Following the demise of MtGox resulting in 750,000 BTC losses to investors, former CEO Mark Karpeles notifies those concerned that 200,000 BTC have been located in offline wallets
The highly unpredictable world of virtual currency has endured more than its fair share of extreme events over the last year, including fluctuating values when compared to the US dollar, ranging from double figures to over $1,000 for one Bitcoin during the latter stages of 2013.
Not only has this provided risk management issues for electronic trading companies offering Bitcoin as a tradable instrument, but indeed a far more sinister matter for consideration has reared its head recently in the demise of entire exchanges and marketplaces, the most recent of which having been MtGox, the largest Bitcoin exchange globally.
Yesterday, just a matter of weeks subsequent to MtGox having become insolvent, creating a loss to investors totaling $473 million at the time of bankruptcy filing, and corporate liabilities of $64 million, former MtGox CEO Mark Karpeles issued a letter intended for investors, stating that it has located 200,000 bitcoins out of the 750,000 that it held upon its demise.
The letter details that MtGox Co., Ltd. had certain old format wallets which were used in the past and which, MtGox thought, no longer held any bitcoins. Following the application for commencement of a civil rehabilitation proceeding, these wallets were rescanned and their balance researched. On March 7, 2014, MtGox confirmed that an oldformat wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC (199,999.99 BTC).
MtGox investigated the presence of these 200,000 BTC, immediately reported it to its counsels in the application for commencement of a civil rehabilitation proceedings, referred to as counsels. A hearing took place on March 8 where a detailed explanation of the situation was made to counsels. Immediately on Monday (March 10), counsels reported the existence of the 200,000 BTC to the Court and the Supervisor
tGox further states that for security reasons, the 200,000 BTC which were at first on March 7 moved to online wallets were moved between March 14 and March 15 to offline wallets. These bitcoin movements (including the change in the manner in which these bitcoins were stored) has been reported to the Court and the Supervisor by counsels.
Further, Mr. Karpeles’ leterthe bitcoins held today by MtGox Co., Ltd. amount to a total of approximately 202,000 BTC, including the above 200,000 BTC and the approximately 2,000 BTC which existed prior to the application for commencement of a civil rehabilitation proceeding.
Mr. Karpeles goes on to explain that MtGox had previously reported about the disappearance of bitcoins which had triggered this application for commencement of a civil rehabilitation proceeding that MtGox had lost almost all of the approximately 850,000 bitcoins it held (approximately 750,000 BTC corresponding to the balance of bitcoins belonging from users as seen from transaction records as well as approximately 100,000 BTC belonging to MtGox).
Taking into account the existence of the 200,000 BTC, the total number of bitcoins which have disappeared is therefore estimated to be approximately 650,000 BTC.
In taking this into consideration, Mr. Karpeles’ letter advises those concerned to consider that that the reasons for their disappearance and the exact number of Bitcoins which disappeared is still under investigation and that the above figures may still change depending on the results of the investigation.
Whilst interest in Bitcoin trading continues to hold values at a relatively high level, it is fair to say that a world in which electronic coins can be relied upon as an alternative to fiat currency is a somewhat distant possibility.