Bitcoin Exchange Mt. Gox At Heart Of Criminal Probe

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Mt. Gox, the Bitcoin exchange that went dark following a major theft, is now at the heart of a criminal probe.

Both Manhattan U.S. Attorney Preet Bharara and the Federal Bureau of Investigation are gathering information to determine what led to the disappearance of 750,000 Bitcoins, valued at as much as $400,000,000. They are also working to determine whether or not there were criminal violations tied to the shut down of the Mt. Gox exchange. One source reported that authorities are requesting that Mt. Gox hold onto documents related to the theft.

Mt. Gox's system suffered from a severe security flaw that provided a loophole for hackers to steal hundreds of thousands of Bitcoins. As an attempt to stop further loss of the virtual currency, accounts were frozen. This meant no one could recover their Bitcoins, leading to a number of frustrated and confused Bitcoin traders.

Some of them are so angry, they've gathered in Tokyo to picket a building where Mt. Gox is thought to be located.

The true location of Mt. Gox and its CEO Mark Karpeles remains unknown. Karpeles did resign from the Bitcoin Foundation about a week ago, at about the same time that Mt. Gox's website went offline.

According to Reuters, on Wednesday Karpeles made a statement via his website regarding his location and intentions:

As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues.

Who those "different parties" are remains unclear, nor is there any corroborating evidence at present that Karpeles remains in the country.

The Bitcoin Foundation, which is fighting hard to legitimize the Bitcoin as a global currency, has stated that they are "cooperating fully" with Bharara's investigation. In an email-based statement sent out on Wednesday, the Seattle organization stated that they "proactively" reached out to federal prosecutors with information to help their case.

The Mt. Gox shutdown has been distressing for many Bitcoin traders, as between the theft and the shutdown, it has left many without access to their money. Even more worrying, the more time that passes, the less it seems that they will be able to recover their funds.

Though other exchanges have stated that they are working to rebuild the trust lost via Mt. Gox's blunder, the behavior of the largest Bitcoin exchange seriously raises the question of the reliability and security of such exchanges and the currency itself.

Image via Wikimedia Commons

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