The Bitcoin Implosion Continues As Mt. Gox Files For Bankruptcy

The ongoing trainwreck of schadenfreude that is Mt. Gox’s complete and total meltdown leaves us conflicted. On the one hand, it stinks that people lost $350 million. On the other, there’s a lot of overlap between “Bitcoin investor” and “annoying Internet libertarian,” which makes it really funny that a lot of them are screaming they’re not getting a bailout as Mt. Gox took the next step towards burning completely to the ground.

For those new to the story: Mt.Gox, which stands for “Magic The Gathering Online Exchange” (really), is a Japanese company paid to store and help trade Bitcoins. Recently, the entire exchange shut down, cutting off Bitcoin users from $350 million worth of their little chunks of cryptographic code. There was hope that these people might get their money back, but according to the Wall Street Journal, that ain’t happening:

Speaking to reporters at Tokyo District Court Friday after the bankruptcy filing, Mt. Gox owner Mark Karpelès said technical issues had opened the way for fraudulent withdrawals, and he apologized to customers.

“There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble,” Mr. Karpelès said during a packed news conference at the Tokyo District Court press club.

“Causing trouble” is not really the term we would have used to describe losing nine figures’ worth of stuff. If you were wondering what the Japanese authorities think of all this, they essentially don’t care, because to them, this is the same as losing your World of Warcraft gold. So if you had Bitcoin in Mt. Gox, you are effectively screwed.

What does this mean for Bitcoin as a whole? Probably nothing good, in the long run. Bitcoin was never intended to be anything other than an experiment, a way to test out the idea of a gray-market currency on the Internet and see where the problems lay. This was, and largely remains, an unexplored frontier of finance, and somebody needed to see what problems might be involved. If nothing else, Bitcoin has done that; whether it can recover from being a pioneer remains an open question.

Via The Wall Street Journal