TOKYO (AP) — The Mt. Gox bitcoin exchange in Tokyo filed
for bankruptcy protection Friday and its chief executive said 850,000
bitcoins, worth several hundred million dollars, are unaccounted for.
The
exchange’s CEO Mark Karpeles appeared before Japanese TV news cameras,
bowing deeply. He said a weakness in the exchange’s systems was behind a
massive loss of the virtual currency involving 750,000 bitcoins from
users and 100,000 of the company’s own bitcoins. That would amount to
about $425 million at recent prices.
The online exchange’s
unplugging earlier this week and accusations it had suffered a
catastrophic theft have drawn renewed regulatory attention to a currency
created in 2009 as a way to make transactions across borders without
third parties such as banks.
It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.
"I am sorry for the troubles I have caused all the people," Karpeles, a Frenchman, said in
Japanese at a Tokyo court.
Karpeles
had not made a public appearance since rumors of the exchange’s
insolvency surfaced last month. He said in a web post Wednesday that he
was working to resolve Mt. Gox’s problems.
The loss is a giant
setback to the currency’s image because its boosters have promoted
bitcoin’s cryptography as protecting it from counterfeiting and theft.
Bitcoin
proponents have insisted that Mt. Gox is an isolated case, caused by
the company’s technological failures, and the potential of virtual
currencies remains great.
Debts at Mt. Gox totaled more than 6.5
billion yen ($65 million), surpassing its assets, according to Teikoku
Databank, which monitors bankruptcies.
Just hours before the bankruptcy filing, Japanese Finance Minister Taro Aso had scoffed that a collapse
was only inevitable.
"No one recognizes them as a real currency," he told reporters. "I expected such a thing
to collapse."
Japan’s
financial regulators have been reluctant to intervene in the Mt. Gox
situation, saying they don’t have jurisdiction over something that’s not
a real currency.
They pointed to the Consumer Affairs Agency,
which deals with product safety, as one possible place where disgruntled
users may go for help.
The agency’s minister Masako Mori urged
extreme caution about using or investing in bitcoins. The agency has
been deluged with calls about bitcoins since earlier this year.
"We’re at a loss for how to help them," said Yuko Otsuki, who works in the agency’s counseling
department.
It’s
hard to know how many people around the world own bitcoins, but the
currency has attracted outsize media attention and the fascination of
millions as an increasing number of large retailers such as
Overstock.com begin to accept it.
Speculative investors have
jumped into the bitcoin fray, too, sending the currency’s value
fluctuating wildly in recent months. In December, the value of a single
bitcoin hit an all-time high of $1,200. One bitcoin has cost about $500
lately.
Roger Ver, a Tokyo resident who has provided seed capital
for bitcoin ventures such as Blockchain.info, a registry of bitcoin
transactions, said he believes bitcoin will survive, possibly emerging
with better technology that’s safer for users.
He said Mt. Gox people were likely sincere but had failed to run their business properly.
"Mt.
Gox is a horrible tragedy. A lot of people lost a lot of money there,
myself included," he said ahead of the bankruptcy filing. "I hope we can
use this as a learning experience."
Some countries have reacted sternly to bitcoin’s emergence, but many people remain fans of its potential.

Vietnam’s
communist government said Thursday that trading in bitcoin and other
electronic currencies is illegal, and warned its citizens not to use or
invest in them.
Late last year, China banned its banks and payment
systems from handling bitcoin, although people still use them online.
Thailand earlier put a blanket prohibition on using bitcoins and Russia
has effectively banned them.
There was still considerable appetite
for bitcoin in China, where it has become attractive as an investment
since tightly-regulated state banks offer very low interest rates on
deposits.
Even some with money tied up in Mt. Gox were undaunted.
Huang
Zhaobin, a 21-year-old student in Chengdu, said he had lost 50,000 to
60,000 yuan ($8,125 to $9,750) from the Mt. Gox closure.
"Actually
this money itself is the benefit from bitcoin investment," said Huang,
who plowed 10,000 yuan into bitcoins about three months ago.
"If it is legal, I will continue to invest for sure as it is the trend in the world."
In
Singapore, Tembusu Terminals, a joint venture specializing in
crypto-currencies, announced Friday its first bitcoin ATM in the
city-state and plans for many more. In Hong Kong, a group opened what it
said was the world’s first bitcoin retail store.
Yang Weizhou,
analyst at Mizuho Securities Co. in Tokyo, said laws to regulate virtual
currencies may have to be created by countries including Japan.
She
said lawsuits from those who lost money were likely, and any court
rulings would chart unexplored territory and help define the reach of
virtual money.
The trend toward such technology for peer-to-peer
payments wouldn’t replace traditional money but was here to stay because
of its convenience, she said.
"It is undeniable," she said. "One must separate the Mt. Gox problem from the overall
concept."
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Associated
Press video journalist Kaori Hitomi in Tokyo, researcher Fu Ting in
Shanghai and writers Chris Brummitt in Hanoi, Vietnam and Satish Cheney
in Singapore contributed to this report.
Follow Yuri Kageyama on Twitter at twitter.com/yurikageyama
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