Mt. Gox, a major Bitcoin exchange based in Tokyo, has halted all transactions for an indefinite period, saying the move is aimed at protecting its site and users.
After displaying a blank page for several hours Tuesday, the website of Mt. Gox finally showed a brief statement regarding its sudden shutdown amid fears among customers over the fate of their investments in the virtual currency. The digital marketplace operator will “close all transactions for the time being in order to protect the site and our customers,” the statement said.
The number of traders in Bitcoins on Mt. Gox is estimated at 1 million, mostly non-Japanese. Chief Cabinet Secretary Yoshihide Suga said Wednesday that government bodies such as the Financial Services Agency and the National Police Agency were gathering information about the problems afflicting Mt. Gox.
The Bitcoin community rallied round to defend the digital currency, with chief executives of several major operators pledging to work together to shore up public faith in the project.
Visitors to the www.mtgox.com domain Tuesday got a blank page — consistent with contents having been removed — when they tried to log on, more than two weeks after the firm suspended cash withdrawals. A widely shared document purporting to be a Mt. Gox “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 $300 million.
Consternation has grown since Mt. Gox stopped processing external transactions Feb. 7, claiming there was a problem with the program that powers the currency and allows it to be transferred between users or swapped for goods and services. The value of the unit on Mt. Gox had gone into free fall since then. Around midday Tuesday, shortly before the shutdown, a Bitcoin was worth $135, compared with the $430 quoted by the CoinDesk Bitcoin price index.
A joint statement issued by CEOs of major platforms said the currency was sound and blamed Mt. Gox for the fiasco.
“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. Mt. Gox has confirmed its issues in private discussions with other members of the Bitcoin community,” said the statement from Coinbase, Kraken, Bitstamp.net, BTC China, Blockchain.info and Circle.
Wild volatility has long been a part of the experimental digital currency, which does not have backing of a central bank or government and falls outside of traditional financial regulatory frameworks. Units are generated by a complex computer algorithm designed by one or more anonymous people in 2009, with a global cap on the eventual number of Bitcoins set at 21 million units.
Proponents say the currency is an efficient and anonymous way to store and transfer monetary value, and to avoid the risks inherent in any currency dependent on the viability of a government for its value.
But some economists say the project is mired in difficulties, including large fluctuations in value caused by speculators and a supposed vulnerability to online thieves. Others note the anonymity it offers is attractive to underworld figures and cite its use to buy drugs and guns on the underground Silk Road website.