Bitcoin Prices Plunge 20% Following $350M Theft at Mt. Gox

The cryptocurrency world has been plunged into crisis after it was revealed that one of the most prominent bitcoin exchanges, Mt Gox, has had over 744,000 bitcoins stolen over two years and left it on the brink of bankruptcy.

Bitcoin prices have plummeted after Mt Gox went offline in what would amount to a record largest bitcoin theft. That prompted rumours of insolvency.

Bitcoin is trading at $449.30 (€327.11, £269.57), after holding steady at roughly $550 throughout most of the day, according to the CoinDesk price index.

The website went offline from 10.30am ET on 24 February and while it came back online later, all trading in bitcoin was halted. The exchange had previously halted bitcoin withdrawals earlier this month.

Cyber-attack

Subsequently, users' logins were disabled and at present, visitors to the website www.mtgox.com see only white space.

An internal Mt. Gox document leaked by bitcoin entrepreneur Ryan Selkis said the exchange was victim to a cyber-attack that went unnoticed for years.

"At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet," the document said.

The document claimed that Mt Gox could go bankrupt at any time. The stolen bitcoins represent about 6% of the 12.4 million in circulation.

"Tragic violation of the trust"

Meanwhile, a group of bitcoin organisations including Coinbase and Blockchain issued a statement, blaming Mt Gox's complacency for the situation.

"This tragic violation of the trust of users of MtGox was the result of one company's actions and does not reflect the resilience or value of bitcoin and the digital currency industry," they said.

"Strong bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age."

Earlier, Mt Gox CEO Mark Karpelès resigned from the board of the Bitcoin Foundation and all tweets on the Mt Gox Twitter account have been deleted.

Mt Gox, once the world's largest bitcoin exchange, has recently suffered a number of technical and security issues, resulting in a plunge in bitcoin prices on the website.

It suspended withdrawals from its exchange, citing bitcoin's inability to handle the volume of traffic Mt Gox customers created. It added that an inherent flaw with the way bitcoin transactions work had slowed its services to a crawl, and a temporary ban on withdrawals was needed to rectify the situation.