MT. GOX, once the dominant exchange for bitcoin trading, says that more than $US470 million ($527m) of the virtual currency has vanished from its digital coffers, kicking into high gear a search for the missing money by victims and cybersleuths.
Acting alone and in groups, the people stepped up their efforts after Mt. Gox filed for bankruptcy protection in Japan and confirmed rumours it had lost almost 750,000 of its customers� bitcoins, as well as roughly 100,000 of its own.
Mt. Gox chief executive Mark Karpeles said technical issues had opened the way for fraudulent withdrawals, though he did not provide details.
�There was some weakness in the system, and the bitcoins have disappeared. I apologise for causing trouble,� Mr Karpeles said at a packed news conference at a Tokyo courthouse after the bankruptcy filing.
The disappearance underscores the risks of currencies that exist only online and aren�t backed by a central bank.
Mt. Gox wasn�t overseen by national regulators, so there is no entity to step in and back investors� deposits.
It wasn�t clear whether or how the missing bitcoins would be found. Bitcoin�s underlying software code, known in developer circles as �the protocol�, is believed to keep track of every transaction using a special marker that can be traced via an online ledger.
Unlike cash, which might be difficult to track if it is stolen from a bank vault and then widely dispersed, bitcoin transactions are logged in the ledger, which essentially can be accessed by anyone with a computer.
Some computing experts believed any hackers might be capable of covering the tracks of a potential computer break-in. But if each bitcoin has a marker, it would make it more difficult for thieves to try to convert a big stash into another currency, in the same way it would be difficult for an art thief to pawn a pilfered Matisse painting quickly.
Those factors are giving hope to the wave of Mt. Gox victims and treasure hunters who have fanned out in search of the missing bitcoins. The virtual currency that disappeared represents nearly 7 per cent of all bitcoins in circulation.
Devon Weller, a 40-year-old freelance web developer in Nashville who said he had a �small amount� of bitcoins stashed at Mt. Gox, tossed aside his regular work on Friday morning to start looking for missing bitcoins. He tapped into the public ledger from his home office and started following the trail of large transactions.
�I haven�t gotten very far, but it�s one of those things that is going to eat away at me,� Mr Weller said.
The exchange�s bankruptcy filing capped a tumultuous stretch for the five-year old virtual currency. One bitcoin traded at about $US549 late on Friday, based on the CoinDesk price index of two leading exchanges. The value of a bitcoin started last year at about $US13, soared above $US1100 in December and has since lost about half its value.
The price swings have hit some investors hard. Fortress Investment Group on Friday recorded an unrealised loss of $US3.7m from its purchase of $US20m worth of bitcoins last year. The asset-management firm held $US16.3m worth of bitcoins at the end of last year, according to a filing with the US Securities and Exchange Commission.
Mt. Gox halted customer withdrawals three weeks ago, saying a �bug in the bitcoin software� allowed some users to alter the ID on transactions and fraudulently claim that bitcoin transfers had not been sent. Other exchanges had problems but were able to provide patches so activity could resume. Mt. Gox didn�t recover, and it shut down operations on Tuesday.
Mt. Gox faces lawsuits from customers. On Thursday, a customer who claims to have $US25,000 worth of bitcoins tied up at Mt. Gox filed a lawsuit seeking class-action status against the exchange. Gregory Greene is seeking damages, an injunction, restitution and other remedies.
ADDITIONAL REPORTING: TAKASHI MOCHIZUKI
Source: http://www.theaustralian.com.au/business/wall-street-journal/geek-treasure-hunt-begins-as-527m-of-bitcoins-disappear/story-fnay3ubk-1226843019495#