Mt. Gox Statement Claims it Made Conscious Decision to Halt Transactions

| Published on February 25, 2014 at 17:16 BST | Companies, Exchanges, Mt. Gox, News, US & Canada

The recent revelations regarding Mt. Gox have been attracting a lot of commentary from everyone other than the exchange itself.

However, the troubled exchange has finally issued a brief statement, albeit one which is unlikely to reassure investors.

It is now becoming apparent that Mt. Gox is about to make an announcement, and that it might be rebranded. However, a new brand identity is probably the least of its worries: for all intents and purposes, the exchange appears to be insolvent and defunct. Its latest statement reads:

Dear MtGox Customers,

In the event of recent news reports and the potential repercussions on MtGox’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.

Best regards, MtGox Team

The statement does not explain why Mt. Gox decided to pull the plug suddenly at 01:59:06 UTC on Tuesday. In addition, customers hoping to find answers from Mt. Gox support will be disappointed, too – the support page simply states: “No help desk at support.mtgox.com.”

It is important to bear in mind that the exchange didn’t simply halt trading and issue the statement shortly after its decision – it went completely offline and has not issued any statements until today.

If the aim of the latest statement was to reassure customers, investors and the bitcoin community in general, it falls short of explaining what is happening behind closed doors and does not address concerns raised by many publications and bitcoin insiders. In an email, CEO Mark Karpeles made an unofficial statement to Reuters claiming that bitcoin exchange is “at a turning point”.

He added that the Japan-based company “should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.” However, these new plans are yet to emerge.

Regulators starting to take notice

The industry reaction to the virtual disappearance of Mt. Gox has been swift. Other exchanges and bitcoin businesses including Blockchain.info and Coinbase did their best to distance themselves from the exchange, issuing a joint statement yesterday (February 24th).

Regulators are taking notice, too. Homeland Security and Governmental Affairs Committee Chairman Tom Carper has issued a statement on the matter, claiming that US policymakers and regulators can and should learn from the Mt. Gox incident to protect consumers:

“For months, our Committee has been calling on law enforcement, industry, and relevant regulators to come to the table and engage in meaningful dialogue to provide clear rules of the roads for entrepreneurs, investors, and consumers. Without these rules, businesses can’t be successful and consumers can’t be protected. If today’s news is true, it is a sad violation of consumer trust, whether through malicious action or simple incompetence. Regardless, it’s unacceptable.”

The chairman stressed that his staff is working closely with federal agencies to determine what lessons can be learned from the failure and to make sure that it does not happen in the US. “Our Committee will continue to work closely with relevant U.S. government entities to steer the boat away from nefarious actors – and it’s up to legitimate, law abiding industry partners to row the boat into law abiding waters,” he added.

Fellow US regulator Ben Lawsky, New York’s Superintendent of Financial Services, also waded into the debate.

In a statement via email he maintained that while all the facts are not yet clear “these developments underscore that smart, tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms.”

Both Carper and Lawsky are clearly throwing the ball to bitcoin industry leaders, if not indirectly passing blame.

It seems the lesson learned from the Mt. Gox demise will be a painful one, but will all regulators will reach the same conclusions?

Ben LawskyMt. GoxMt. Gox suspends tradingNYDFS

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