Last month, Mt. Gox had halted all transactions due to a technical glitch in its system (Transaction Malleability DDOS). This sent shock waves all over the world, consequently the Bitcoin price plummeted in all major Bitcoin Exchanges. The Mt. Gox website issued statements that its technical team was working to solve the glitch and would soon come up with a solution. Users were not being able to login on the website to check their balances. But, Mt.Gox couldn’t find the perfect solution and soon filed for bankruptcy. Also, Mt.Gox claimed that it had lost 750,000 bitcoins of customers and 100,000 bitcoins of the Exchange itself. After the once largest Bitcoin Exchange filed for bankruptcy, the investor confidence in Bitcoin was at its lowest.
Adding to the problems, the blog of Mt.Gox CEO Mark Karpeles was recently hijacked by hackers. The hackers posted a file which they claim they snatched from Mt.Gox’s servers. Although the authenticity of the file is yet to be determined, the hackers believe it proves that Mt. Gox still holds close to 1 million Bitcoins, even after filing for bankruptcy. Could this mean something? However, Mt.Gox released a spam warning letter directed towards all its users, soon after the hack. The letter warns former users of phishing attacks that may be directed towards them. Soon, Mark Karpeles released a document stating that it had previously assumed that there were no bitcoins in wallets, but it found 199,999.99 bitcoins in an old-format wallet which was used before June 2011. Furthermore, he claimed that this wallet was discovered before his blog was hacked. So, the total number of bitcoins missing now are 650,000. Doesn’t all of this seem fishy?
Well, another thing Mt. Gox has to worry about is how to return the found bitcoins to the customers? It’s known fact that tracing Bitcoins to their owner can be a tiresome work. Moreover, the U.S bankruptcy courts don’t have special rules to deal with virtual currencies. So, returning the found bitcoins to their customers is also a huge task.
As of the last week of March 2014, Mt.Gox says it is still cooperating with the police to find the missing bitcoins. After the mysterious finding of 199,999.99 bitcoins, U.S federal investigators are looking into multiple theories, one of them being the involvement of a Mt.Gox insider. Adding to the mystery, two years before Mt.Gox filed for bankruptcy, its employees say they challenged their CEO to see if some client money was used to cover operational costs.
Could this have been an insider job? Are there some big guns involved in this? Is the money really stolen by hacking or was it never deposited in the Exchange? All these doubts would be cleared only after the court appointed lawyer submits his findings’ report on the extended deadline of May 9, 2014.