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Mt. Gox files for bankruptcy protection; Yellen says Fed has no authority to regulate bitcoin

28 February 2014  |  6117 views  |  1 bitcoin

Mt. Gox has filed for bankruptcy protection, a lawyer for the beleaguered bitcoin exchange told a news conference today. Meanwhile, new Federal Reserve chair Janet Yellen has said that the central bank has no authority to regulate the crypto-currency.

According to the Wall Street Journal, an Mt. Gox lawyer has told reporters in Tokyo that the exchange is filing for bankruptcy protection and has around $63.6 million in outstanding debt.

The exchange has been reeling for several weeks, suspending withdrawals after it emerged that it appears to have lost nearly 750,000 bitcoins - worth hundreds of millions of dollars - to malleability-related theft.

Earlier this week the Mt. Gox Web site disappeared, replaced by a notice telling users that all transactions have now been stopped "in light of recent news reports and the potential repercussions on MtGox's operations and the market".

At a news conference in Japan today, Mt Gox CEO Mark Karpeles told reporters that it may have lost nearly half a billion dollars worth of the virtual coins, adding 100,000 of its own bitcoin stash to the 750,000 already reported as missing. The firm is also investigating a $27.4 million discrepancy in its own bank account.

Speaking about the Mt. Gox closure, Japan's vice finance minister Jiro Aichi says that the government will respond "if necessary" but that that bitcoin regulation needs to by international.

Meanwhile, US Fed chair Janet Yellen has responded to a letter from West Virginia Senator Joe Manchin about bitcoin in which he calls it "disruptive to our economy".

Says Yellen: "To the best of my knowledge there's no intersection at all, in any way, between bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the fed doesn't have authority to supervise or regulate bitcoin in anyway."

However, she adds: "But certainly it would be appropriate for Congress to ask questions about what the right legal structure would be for digital currencies...It's not so easy to regulate bitcoin because there's no central issuer or network operator."

Comments: (1)

Neil Crammond
Neil Crammond - trader - london | 28 February, 2014, 11:40

Regulators  are supposed to provide "fair and orderly markets " . Therefore I struggle  to understand how "bitcoin " was ever allowed to trade ?            Those who have lost monies should learn and trade at established "lit " exchanges . Bitcoin can join Mr Madoff as those who temporary fooled the markets BUT were eventually caught .

 

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