Attorney subpoenaed Mt. Gox, other bitcoin businesses: source

Wed Feb 26, 2014 5:00pm EST
 
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By Emily Flitter

NEW YORK (Reuters) - Manhattan Attorney Preet Bharara has sent subpoenas to Mt. Gox, other bitcoin exchanges, and businesses that deal in bitcoin to seek information on how they handled recent cyber attacks, a source familiar with the probe said on Wednesday.

In the attacks - known as distributed denial of service attacks - hackers overwhelmed bitcoin exchanges by sending thousands of phantom transactions. At least three exchanges were forced to halt withdrawals of bitcoins on February 7, including Mt. Gox, which was the largest at the time.

Mt. Gox never resumed service before going dormant on Tuesday, leaving customers unable to recover their funds. The Tokyo-based company's chief executive, Mark Karpeles, said earlier on Wednesday that he is working with others to solve the problems.

"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 issues," Karpeles said in a statement posted on the Mt. Gox website.

A spokesman for Bharara declined to comment.

Bitcoin, a form of electronic money independent of traditional banking, relies on a network of computers that solve complex mathematical problems as part of a process that verifies and permanently records the details of every bitcoin transaction that is made. At current prices, the bitcoin market is worth about $7 billion.

Investors deposit their bitcoins in digital wallets at specific exchanges, so the Mt. Gox shutdown is similar to a bank closing its doors - people cannot retrieve their funds.

While proponents of bitcoin hail its anonymity and lack of ties to traditional banking, regulators have become increasingly interested in the digital currency due to its usage by criminal elements and its volatile nature.   Continued...

 
Some Bitcoin are pictured in this photo illustration in Sandy, Utah, January 31, 2014. REUTERS/Jim Urquhart REUTERS/Jim Urquhart