Bitcoin Exhange MtGox Files for Bankruptcy in Tokyo

After shutting down this week to “protect the site” and its users, the MtGox Bitcoin exchange announced this morning that it’s officially filing for bankruptcy protection.

bitcoin mtgox

The website of Tokyo-based MtGox — once the largest Bitcoin exchange — went dark on Tuesday, raising concerns about the future of the unregulated virtual currency, reports Reuters today. Documents surfaced suggesting insolvency and the loss of more than $426 million, or 744,400 bitcoins.

Ars Technica reports that MtGox appears to have pitched investors in recent weeks, “arguing that it was poised to increase its profits 20-fold in just two years on the back of ‘no debt nor outside financing.’”

Federal prosecutors are now investigating Tuesday’s MtGox exchange collapse, which came amid accusations of mismanagement and after a series of cyberattacks. The Wall Street Journal has also reported this morning that MtGox has been served with a U.S. subpoena.

Federal Reserve Board chair, Janet Yellen, told Congress on Thursday that the Federal Reserve has no authority to supervise or regulate Bitcoin.

In a CoinDesk exclusive, Bitcoin entrepreneur, Charlie Shrem, spoke of his relationship with MtGox CEO, Mark Karpeles, who Shrem describes as a “very sweet guy” and “non-confrontational” but who nonetheless has made bad business decisions. Shrem believes the company should have hired an agency to handle its PR long ago. But the shutdown represents more than shoddy public relations, it’s potentially a huge blow for Bitcoin.

“Shrem believes Karpeles’ arrest was carefully planned by the federal government to damage the public’s perception of Bitcoin. He thinks the media hasn’t helped matters, either, by ‘making assumptions’ and publishing articles ‘without knowing the full story,'” reported CoinDesk.