16 Feb 2014 / Washington Post – The Japanese exchange Mt. Gox has long been one of the Bitcoin community’s most prominent institutions. It has also been one of its biggest PR headaches.
In 2011, the value of a bitcoin soared from less than $1 to more than $32. Much of this trading occurred on Mt. Gox, which found itself unable to keep up with the demand. The servers began to freeze up, helping to trigger a collapse in the currency’s value. By November, one bitcoin was worth just $2. A similar scenario played out in 2013. As the price of one bitcoin soared from $13.50 to $266, Mt. Gox’s servers started to buckle under the strain, helping spark a wave of panic selling that pushed the price back down to around $50.
Getting overloaded due to excess demand is a nice problem to have. Mt. Gox’s other problems have been more serious. Last year, the exchange announced a deal for the Bitcoin start-up CoinLab to manage its North American trading. But the deal fell apart, leading CoinLab to file a $75 million lawsuit against its former business partner. Then in August, the U.S. government seized $5 million in funds belonging to Mt. Gox over an alleged failure to comply with money laundering laws.
Meanwhile, customers were finding it harder and harder to get their money out of the exchange. In August, Mt. Gox announced a two-week suspension of dollar withdrawals. Ever since then, customers have complained that withdrawal requests have been processed slowly, if they’ve been processed at all….. Read more
