Mt. Gox just lost 744,400 BTC!
A document has surfaced suggesting that troubled Japan-based bitcoin exchange Mt. Gox will close for one month as part of a four-step rebranding plan, and that CEO and former Bitcoin Foundation board member Mark Karpeles will step down from his executive position as part of the process.
The bitcoin price has been tumbling all morning amid the news, hitting a low of $419 so far.
Entitled “Crisis Strategy Draft,” the document suggest the company’s increasingly dire financials are greatly impacting the decision. By Mt. Gox’s own estimates, they say, it has only 2,000 BTC and approximately $22.4m in fiat currencies in its possession.
The document is branded with the current Mt. Gox logo and a redesigned version, and claims to have detailed inside knowledge of Mt. Gox and its financial affairs, but appears to be written by a team external to Mt. Gox’s current management.
The document is publicly available for viewing here and embedded below this article.
According to the leak, Mt. Gox has lost close to 744,408 BTC or $350m at current prices, and faces an unconfirmed additional $55m in fiat liabilities. The company suggests that theft related to transaction malleability has been ongoing for several years, but was not reported by the company.
We can assume now that withdrawals will not recommence, at least not in the foreseeable future. Customers with Mt. Gox accounts will not be receiving their bitcoins or possibly even other currencies in what is effectively an insolvency, though no-one in an official position is using that word.
At Japan time on the eve of the statements, Japan’s finance and banking regulator the Financial Services Agency (FSA) said it would not be intervening in the issue as it did not view supervision of digital currency exchanges as part of its obligations.
Rumors of the proposal first began circulating on 24th February, when the document was posted on the popular digital currency blog The Two-Bit Idiot. Sources close to the company suggest the document is real, and that it is part of a plan by Mt. Gox to raise investor capital.
The document paints a vivid picture of potential investors who are seeking to raise the necessary capital to continue operations, or at least use whatever remains of Mt. Gox’s brand value to begin a new venture.
While admitting Mt. Gox’s image is “broken”, it notes that throughout the recent bad press customers have continued to deposit funds and trade on the exchange.
The document also evokes sweeping rhetoric aimed to tie Mt. Gox’s fate to that of the broader bitcoin community: “The likely consequences will be larger than this localized financial damage, and we believe that the benefits of keeping MtGox stable and running outweigh the risks. This isn’t about saving MtGox anymore.”
They suggested the demise of its brand could set bitcoin back “five to 10 years”, and that governments should and would react “swiftly and harshly”. “At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public,” the document reads.
Mt. Gox, through intermediary sources, declined to comment on the validity of the reports at press time.