Bitcoin exchange MtGox offline amid rumours of theft

MtGox, once the largest bitcoin exchange in the world, has disappeared from the internet with many millions of dollars of customer deposits, leaving only a short statement by way of explanation.

Addressed to “MtGox Customers”, the statement reads, in full, “In the event 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.”

Until the statement was posted, the site was just a blank white page from Monday night until Tuesday morning, while the company’s Twitter account was wiped blank on Monday. On Sunday, its chief executive Mark Karpeles resigned from the board of the Bitcoin Foundation, the charity that promotes the use of the cryptocurrency.

MtGox’s apparent closure or hiatus also follows the leak of what is alleged to be a “crisis strategy document” from the company, which says that almost 750,000 bitcoins (currently worth more than £200m) are “missing” due to theft which went unnoticed for several years.

In a joint letter, the CEOs of a number of other bitcoin exchanges said that MtGox had confirmed its “issues” in private discussions. The founders of Coinbase, and the CEOs of Kraken, BitStamp, Circle, BTC China & Blockchain.info, released the statement late Monday night.

“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” it reads in part. “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.”

The claimed MtGox strategy document claims that the 750,000 bitcoin loss is as a result of the same “transaction malleability” issue which caused it to halt bitcoin withdrawals in early February; but says that the actual losses happened closer to when the problem, which is inherent to bitcoin, was discovered in 2011.

The document suggests that a temporary closure, and rebrand to “Gox.com”, may be enough to clean the company’s image. As for making up the missing millions, it proposes asking “bitcoin big players and the core community” to donate money. The rationale is that the total collapse of MtGox would be so bad for the digital currency that everyone who is invested in bitcoin will have a motivation to keep it alive.

Before the company issued the statement, the source code of the blank MtGox page contained an HTML comment reading “<!-- put announce for mtgox acq here -->”, suggesting that it is soon to announce an acquisition.

On the Reddit bitcoin subforum, users traded stories about how much they lost in the closure. One who claimed to have lost 4,750 bitcoins (£1.3m) said “I don’t know how dying feels, but I’m pretty sure that’s how I feel now.” Another lost 1998 bitcoin but says “Despite all this, I’m still a believer in bitcoin (just not so much other people).”

Bitcoin prices were down across the board, with the Winkdex price index showing a 22% drop in the price of one bitcoin in the past 24 hours over five of the largest exchanges from $581 to $437.

MtGox did not respond to requests for comment. The Japan-based company, which was originally known as the Magic the Gathering Online Exchange, began as a site for selling cards from the popular Magic trading card game. It rapidly pivoted into selling bitcoin in 2010, and was sold to Mark Karpeles in 2011. By April 2013 it handled 70% of the world’s bitcoin trades.