The bitcoin exchange Mt. Gox files for bankruptcy

The Tokyo based bitcoin Mt. Gox filed for bankruptcy protection on Friday and its chief executive reported 850,000 bitcoins are unaccounted for.

The Japan-based Mt. Gox Bitcoin exchange once hosted 80% of the world’s bitcoin trades.

The exchange’s CEO Mark Karpeles said a weakness in the exchange’s systems was behind a massive loss of the virtual currency involving 744,408 bitcoins from users, or 6% of all bitcoins in circulation and 100,000 of the company’s own bitcoins.

Wearing a suit instead of his usual T-shirt, Mt. Gox’s CEO Mark Karpeles bowed in contrition and apologized in Japanese at the Tokyo District Court, blaming his firm’s breakdown on a “weakness in our system”.

“First of all, I’m very sorry. The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point.”

The online exchange’s unplugging earlier this week and accusations it had suffered a disastrous theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.

It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.

Karpeles had not made a public appearance since rumours of the exchange’s insolvency surfaced last month. He announced via the web Wednesday that he is working to resolve Mt. Gox’s problems.

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