Update On Mt. Gox Stresses The Need For Security

Once the world’s largest Bitcoin exchange, Mt. Gox is now more infamous for the fact that it was the center of the largest theft of bitcoins in the cryptocurrency’s history. Although it has already been two years since the collapse of the exchange, people are still talking about the aftereffects of the collapse. This can mostly be blamed on the extent of the theft.

The legal effects are also still being felt. Mark Karpeles, the CEO of Mt. Gox, is still being held liable for the losses of the exchange. Last year in October, the CEO was arrested under the suspicion that he was involved in the hacking incident. This was not Karpeles’ first arrest in relation to Mt. Gox. He had already been under the radar because of the suspicious movement of funds to his account.

Though Karpeles is under arrest, the legal battles around Mt. Gox have continued. Many people who had their bitcoins tied up in the exchange were understandably upset when it went down. This has led to several attempts by them to retrieve their money one way or another. The latest update about them is not encouraging as Canada has rejected a class-action suit filed by aggrieved parties.

Earlier troubles

The legal status the Mt. Gox class action suit was not all that got updated over the past week. As far as the world knows, Mt. Gox collapse was the culmination of several problems faced by the exchange over a period of several years. The first stirrings of trouble were in 2011, when a hacker managed to set the price of Bitcoin on the exchange to one cent. This resulted in a lot of bitcoins being fraudulently transferred. Further hacks and problems emerged until 2014, when the exchange had to shut down because it had become insolvent. Bitcoin prices dropped and the rest was history.

New information has emerged that paints a more worrying picture. In an email to Mark Karpeles, Jed McCaleb, the site’s original owner divulged that the site was already missing around 80,000 BTC. That is a surprising large number and could have caused problems for the site has there been a high-volume trade. McCaleb then details a few ways in which Karpeles would be able to hide the shortfall. The main idea to take-away from this bit of news is that Mt. Gox was already in trouble even before Karpeles took over. This could affect how he would be prosecuted in the future.

Scams in the Bitcoin world

With all of the security breaches that have hit Mt. Gox, it has highlighted the need for better security. It also has brought attention to the fact that fraudulent dealings can easily become part of the Bitcoin marketplace. Mt. Gox was not completely felled by hacks, but also by the actions of its CEO.

The latest example of a scam involving Bitcoins just highlights these. Taiwanese authorities have arrested a man who ran a bitcoin trading scam where he promised investors large returns from their Bitcoin purchases. He did the complete opposite by changing the server settings and stealing all of his customers’ bitcoins. With this sort of reputation, Bitcoin is facing an uphill fight to regain legitimacy in the wider market.

Despite the Mt. Gox controversy and the misuse of the Bitcoin technology, this digital currency and the adoption of the blockchain technology are geared toward changing today’s financial landscape and even open new ways to improve the systems that run today’s world.