Bitcoin Exchange MtGox Faces 'Whirlpool Of Death' As Prices Drop To Lowest Point In Six Months

   on February 20 2014 12:33 PM
MtGox Feb 20
Bitcoin prices have fallen while MtGox faces technical issues. Courtesy bitcoincharts

In the latest chapter in the continuing story of MtGox, the troubled bitcoin exchange has further spiraled down the plughole as it released another statement today citing security issues at its Tokyo office as the reason withdrawal capability hasn't resumed. “In addition to the technical issue, this week we have experienced some security problems, and as a result we had to relocate MtGox to our previous office building in Shibuya. … The move, combined with some other security and technical challenges, pushed back our progress,” stated a release on the company’s website.

Users of MtGox have been in limbo as the once great exchange has experienced technical issues leading to the suspension of withdrawals on its site. No less than a month ago, prices on the largest bitcoin trading site capped $1,000 per bitcoin. Now, with the “update on an update,” prices have fallen for the cryptocurrency to lows that have not been seen in more than six months.

As of this writing, the price of bitcoin on MtGox sits at around $135. The average bitcoin price, as reported by Coindesk, is down from last week, but compared to MtGox’s price, it is much more stable at $588. The overall average price across multiple platforms has been affected by the Gox drop leading to the week-over-week price decrease, but not by an overwhelming extent. Ultimately, while the volatility seen in the last month might bolster naysayers of the cryptocurrency, the fact that prices on exchanges like Bitstamp and BTC-e have stayed high creates more security in the currency rather than signaling its downfall.

In early February, MtGox developers noticed an issue with their withdrawal approval software and were forced to suspend fiat and bitcoin withdrawals on the exchange. Transaction malleability, a way for criminals to trick exchanges into double-sending withdrawals, was originally discovered in 2011. However, it wasn’t until MtGox halted withdrawals on Feb. 7 that the issue took hold on bitcoin exchanges. Within the week, other exchanges had halted their withdrawal functionality as well. However, Bitstamp and BTC-e resumed their withdrawal capabilities mere days after their stoppage. MtGox has yet to do so.

Many are calling this the death of MtGox, but the exchange has yet to throw in the towel. Trading on the site is still active and, according to Marco Santori, chairman of the Bitcoin Foundation’s Regulatory Affairs Committee, “there’s a lot of people who think that they are getting a deal.” If the exchange manages to remain in business through this ordeal and resume withdrawal functionality, then those people are getting a good deal. Buying in at a low of $135, only to turn around a week later and turn it into $600 or more is exactly that. Perhaps the possibility of quick and major gains is what will ultimately save MtGox from insolvency. 

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