For a case study of a blistering rise and an absolutely epic fall of an exchange that 1) was named after Magic: the Gathering and 2) transacted in a digital currency which many have speculated was conceived by the NSA nearly two decades ago and was used as a honeypot to trap the gullible, look no further than Mt.Gox which after halting withdrawals for the second (and final time) has finally done the honorable thing, and filed for bankruptcy. As the WSJ reports, “Bitcoin exchange Mt. Gox said Friday it was filing for bankruptcy protection after losing almost 750,000 of its customers’ bitcoins, marking the collapse of a marketplace that once dominated trading in the virtual currency. The company said it also lost around 100,000 of its own bitcoins. Together, the lost bitcoins would be worth approximately $473 million at market prices charted by the CoinDesk bitcoin index, although the price of Mt. Gox bitcoin had fallen well below that index after it stopped bitcoin withdrawals in early February.”
The punchline: speaking to reporters at Tokyo District Court Friday after the bankruptcy filing, Mt. Gox owner Mark Karpelès said technical issues had opened the way for fraudulent withdrawals, and he apologized to customers. Â
“There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble”
So $473 million Bitcoins disappear just like that? But you heard the man – he is sorry. So all is well – and why not: it works for the TBTF banks every day.
What is amazing is that at the time of filing Mt. Gox had outstanding debt of about ¥6.5 billion ($63.6 million), and just as amazing is that it actually had assets worth ¥3.84 billion.
Elsewhere, prices on the CoinDesk index, which tracks the Bitstamp and BTC-e bitcoin exchanges, fell slightly after the announcement but appeared to stave off a larger drop.
Mr. Karpelès, wearing a gray suit and a blue tie, appeared calm while his lawyer did most of the talking, but he appeared to have difficulty finding words when reporters asked him to send a message to his investors, just repeating his apology.
