in existence worldwide, were missing and probably stolen.

“The facts known to date indicate that it was caused or related to a flaw in the software algorithm that underlies bitcoin, and ‘hacking’ attacks of one or more persons,” Mt. Gox Chief Executive Officer Mark Karpeles said in a sworn statement filed in the Dallas court.

The exchange was founded in 2011, two years after bitcoins first appeared. Shortly after it opened in July of that year, hackers attempted to break into the system or shut it down with so-called denial of service attacks, according to court papers.

Manhattan U.S. Attorney Preet Bharara and the FBI are probing possible criminal violations tied to the shutdown of Mt. Gox, two sources said last month. The Bitcoin Foundation, an advocacy group for the digital currency, said last month that it briefed federal prosecutors about possible theft at Mt. Gox.

A spokeswoman for Bharara, Jennifer Queliz, declined comment on whether a software flaw would effect a federal investigation, citing the office’s policy to neither confirm nor deny the existence of an investigation.

Last month, Mt. Gox was sued in federal court in Chicago by an Illinois resident accusing it of misappropriation and fraud. The company also faces a $75 million breach-of-contract suit filed by CoinLab Inc. in Washington state.

Mt. Gox filed for creditor protection Sunday in federal court in Dallas under Chapter 15 of the U.S. Bankruptcy Code, which can be used to shield assets while the main bankruptcy proceeding is carried out in another country. The petition listed about $37.7 million in assets and $63.9 million in liabilities.

Jed MacCaleb, who built the initial Mt. Gox software, owns 12 percent of the company. Tibanne Co., a Japanese company, owns the rest, court documents show.

News Source: www.japantimes.co.jp

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Robust Bitcoin survives first real test: 'Mt Goxalypse'

Mt. Gox CEO Mark Karpeles, sitting at second right, attends a press conference at the Justice Ministry in Tokyo

WHY does Bitcoin refuse to die? It's a question that many will ask after what seemed like a terminal blow last week: the collapse of the oldest and most famous Bitcoin trading exchange, Mt Gox.

t was a messy business, with €230m of Bitcoin owners' money lost (possibly stolen) when a glitch in the exchange's handling of Bitcoin was apparently exploited by persons unknown.

Howls of 'I told you so' emerged almost immediately, in the main from economists and pundits who have predicted the demise of the virtual currency for the last five years. TV stations from Bloomberg toCNBC to the BBC ran "Bitcoin Crisis" headlines.

One US senator even called for the crypto-currency to be banned. (A verdict from Irish Senator Fidelma 'Some Class Of A Microchip' Healy Eames on the crypto-currency is expected soon.) Yet not only did Bitcoin stabilise in the 48 hours after the Mt Gox meltdown, its price started to rise again. At the time of writing, it was nearing $600, (€434) well up on its post-crash level of $500 (though well down on its pre-crash $950 level).

Why is this? Why are investors and traders ignoring the advice of middle-aged institutional economists and banking middle-men?

There are three main reasons why Bitcoin refuses to die.

1. People that matter believe in it.

If you line up the flag-wavers against the naysayers, it's hard to ignore the comparative make-up of both.

Promoters of the crypto-currency are often doers and creators. They are people like Marc Andreessen or senior web industry business executives: engineers and entrepreneurs who are currently creating a lot more wealth than other industrial sectors. This indicates that when they believe passionately in something, they build things to support it.

By contrast, many of the most vocal sceptics fit the profile of institutionalised vice-presidents with personal and professional capital invested in the status quo. They work for banks, listed investment firms and other financial organisations with nothing to gain – and plenty to lose – if systems like Bitcoin continue to take root in the public consciousness.

A very common reason against Bitcoin given by besuited naysayers is: "I don't understand it." In a world dominated by vague derivatives and CFDs, is this really the clincher argument?

News Source: www.independent.ie

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Bitcoin exchange Mt. Gox files for bankruptcy, hit with lawsuit

Mt Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency, shaking the nascent but burgeoning bitcoin community.

Wearing a suit instead of his customary T-shirt, Mt. Gox's French CEO Mark Karpeles bowed in contrition and apologised in Japanese at a news conference at the Tokyo District Court, blaming his firm's collapse on a "weakness in our system", but predicting that bitcoin would continue to grow.

"First of all, I'm very sorry," he said. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Gregory Greene, who estimated his bitcoin stake at $25,000, filed a lawsuit in the U.S. District Court in Chicago late on Thursday, saying Mt. Gox had failed "to provide its users with the level of security protection for which they paid.

Baker & McKenzie, a Chicago-based law firm that represents Mt. Gox, declined to comment. It is not yet clear if the firm is representing the exchange in this lawsuit.

Mt. Gox said the exchange, used overwhelmingly by foreigners, had lost 750,000 of its users' bitcoins and 100,000 of its own. At the current bitcoin price of about $565, that would total some $480 million - representing about 7 percent of the estimated global total of bitcoins.

"This may be telling for the level of traceability of the transactions. Bitcoin has been telling us that it is more traceable than cash. The question is, how much more and is there the potential for real recourse in the case of theft," said Moshe Cohen, assistant professor at Columbia Business School in New York.

Mt. Gox said there was a discrepancy of 2.8 billion yen in its bank accounts when it checked on Monday. Junko Suetomi,

News Source: www.financialexpress.com

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Big Bitcoin Exchange Files for Bankruptcy

The company claims a loss of $473 million worth of the digital currency

A major Bitcoin exchange filed for bankruptcy protection on Friday, providing a detailed account of the estimated losses from what was one of the world’s largest exchanges for the currency.

In a news conference in Japan, a lawyer for the Tokyo-based Mt. Gox exchange said it had lost three-quarters of a million Bitcoin belonging to customers, along with 100,000 of its own. At current market prices for Bitcoin that’s an estimated loss of $473 million, the Associated Press reports. Mt. Gox listed outstanding debts of about $63.6 million against assets of about $37.7 million.

Late Monday evening, Mt. Gox’s website went blank unexpectedly, causing the value of the virtual currency to fall to around $470 from $550 in just a few hours. A leaked document revealed that a security breach had resulted in the theft of nearly three-quarters of a million Bitcoin—about six percent of all available Bitcoin. The heads of several other Bitcoin exchanges released a joint statement saying the Mt. Gox shutdown ”does not reflect the resilience or value of Bitcoin and the digital currency industry.”

The sudden implosion of an exchange that, according to the Wall Street Journal, at one time handled more than 80 percent of all Bitcoin trades has raised questions about the lack of regulations governing the currency. On Thursday, Federal Reserve chief Janet Yellen told the Senate Banking Committee that the central bank does not have the authority to regulate the digital currency.

“Bitcoin is a payment innovation that’s taking place outside the banking industry,” Yellen said. “To the best of my knowledge there’s no intersection at all, in any way, between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the Fed doesn’t have authority to supervise or regulate Bitcoin in anyway.”

News Source: business.time.com

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Japan factory output jumps ahead of tax hike, outlook murky

Tokyo: Japan`s factory output rose in January at the fastest pace in more than two years and core inflation hovered near a five-year high, comforting signs for an economy expected to take a hit from a sales tax hike scheduled for April.

Labour demand continued to improve and household spending rose more than expected, providing hope that domestic demand could underwrite a recovery after lacklustre growth in the fourth quarter of last year.

The upbeat data showed the economy started the year strongly as shoppers brought forward purchases before the tax hike, but there are concerns that more stimulus would be needed later in the year to support growth as consumer spending is expected to sag.

"I`m not that confident about the economy after the sales tax hike," said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting Co.

"Consumer spending will not be as strong as it is now. There are a lot of uncertainties about exports. Once the BOJ realises that consumer prices are not accelerating, it will start to debate other measures."

After decades of sluggish growth, the world`s third-largest economy shifted into higher gear over the last year after Prime Minister Shinzo Abe launched an aggressive cocktail of monetary and fiscal stimulus policies.

However, markets are starting to worry about the durability of the rebound, especially as exports have failed to substantially perk up while business investment and wages growth have trailed expectations.

The scheduled sales tax hike to 8 percent from 5 percent in April has added to the uncertainty, although policy makers have said that they are prepared to look past a temporary dip in activity.

Japan`s industrial output rose 4.0 percent in January, suggesting that robust domestic demand is underpinning the economy as consumers rush to beat the national sales tax hike.

The rise was more than the median forecast for a 3.0 percent as companies ramp up production of cars and consumer appliances. It was also the fastest increase since output rose 4.2 percent in June 2011.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 1.3 percent in February but decrease 3.2 percent in March, data showed on Friday.

Japan`s core consumer price index (CPI), which excludes fresh food prices but includes oil products, rose 1.3 percent year-on-year in January, more than the median estimate for a 1.2 percent annual increase.

That matched a 1.3 percent annual increase in December - the fastest in more than five years.

The central bank maintained its massive monetary stimulus at last week`s policy meeting, aiming to meet a 2 percent price goal around early 2015, which is seen by many analysts as overly ambitious.

Analysts expect that inflation will struggle to pick up pace in the coming months as the effects of a weak yen on imported goods taper off. There are also worries private consumption could lose steam after the sales tax is raised.

Japan`s jobless rate was unchanged at a six-year low of 3.7 percent in January.

Job availability as measured by the jobs-to-applicants ratio edged up to 1.04, meaning more than one job is available per job seeker. The ratio matched the median estimate and hit the highest since August 2007, underlying the strength of the job market.

Japanese household spending rose 1.1 percent in the year to January, blowing past the median estimate for a 0.2 percent increase.

That marked a fifth straight month of annual gains and an acceleration from a 0.7 percent annual increase in December as consumers spent more on clothes, cars and domestic travel.

A Reuters poll last week showed the BOJ is expected to ease policy further by this summer to help boost the economy as the effects from Prime Minister Shinzo Abe`s stimulus strategy begin to wane.

News Source: zeenews.india.com

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