A Reuters report published on Yahoo News said that the website of the world's biggest virtual currency exchange, Mt Gox, went down on Tuesday with no explanation. The report said that the closure seemed to have amped up investor panic when it was also known that its Tokyo office is empty, and its chief executive has yet to provide a definite explanation of its abruptly shuttered operations.
Mt Gox has been the subject of many for its lack of stringent security measures. Pointing to an unverified document circulating on the Web, it showed that over 744,000 Bitcoins went missing due to transaction malleability theft. According to a report by SF Gate, transaction malleability pertains to the capability of a transaction to be renamed prior to the confirmation of the transaction that actually happened, which provides a window of opportunity for thieves to steal.
The document in question, said Reuters, also claimed that Mot Gox has $174 million in liabilities against $32.75 million in assets, which by simple accounting could equate to a very troubling financial situation for the virtual money exchange if the document has been verified.
When the news agency asked Mt Gox Chief Executive Officer Mark Karpeles if the site is dead, he said in an emailed response, "We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties."
A report by Cameron Keng for Forbes said that the Mt Gox disaster isn't the only exchange that had incidents of Bitcoin thefts. However, American investors who had money in Bitcoin via Mt Gox could charge the losses it incurred to decrease their tax burdens under the US tax law, Keng said. Citing an example, a person or an entity who lost an equivalent of $409.2 million in Bitcoin could get $122.8 million in potential tax refunds over several years.
On the other hand, Keng discounts the possibility of filing a claim against Mt Gox, as one would need to file an international lawsuit under Japanese law. Since Mt Gox is not a bank, investors of the virtual should note that Bitcoin investments in Mt Gox is not covered by the FDIC or Federal Deposit Insurance Corporation or any other insurance system.
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