Mt. Gox Admits to Losing 850,000 Bitcoins

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The once high-flying bitcoin exchange Mt. Gox released a statement today admitting the loss of around 850,000 bitcoins. The details about the incident and exactly what happened remain unclear, but the statement noted that the discrepancy between the amount of cash on account in banks and the amount deposited from Japan-based Mt. Gox’s users is more than 2.8 billion yen or approximately $27.6 million.

Mt. Gox CEO statement on losing bitcoins

In the statement, Mt. Gox CEO Mark Karpeles said there was a “high probability” that the bitcoins had been stolen by taking advantage of a bug in the bitcoin system. “At the start of February 2014, illegal access through the abuse of a bug in the Bitcoin system resulted in an increase in incomplete Bitcoin transfer transactions and we discovered that there was a possibility that Bitcoins had been illicitly moved through the abuse of this bug,” he explained.

Karpeles went on to acknowledge that the problem could have stemmed from several causes such as illegal hacking by third parties. “We have asked an expert to look at the possibility of a criminal complaint and undertake proper procedures,” he said.

Mt. Gox declared bankruptcy last week

Mt. Gox filed for bankruptcy protection in Japan late last week, and that announcement roiled the bitcoin industry. However, anticipating this possibility, six of the world’s biggest bitcoin exchanges wrote a group letter earlier in the week designed to reassure bitcoin investors.

Regarding the necessity to file for bankruptcy, today’s statement from Mt. Gox says “all efforts will now be made to restore the business and recover damages to repay debts to creditors.”

According to Bitcoin Ticker, bitcoin prices are up over 2% today, trading at around $617 per bitcoin as of 11:15 PM ET. Given this strong price action in the face of today’s news, it looks like the Mt. Gox debacle is not going to be a fatal blow to the prospects of the fast-growing digital currency.

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