On 4 July 2013, Mt. Gox announced that it had “fully resumed” withdrawals, but as of 5 September 2013, few US dollar withdrawals had been successfully completed. Customer complaints about long delays were mounting as of February 2014, with more than 3,300 posts in a thread about the topic on the Bitcoin Talk online forum. On 5 August 2013, Mt. Gox announced that it incurred “significant losses” due to crediting deposits which had not fully cleared, and that new deposits would no longer be credited until the funds transfer was fully completed. The article said that the company had “effectively been frozen out of the U.S. banking system because of its regulatory problems”. Wired Magazine reported in November 2013 that customers were experiencing delays of weeks to months in withdrawing cash from their accounts.
On 25 February 2014, Mt. Gox reported on its website that a “decision was taken to close all transactions for the time being”, citing “recent news reports and the potential repercussions on Mt Gox’s operations”. On 28 February 2014, Mt. Gox filed in Tokyo for a form of bankruptcy protection from creditors called minji saisei (or civil rehabilitation) to allow courts to seek a buyer, reporting that it had liabilities of about 6.5 billion yen ($65 million, at the time), and 3.84 billion yen in assets. Chief executive Mark Karpelès told Reuters that Mt. Gox was “at a turning point”. The United States Department of Justice identified Alexander Vinnik, owner of the BTC-e bitcoin exchange, as an alleged key figure in the laundering of Mt. Gox’s stolen bitcoins.
In March 2013, the bitcoin transaction log or “blockchain” temporarily forked into two independent logs, with differing rules on how transactions could be accepted. With prices increasing rapidly, Mt. Gox suspended trading from 11 to 12 April for a “market cooldown”. 48) in the following hours. The value of a single bitcoin fell to a low of $55.59 after the resumption of trading, before stabilizing above $100. The Mt. Gox bitcoin exchange briefly halted bitcoin deposits. By April 2013 and into 2014 the site had grown to the point where it was handling over 70% of the world’s bitcoin trades, as the largest bitcoin intermediary and the world’s leading bitcoin exchange.
The company said it had lost almost 750,000 of its customers’ bitcoins, and around 100,000 of its own bitcoins, totaling around 7% of all bitcoins, and worth around $473 million near the time of the filing. On 9 March 2014, Mt. Gox filed for bankruptcy protection in the US (relevant resource site), to halt U.S. Mt. Gox released a statement saying, “The company believes there is a high possibility that the bitcoins were stolen,” blamed hackers, and began a search for the missing bitcoins. On 14 April, Mt. Gox lawyers said that Karpelès would not appear for a deposition in a Dallas court, or heed a subpoena by FinCEN. Chief Executive Karpelès said technical issues opened up the way for fraudulent withdrawals. Mt. Gox also faced lawsuits from its customers.
He used the exchange’s software to sell them all nominally, creating a massive “ask” order at any price. Accounts with the equivalent of more than $8,750,000 were affected. Within minutes the price corrected to its correct user-traded value. While the standard client would check for such an error and reject the transactions, nodes on the network would not, exposing a weakness in the protocol. As no private key could ever be assigned to them, these bitcoins were effectively lost. BTC 2,609 to invalid addresses.