Top Bitcoin exchange Mt. Gox goes offline as insolvency rumors swirl

to tell him what had happened to his Bitcoins, which at one point were worth $300,000.

“It looks like that’s disappeared,” said Burges, one of six protesters outside the Mt. Gox office, which was as deserted as a nearby cafe that had formerly accepted Bitcoins as payment. In a statement last week, Mt. Gox said it had moved office because of security issues. Some protesters carried signs saying, “Mt. Gox, where’s our money?” and “Mt. Gox, are you solvent?”

“They prolonged this and kept telling people everything was OK,” Burges said. “A lot of people did believe that, and it’s very annoying what they’ve done to me and up to a million others.”

Six leading Bitcoin exchanges — which allow users to trade Bitcoins for U.S. dollars and other currencies — distanced themselves from the Tokyo-based exchange.

“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” the companies — Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle — said in the statement. “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we’re seeing today.”

On Sunday, Karpeles resigned from the board of the Bitcoin Foundation, in a blow to the digital currency. Mt. Gox had once been the largest exchange handling Bitcoins.

His resignation from the foundation, the cyber currency’s trade group, followed a number of technical issues, including a massive cyber attack from unknown sources that has been spamming Bitcoin exchanges.

The Mt. Gox Bitcoin, which traded at $828.99 before Feb. 7, when the exchange halted withdrawals, has since plunged 83.7 percent to $135. By contrast, coins at Bitstamp, another large exchange, have fallen 40.5 percent over the same period to $400.

While Bitcoin globally has taken a beating to its value and reputation, users say the problem is with Mt. Gox, not with the virtual currency itself.

The Bitcoin Foundation said in a statement, “Mt. Gox is one of several exchanges, and their exit, while unfortunate, opens a door of opportunity. This incident demonstrates the need for responsible individuals and members of the Bitcoin community to lead in providing reliable services.”

A commenter on the Reddit site, identified as evorhees, proudly defended Bitcoin as an epochal development in finance.

“We are building a new financial order and those of us building it, investing in it and growing it will pay the price of bringing it to the world,” he wrote. “This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow’s finance, and we put ourselves at risk in doing so.”

Japan’s financial regulators, by contrast, have largely given Bitcoin a shrug.

“Bitcoin is not a currency; it is an alternative to currencies, like gold,” said a spokesman for the Financial Services Agency. “We are only responsible for curren- cies and therefore Bitcoin is not subject to our regulatory oversight.”

In the United States, Alabama’s securities regulator said he will issue an alert, cautioning consumers and investors to stop trading on Bitcoin exchanges or adding to their accounts if they are having trouble redeeming the digital currency or cashing out.

Karpeles himself, while insisting on his own exchange’s reliability, has made no secret that Bitcoin is, as he told Reuters last April, a “high-risk investment”.

“If you buy Bitcoins, you should buy keeping in mind that the value could be zero the day after.”