Technology

MtGox chief Mark Karpeles quits Bitcoin Foundation

Bitcoins
The value of Bitcoin has fluctuated in recent months

The chief executive of Bitcoin exchange MtGox, Mark Karpeles, has quit the board of the Bitcoin Foundation, which oversees and develops Bitcoin software.

It comes shortly after MtGox halted transfers of the digital currency to external addresses after it spotted what it called "unusual activity".

The halt resulted in a sharp decline in the value of Bitcoins.

Last week, MtGox - one of the largest Bitcoin exchanges - said customers should be able withdraw funds "soon".

Meanwhile, all tweets on MtGox's Twitter account have also been deleted.

The Bitcoin Foundation said that Mr Karpeles's resignation would be "effective immediately".

It is the foundation's second high-profile resignation in the past month.

Another board member, Charles Shrem, stepped down in late January after being arrested and charged with money laundering in connection with his Bitcoin company.

Mr Shrem, the chief executive of New York-based Bitcoin exchange BitInstant, has pleaded not guilty.

Dispute

The issues with MtGox had sparked a dispute between the exchange and the Bitcoin Foundation.

The Tokyo-based firm said that its investigation into the unusual activity revealed a loophole that could be exploited to fool the transaction process into sending double the correct number of Bitcoins.

It also left it vulnerable to attacks, which slowed down the rate at which coins could be bought and sold.

As it halted the withdrawals, MtGox had suggested that a flaw in the virtual currency's underlying software was to blame for the problem.

"A bug in the Bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of Bitcoins to a Bitcoin wallet did not occur when in fact it did occur," it had said in a statement.

"Since the transaction appears as if it has not proceeded correctly, the Bitcoins may be resent."

However, Gavin Andresen, chief scientist at the Bitcoin Foundation, denied the problem was its fault.

"The issues that MtGox has been experiencing are due to an unfortunate interaction between MtGox's highly customised wallet software, their customer support procedures, and an obscure (but long-known) quirk in the way transactions are identified and not due to a flaw in the Bitcoin protocol," he told the BBC earlier this month.

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