Concerns about Bitcoin's stability heightened this week with the apparent insolvency of Mt. Gox, the largest Bitcoin exchange.
In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.
In the recent past, Mt. Gox was the target of denial-of-service attacks, leading it to halt withdrawals. Further shaking consumer confidence, hackers also attacked Bitstamp earlier this month, and authorities arrested Charlie Shrem of BitInstant on money-laundering charges in January. Like Shrem, Mt. Gox CEO Mark Karpeles has resigned from the board of the Bitcoin Foundation.
An unverified document passed around on social media channels also alleged that Mt. Gox lost 744,000 Bitcoins, about 6% of the 12.4 million in circulation, in a theft that "went unnoticed for years."
The leaders of six Bitcoin companies--Coinbase, Kraken, Bitstamp.net, BTC China, Blockchain.info, and Circle--issued a strongly worded joint statement, calling Mt. Gox a "bad actor" that it hopes doesn't taint the virtual currency's future.
This tragic violation of the trust of users of Mt.Gox was the result of one company’s 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. Mtgox has confirmed its issues in private discussions with other members of the bitcoin community.
To regain consumers' trust, the companies also called for "transparent, thoughtful, and comprehensive consumer protection measures."
The price of Bitcoin, which had topped $1,000 on Mt. Gox in November, fell to about $480 late Monday.
[Image: Flickr user antanacoins]