News Column

Bitcoin Speculators Want Legal Action on MtGox

February 27, 2014

Times of Oman

bitcoin
Bitcoin (file photo)

Anxious Bitcoin investors in Tokyo called Thursday for legal action against the chief executive of an exchange where hundreds of millions of dollars' worth of the virtual currency appear to have vanished.

Dozens of members of "Bitcoin Tokyo" gathered in a restaurant in the Japanese capital, some nursing possible six-figure losses after an apparent grand theft from the digital vaults of the MtGox exchange.

American IT engineer Aaron Gotman said he had 463 bitcoins at MtGox, worth well over $200,000.

"What happened at MtGox was first incompetence, but then it could have gone to fraud at the end if they were knowing they didn't have the bitcoins they were selling," he said.

"If that's true, (MtGox CEO Mark) Karpeles should face justice and go to jail," he said.

"Now only a miracle could give me back my bitcoins."

Gotman, 35, is one of a reported one million people who had an account at MtGox, the first exchange for the crypto-currency.

Bitcoin continued its rollercoaster ride Thursday, trading around $577 at 1330 GMT, according to the Coindesk index, which showed it had been around $20 lower at one point on Thursday.

The value swing is characteristic of a currency that began life worth a few cents and topped out last year well above $1,000.

The MtGox website, which went dark on Tuesday, remained largely empty, save for a message from Karpeles, the France-born chief executive who has not been seen in public for several days.

"As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues," he said.

"Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for further announcements and updates."

Bitcoin derivatives
A Bitcoin derivatives company -- btc.sx -- said it was suspending trading "due to the current closure of our main partner exchange".

The company, which allows investors to carry out leveraged trades against the future price of a Bitcoin, said: "All customer balances are secure and we will honour any withdrawal requests."

Founder Joe Lee is described on the company website as "a Bitcoin enthusiast whos (sic) parallel interest in finance and technology took him on a journey ending up in MtGox's Tokyo offices".

Despite the farrago that seems to have wiped out previously-healthy Bitcoin balances, many of those at the meeting in Tokyo said they had not lost faith in the virtual currency.

Student Khalil Dahbi said he had four Bitcoins in MtGox and was eager to explore possible legal moves against the exchange.

But, he said, the failure of one exchange was not enough to damn the whole project.
"The Bitcoin itself, it's technology, it's the future," he said.

A young Japanese mother who only gave her family name of Inoue, echoed that sentiment, despite having lost 1,000 Bitcoins.

"I will keep on investing in Bitcoin elsewhere," she said. "If a Japanese bank failed, you would not dump the yen, right? It's the same thing."

The crisis at MtGox first gained wide recognition on February 7 when the company halted withdrawals, citing a flaw in the software that supports Bitcoins, which it said could allow hackers to steal them.

Other exchanges said the problem was not with Bitcoin, but rather with MtGox, which critics say was not robust enough to handle the volume of transactions it was getting.

In the weeks after the suspension the price of a Bitcoin on MtGox dropped and sat at around a quarter of the global average before the website went offline on Tuesday.

A document circulating on the Internet and purporting to be a MtGox "crisis strategy" said the firm might have lost more than 744,400 Bitcoins in a theft that had gone unnoticed for years.

That number of Bitcoins would be worth more than $400 million at present rates and represents around five percent of all the Bitcoins in existence.

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Original headline: Bitcoin investors call for legal action on MtGox


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