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It was once the biggest Bitcoin exchange in the world, accounting for as much as 80% of the global trading market in the virtual currency, but Mt. Gox suddenly stopped trading yesterday and reports suggest that some $375m worth of Bitcoins, or 6% of all Bitcoins in circulation, have gone missing.

In an official statement, the Mt. Gox management team state that: "In light of recent news reports and the potential repercussions on Mt. Gox'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."

An internal document, which has been widely reported upon by the media, suggests that more than 600,000 Bitcoins were stolen in cyber-attacks on the US-owned but Tokyo-based company. It is this theft, it seems, that has prompted all withdrawals to be frozen and Bitcoin trading suspended. It has also prompted other Bitcoin exchanges to release a joint statement, with six of the biggest insisting that "This tragic violation of the trust of users of Mt Gox was the result of one company's actions. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. 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."

According to an investigation by reporters for The Guardian Mt. Gox began limiting Bitcoin withdrawals at the start of the month, and prevented users from withdrawing purchases to spend external to the site itself. What's more, reporters say, the Bitcoin trading price also became "completely disengaged from the wider bitcoin market" as it went below $100 at the end of last week while it remained over $500 at other exchanges. Something was obviously, and worryingly, up. The Guardian reckons that "it seems likely that it was early February when the company discovered that its cold storage was gone. While the value of customer accounts was 624,408btc, the company actually only possessed the 2,000btc that were in its “hot wallet” – the bitcoin wallet connected directly to the exchange and used to enable trading".

I am also led to believe that Mt. Gox had suffered a suspected theft back in 2011, when reports suggest a hack attack led to losses of some 400,000 Bitcoins (worth around $220m today). Back then the price of Bitcoins fell to zero as the attackers attempted to simultaneously sell the stolen stash on Mt. Gox itself. The exchange, and some would say Bitcoin itself, only survived then as all losses were reimbursed by Mt. Gox. Although Mt. Gox is unexpected to be able to pull off a similar feat this time around, and it really does look like it is the end of this company now, that doesn't mean the death of Bitcoin itself. What it does mean is that anyone who held a Bitcoin deposit at Mt. Gox will almost certainly have lost everything. These exchanges are not banks and no real protection is offered for investors when it comes to recovering financial losses.

As Editorial Director and Managing Analyst with IT Security Thing I am putting more than two decades of consulting experience into providing opinionated insight regarding the security threat landscape for IT security professionals. As an Editorial Fellow with Dennis Publishing, I bring more than two decades of writing experience across the technology industry into publications such as Alphr, IT Pro and (in good old fashioned print) PC Pro. I also write for SC Magazine UK and Infosecurity, as well as The Times and Sunday Times newspapers. Along the way I have been honoured with a Technology Journalist of the Year award, and three Information Security Journalist of the Year awards. Most humbling, though, was the Enigma Award for 'lifetime contribution to IT security journalism' bestowed on me in 2011.

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