Technology

Top Bitcoin exchange MtGox goes offline

Bitcoins
Image caption The value of Bitcoin had fallen sharply on the MtGox exchange in recent days

One of the biggest Bitcoin Exchanges, MtGox, has gone offline.

The exchange has been hit by technical issues and recently halted all customer withdrawals of the digital currency after it spotted what it called "unusual activity".

The move is a setback for backers of Bitcoin, who have been pushing for greater adoption of the currency.

Meanwhile, six other major Bitcoin exchanges issued a joint statement distancing themselves from MtGox.

The move by MtGox to halt withdrawals had resulted in a sharp decline in the value of Bitcoin.

A statement was posted on the MtGox website on Tuesday afternoon.

"In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly," it said.

The closure of the site did not "reflect the resilience or value of Bitcoin", said a statement from representatives of several other Bitcoin exchanges, including Coinbase and BTC China.

"This tragic violation of the trust of users of MtGox was the result of one company's actions.

"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

"We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfil the promise that Bitcoin offers as the future of payment in the internet age," they added.

Lost Bitcoins?

MtGox halted transfers of the digital currency to external addresses on 7 February.

The Tokyo-based firm said it had found a loophole that thieves could use to fool the transaction process into sending double the correct number of Bitcoins.

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

The loophole was also thought to have been exploited by thieves, who stole about $2.7m in Bitcoins from the Silk Road 2 website earlier this month.

However, last week, the exchange said that customers would be able to starts withdrawals "soon".

One report claimed on Monday that the exchange had become "insolvent" after losing 744,408 Bitcoins - worth about $350m (£210m) at Monday's trading prices.

The chief executive of MtGox, Mark Karpeles, told Reuters in an email on Tuesday: "We are currently at a turning point for the business. I can't tell you much more for now, as this also involves other parties."

'Re-establish trust'

Unlike real currencies, Bitcoins are not regulated by any central bank or government financial institutions.

They are created as part of a technique called "mining", which is used to process transactions.

With only a limited number or Bitcoins in circulation, their price has risen significantly in recent months driven by a variety of factors.

Some have been betting that the digital currency may get the backing of regulators as a legitimate financial service and have been investing in it.

Their popularity has also been driven in part by it being difficult to trace transactions carried out using Bitcoins, and the currency has been linked to illegal activity online.

Its growing popularity has seen backers of the currency push for greater mainstream adoption. They have had some success with a few firms starting to accept Bitcoins as a form of payment.

However, there have also been concerns over the currency's long-term future, not least due to a lack of proper regulation and laws.

At the same time, some have warned that the rapid surge in Bitcoin's price was merely due to speculation and was not sustainable.

The latest development with MtGox is likely to trigger fresh concerns over the digital currency.

However, other Bitcoin backers said they were working together to "re-establish" trust among users and were "committed to the future of Bitcoin".

They said they "will be coordinating efforts over the coming days to publicly reassure customers and the general public that all funds continue to be held in a safe and secure manner".

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