Mark Karpales, the former CEO of scandal-hit Bitcoin trading emporium Mt. Gox, has been arrested this morning by Japanese police. They suspect he had something to do with the disappearance of hundreds of millions of dollars in Bitcoin.
Bitcoin devotees and other cryptocurrency fans say that math gives their radical ideas so much potential. But starting a new value system also requires a level of faith in the people using the math. As “shitcoin” scams pile up, it’s becoming clear that new currencies need trust, too. And they don’t have it.
Just a few days after reports emerged that the infamous Mt. Gox meltdown was an inside job, one of the biggest, oldest, and most trusted bitcoin exchanges—Bitstamp—just went offline after a security breach. Bitcoin exchanges come and go all the time, but this is different. Bitstamp is supposed to be the reliable one.
Back in April, the Silk Road defence lawyer Joshua Dratel tried to save his client, Ross Ulbricht, by throwing Bitcoin under the bus. Now, the FBI is investigating Mt. Gox and a number of other bitcoin exchanges in connection with Silk Road.
MtGox has set up a call center in Japan to handle the worried inquiries of newly hard-up Bitcoiners. That'll help.
The Mt.Gox saga just gets sadder and sadder. Not only did the company file for bankruptcy, but Mt.Gox CEO Mike Karpele went on Japanese TV a few minutes ago and admitted that everybody's money is gone. Gone, gone, gone.
A lawyer representing Mt. Gox has announced that the bitcoin exchange is filing for bankruptcy protection, and that the company has outstanding debt of around $63.6 million.
Ever since a single Bitcoin became worth a small fortune, there have been people trying to steal them. Sure, there have some small-time thieves who've stolen a few hundred dollars worth of Bitcoin here and there. But there have also been heists. Massive, highly orchestrated attacks that lead to millions of dollars…
A user account carrying a significant amount of Bitcoin on the trading site Mt. Gox was hacked by an unknown party, who then attempted to sell the lot to themselves and exchange the Bitcoin into US dollars. Then all hell broke loose.