Updated: Mt.Gox Goes Silent - Markets Falling

MT. Gox has gone silent! Checking www.mtgox.com as of 9:02 p.m. Pacific rewards you with a blank screen.

More telling is a quick check of their Twitter account at https://twitter.com/MtGox. Still followed by over 28,000, it appears Mt.Gox has erased all their previous tweets.

Mark Karpeles the CEO of Mt.Gox resigned from the board at the Bitcoin Foundation yesterday.

BTC is nosediving on most exchanges and LTC is following, as of 9:04 p.m. Pacific, BTC is sub $500 on BTC-e and LTC is sub $13.

Time to take your loses early, go to FIAT and look for a buy back opportunity when the panic starts to settle down.

Remember there is often profit to be made when the panic comes. We at Crypto Pros wishes you all good luck!

Taken @ 9:20 p.m. Pacific 2-24-14

Coinbase took this opportunity to publish the following letter on their blog in an attempt to shore up confidence in the viability of Bitcoin.

Joint Statement Regarding MtGox

Feb 24th, 2014

The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox.

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants.  As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.  Mtgox has confirmed its issues in private discussions with other members of the bitcoin community

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

In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds. As part of the effort to re-assure customers, the following services 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: Coinbase, Kraken, BitStamp, Circle, and BTC China.

We strongly believe in transparent, thoughtful, and comprehensive consumer protection measures. We pledge to lead the way.

Bitcoin operators, whether they be exchanges, wallet services or payment providers, play a critical custodial role over the bitcoin they hold as assets for their customers.  Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.

The following industry leaders stand by this statement:

Fred Ehrsam — Co-founder of Coinbase

Jesse Powell — CEO of Kraken

Nejc Kodrič — CEO of Bitstamp.net

Bobby Lee — CEO of BTC China

Nicolas Cary — CEO of Blockchain.info

Jeremy Allaire — CEO of Circle

Crypto Pros applauds the efforts of Coinbase and the industry leaders above who lend their support to the statement.

Update 8:13 a.m. Pacific 2-25-14

Checking www.mtgox.com this morning we find they have posted the following message on their website, the rest of the site remains blank:

Dear MtGox Customers,

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.

Best regards,
MtGox Team

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Mt.Gox got Goxed

The concept of insolvency is on the minds of a lot of Mt.Gox customers at the moment.  What was once the worlds biggest Bitcoin exchange has found itself in very troubled waters.

Mt.Gox, the Japanese based Bitcoin exchange, has just recently announced a halt on all withdrawals from its exchange, this includes USD as well as Bitcoin.  They are blaming a vulnerability in the Bitcoin protocol (the software code that operates Bitcoin) known as "Transaction Malleability" for the the halt, which has brought on the very real concern that the exchange might be having serious insolvency issues.

Transaction Malleability is a bug in the Bitcoin protocol that makes it possible for someone to use the Bitcoin network to alter a transaction's details to make it seem as if the coins did not reach it's intended destination, when in fact they did. In reality, this has been a known flaw for quite some time, and should factory lightly on the ability of Mt.Gox to transfer fiat currency or Bitcoins to its clients.

If Mt.Gox is actually insolvent, this will be a sad day for Bitcoin. Mt.Gox was one of the key reasons behind the rapid price rise of Bitcoin late last year, and even with their poor customer support, played a vital roll in the popularity of the coin. At one time Mt.Gox handled 80% of all bitcoin transactions, and even if they fix the the vulnerability issues in the protocol they are are claiming is the cause behind the cessation of withdraws from their platform, it is doubtful they will ever reach that level again.

Mt.Gox's issues are having a ripple effect on the price of Bitcoin, and we have already seen a massive drop in price across all exchanges. Mt.Gox is currently trading at $371 (as of the time of writing this article) while other exchanges are above the $600 mark though several, such as BTC-e, dropped to the low $500's in the last 24 hours.

If Mt.Gox fixes their "issues" and opens up withdraw functionality, it is most likely we are going to see a huge dump of the coins into other exchanges as wary ex-Mt.Gox customers pull their Mt.Gox holdings and look for perceived safer and more stable grounds. It is our opinion this will have a negative effect on the price of Bitcoin for quite some time, at the very least it will induce increased volatility for all you day traders to enjoy.

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