Bitcoin prices have cratered again after troubled Japanese exchange operator MT Gox suspended trading amid reports that it has allegedly lost almost $350 million to a year-long cyber-theft and is technically insolvent.
A crisis strategy draft
for MT Gox, leaked on the Web, reveals large amounts of bitcoin have gone missing from the exchange.
"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 posted by bitcoin blogger Ryan Galt reads. "The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company."
Once the world's largest bitcoin exchange, MT Gox went offline within hours of suspending trading, as the scale of the losses rocked investors in the crypto-currency. As panic spread, Bitcoin prices hit a low of $419 before stabilising.
The leaked document paints a bleak future for the Bitcoin ecosystem: "With Bitcoin/crypto just recently gaining acceptance in the public eye, the likely damage in public perception to this class of technology could put it back 5-10 years, and cause governments to react swiftly and harshly. At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public."