MtGox Issues New Statement, Blames Software Bug

Mark Karpeles Mt. Gox

MtGox Issues New Statement

MtGox, Tokyo based bitcoin exchange, filed for bankruptcy protection on February 28th, after having revealed that they had lost the bitcoins of not only their customers, but also their own.

The bitcoin exchange has remained consistent throughout its growing troubles about disclosing important information regarding the reality of the situation. In other words, it has not been revealing much. Until recently, it has finally broken away from that pattern and started disclosing tidbits here and there. But, that is probably due to the fact that it is in very deep waters with its customers and authorities.

MtGox has published another statement yesterday. The exchange stated that 750,000 bitcoins of their customers have been lost as well as 100,000 bitcoin belonging to the company have also gone missing. The total loss turns out to be approximately over $500 million worth. A lot of what is written in the new statement confirms what was written in an earlier leaked crisis strategy document that Karpeles denied having been issued from MtGox.

The exchange identified a software bug to be the cause of its problems. The software bug made it possible for an increase in the incomplete bitcoin transfers which hackers could have used to withdraw funds. In the words of Mark Karpele, CEO of MtGox,

“At the start of February 2014, illegal access through the abuse of a bug in the bitcoin system resulted in an increase in incomplete bitcoin transfer transactions and we discovered that there was a possibility that bitcoins had been illicitly moved through the abuse of this bug.”

Emphasizing on the fact that Karpeles indicated that it might have been a “possibility” that bitcoins were being transferred out by hackers. To reach the point of surety of what happened with the disappeared bitcoins,

“we have asked an expert to look at the possibility of a criminal complaint and undertake proper procedures,” wrote Karpeles.

He further continue to say,

“Once we discovered that bitcoins had disappeared and the discrepancies between cash funds and deposit balances, we judged that it would be difficult to continue our activities normally and we therefore closed our site at noon on the 25th (Japan time).”

The Daily Beast was told by an anonymous ex-employee of Mt. Gox that the exchange failed in the upkeep of accounting and had ineffectual management.  Additionally, software bugs that had been identified remained unfixed for quite some time.

MtGox opened up a customer call center in the process of rectifying its affairs (we hope.)

Bitcoin and its community have come a long way from its origin. These are just hurdles in the path of great innovation and advancement. All hopes for the best of outcomes for both MtGox’s customers and the bitcoin community.

Drop a comment below and let us know what are your thoughts on the ‘software bug’.

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