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Subpoenas Issued To Mt. Gox And Other Bitcoin Exchanges

Following the disappearance of one of the biggest Bitcoin exchanges Mt. Gox, the Manhattan U.S. attorney Preet Bharara as announced that they are sending subpoenas to Bitcoin exchanges. While up to now Federal authorities did not know how to deal or if to deal with Bitcoin companies, the reported theft and mismanagement of millions of dollars from exchanges like Mt. Gox have forced government to intervene and scrutinize the volatile industry. Among the issue the Bitcoin exchanges will have to address are the measures they employ to prevent distributed denial of service attacks (DDoS) which reportedly led to major exchanges going offline and preventing investors from withdrawing their funds.

The future of the Tokyo-based Mt. Gox seems bleak as they would need a miracle in order to restore investor confidence. As we reported they initially were nowhere to be found and contacting them was mission impossible. . The chief executive Mark Karpeles has surfaced and is doing his best at damage control. On Wednesday he released an impassioned or desperate plea depending on where you sit and said,” As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issue.”

Industry insiders are understandably skeptical of anything that comes out of Mt. Gox as many believe that the issues that led to their current situation were long going and were not a surprise. A report in Reuters quotes Bitcoin developer, Mike Hearn as saying,” Mt Gox has been broken and it was obvious there was something really bad going on there for nearly a year. They were processing withdrawals very slowly and generally being very opaque about what was going on there.”According to sources there is also an investigation ongoing by U.S. federal law enforcement into Mt. Gox as well as reports that the FBI is watching developments carefully.

The speculation as to the future of Bitcoin is anyone’s guess. There are schools of thought that believe that the collapse of Mt. Gox can be a good thing for the overall long term future of virtual currencies as it has forced the industry to implement controls on themselves if they want to continue to attract investors. With the potential rewards so mesmerizing it is certainly conceivable that even Mt. Gox can make a return as high stake gamblers are always looking to make a fast buck.

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