Bitcoin Loss Highlights Elusive Paths of Regulation Can nearly $450 million go missing without a crime taking place? That is only one of the questions stemming from the collapse of the Bitcoin exchange Mt. Gox that present a host of challenges for governments worldwide that are struggling to regulate virtual currencies. Mt. Gox filed for bankruptcy protection in Japan after the disappearance of more than 744,000 Bitcoins owned by customers, along with 100,000 of its own. Unlike an ordinary robbery, this appears to be the work of hackers who exploited a weakness in the system for tracking Bitcoin transactions that allowed the currency to be diverted, perhaps over a few of years. The number taken amounts to about 6 percent of the total Bitcoins in circulation, raising serious questions about how any virtual currency can be made safe for consumers and investors. For law enforcement, this is like any bank robbery that requires identifying the perpetrators. DealBook reported that the Justice Department had issued subpoenas to Mt. Gox and other firms to gather information about how virtual currencies are transferred and converted into dollars. But unlike in “Butch Cassidy and the Sundance Kid,” none of the Mt. Gox thieves are looking back at the posse and asking “Who are those guys?” One of the appeals of Bitcoin is its anonymity, and trying to find those who stole something intended to be untraceable through computer hacking may well be impossible. So the losses from Mt. Gox are unlikely to be recovered.
Posted on: Tue, 04 Mar 2014 11:36:01 +0000