Mt. Gox Bitcoin Meltdown: What Went Wrong

Mt. Gox, recently the world's third-largest bitcoin exchange, has melted down in spectacular fashion, triggering an investigation by Japanese authorities. The CEO of Tokyo-based Mt. Gox, Mark Karpeles, filed for bankruptcy protection Friday, revealing that about $500 million in bitcoins stored by the exchange have been stolen, comprising 750,000 bitcoins deposited by users of the site, and 100,000 owned by Mt. Gox.

But in the bankruptcy filing, the exchange reported that it doesn't know what technique -- or techniques -- attackers used to steal the bitcoins, exactly how many were stolen, or when the thefts occurred. While Mt. Gox suspects that the exchange was hacked, it's reviewing transaction reports to establish what happened. "As of this date, we cannot confirm the exact amount of missing deposit funds and the total amount of bitcoins which disappeared," it said.

Karpeles, speaking Friday at a Tokyo press conference called to announce the company's bankruptcy, said that unspecified weaknesses were to blame. "We had weaknesses in our system, and our bitcoins vanished. We've caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened," he said, reported Wired.

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