Breaking: MtGox Files for Bankruptcy Protection
MtGox, the embattled Bitcoin exchange based in Japan, has filed for bankruptcy protection citing that it has lost 850,000 bitcoins.
Earlier this week, we reported that MtGox was in its last days. Now we are seeing the final nail in the coffin.
The Bitcoin loss is comprised of approximately 750,000 BTC entrusted to MtGox by its customers and 100,000 BTC from its own holdings. In addition, MtGox’s attorney disclosed that the company had debt obligations of ¥6.5 billion ($63.6 million) with assets worth ¥3.84 billion.
This is a tragic outcome for MtGox customers who have lost their investments, and a blow to the credibility of the Bitcoin ecosystem overall. But many in the Bitcoin community are looking forward.
Erik Voorhees, a profilic Bitcoin entrepreneur, wrote a memo to the Bitcoin community disclosing that he personally lost 550 BTC in the MtGox collapse and providing his pioneering perspective. “We are building a new financial order,” wrote Voorhees, “and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow’s finance, and we put ourselves at risk in doing so.”
Will O’Brien, CEO of BitGo, published a 2,000-word essay this week entitled “With MtGox Effectively Dead, Bitcoin Officially Enters Its Third Stage of Evolution” in which he described how “we are seeing the beginning of a new, more secure and more robust, future for digital currency” where the next generation of exchanges and companies will be built by veteran entrepreneurs and designed to scale.
At the same time, MtGox customers need to understand what exactly happened to their investments.
Speaking with Bloomberg BusinessWeek, Circle CEO Jeremy Allaire described MtGox’s failures as, “either total incompetence or negligence or outright criminal behavior.”
Now that MtGox is seeking bankruptcy protection, it looks like it will be a matter for the courts to decide.