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The troubled Mt. Gox exchange officially filed for bankruptcy today (Friday) in Japan, but this Bitcoin news was so much expected that prices on other exchanges hardly moved.
Bitcoin prices on most major exchanges briefly dipped about 5% on the news, but recovered quickly. The composite Bitcoin price on CoinDesk was $565 at midday, down less than 2% for the day.
It's a sign that most of the Bitcoin community has moved on from Mt. Gox, but the severity of the collapse ensures it will never be forgotten.
The details of the Mt. Gox bankruptcy were even worse than the numbers that had been circulating when the site went dark on Monday.
Mt. Gox said it had lost a total of 850,000 bitcoins – 100,000 of its own and 750,000 belonging to customers. At current Bitcoin prices, the lost currency would be worth $480 million and represent about 7% of all bitcoins in existence.
In addition, Mt. Gox said it had liabilities of $63.67 million against assets of $38 million.
It was an astonishing fall for a Bitcoin exchange that a year ago was the home of 80% of all Bitcoin trading.
"There was some weakness in the system, and the bitcoins have disappeared," said Mt. Gox Chief Executive Officer Mark Karpeles at a news conference at the Tokyo District Court press club. "I apologize for causing trouble."
What the Bitcoin News About Mt. Gox Means
The flaw Karpeles blamed allowed hackers to double-draw Bitcoin from their accounts, which apparently was happening on a large scale. The time period of the theft is unclear, although The Wall Street Journal described it as "long-running."
What's most puzzling is that Mt. Gox only recently detected the theft, which indicates the company was doing a very poor job of tracking the money in its accounts and apparently had no safeguards in place.
The Mt. Gox bankruptcy leaves the exchange's customers with little hope of ever recovering their bitcoins.