Bitcoin Exchange MtGox Is Effectively Dead

Like this? Share it.

It has finally happened. MtGox is dead.

MtGox is a Japan-based Bitcoin exchange that once served 80% of the liquidity for Bitcoin. As of tonight, MtGox has disabled trading, taken its website offline, and there rumors abound of insolvency.

Even more than rumors, a group of up and coming Bitcoin companies have issued a joint statement regarding MtGox. The memo was signed by Coinbase, Blockchain.info, Circle, Kraken, Bitstamp, and BTC China.

This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.

In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following exchanges will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner: Coinbase, Kraken, BitStamp, Circle, and BTC China.

We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.

Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers. Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading. It does not appear to any of us that MtGox followed any these essential requirements as a financial services provider.

This is the end of a turbulent final road for the embattled exchange.

Earlier this month, MtGox halted Bitcoin withdrawals blaming transaction malleability and causing a price scare. They were widely accused of spreading misinformation and not taking accountability.

Last week, MtGox resigned from its industry board seat on the Bitcoin Foundation.

Earlier tonight, MtGox deleted its Twitter history. It now shows over 28,000 followers with zero tweets.

And also tonight, there are rumors that MtGox has lost much of its reserve bitcoins and has issued an internal crisis strategy memo (note: the validity of this document is not confirmed).

We will monitor as this plays out. More than likely, a new era of Bitcoin begins tonight, where the core infrastructure will be built by stronger operators with sustainability in mind.

Like this? Share it.