Vircurex Becomes The Latest Bitcoin Exchange To Implode
Just when you thought it was safe to venture into virtual currencies another Bitcoin exchange is following in the footsteps of Japanese based Mt. Gox. The implosion of Mt. Gox along with hundreds of millions of dollar’s worth of Bitcoins was a major blow to the credibility and stability of virtual currencies. The main appeal of Bitcoin is without a doubt the potential to win big in a short space of time. The volatility of any commodity that can trade from $12 to $1200 in a twelve month period is the ultimate thrill for many investors or more accurately speculators.
The latest Bitcoin exchange to announce it will halt all withdrawals of Bitcoin, Litecoin and other virtual currencies is the Beijing-based Vircurex. In a case of de javu ,Vircurex will from tomorrow freeze all user accounts. This is not the first time Vircurex has made the headlines for the wrong reasons as last year they were plagued by two hacking incidents. Now unlike Mt. Goxm Vircurex are not abandoning ship as of now but have come up with some sort of strategy that involves locking down its existing accounts while gradually paying back the affected customers. They have come up with what they call “Frozen Funds”. What his means is that customers won’t be able to withdraw or trade in this account but will gradually be paid back.
In a statement released Vircurex said,” Unfortunately we had large fund withdrawals in the last weeks which have led to a complete depletion of our cold wallet balance and we are now facing the option of either closing the site with significant unrecoverable losses for all or to work out a solution that allows the exchange to continue to operate and gradually pay back the losses.”
This creative” risk management tactic” adopted by Vircurex is based on the premise that new users will continue to sign up with them despite the fact that they are insolvent. It also has to ensure that they are not hacked for a third tine. Any objective outsider would not give Vircurex a third chance but with Bitcoin mania still at its peak even this shady operation might just beat the odds and continue to operate.