Major bitcoin exchange Mt Gox announced on Monday that users should soon be able to withdraw funds from their accounts amid growing tensions and a price collapse for the virtual currency.
Japan-based Mt Gox is the second-biggest bitcoin exchange in the world – representing around 18 percent of total bitcoin trade in the last week, according to Bitcoinity.org. A halt in withdrawals last weekend left customers unable to transfer their investments into U.S. dollars.
The price of the virtual currency has plunged to below $300 on the exchange in recent days, compared to a figure of around $650 on other major exchanges. Bitcoin had traded above $1,200 at its peak back in November but has since halved in price.
In a new statement on Monday Mt Gox apologized for the inconvenience caused by the recent suspension of external bitcoin transfers and said that it had implemented a workaround that should enable withdrawals and mitigate any issues.
“With this new system in place, Mt Gox should be able to resume withdrawals soon. At the beginning we will do so at a moderated pace and with new daily/monthly limits in place to prevent any problems with the new system and to take into account current market conditions,” it said in a statement on its website on Monday.
“We will update everyone again by Thursday at the latest.”
Withdrawals were halted last week as the exchange’s technical team investigated a problem with the way bitcoin withdrawals were processed. This followed several weeks of users complaining of slow withdrawal rates. Mt Gox blamed its ongoing technical issues on a critical flaw in the cryptocurrency which it said affected all exchanges.
It detailed a bug in the bitcoin software that made it possible for people to use the bitcoin network to alter transaction details. That could give the false impression that bitcoins had not been sent to a bitcoin wallet, when in fact they had.
Mt Gox caused anger in the bitcoin community when it blamed the fault on this issue — known as called “transaction malleability”. A representative from the Bitcoin Foundation, an organization that aims to promote and protect bitcoin, hit back at Mt Gox’s claims, saying that it was actually due to its highly customized software, its customer support procedures, and its unpreparedness.
This war of words continued with Mt Gox chief executive Mark Karpeles suggesting to Forbes magazine on Thursday that the flaw ought to have been solved by the Bitcoin Foundation as it has been known about since 2011.
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Mt Gox has been described as the “original” bitcoin exchange by fans of the digital currency who see it as facilitating its fledgling growth in the early days of the technology. Mt Gox once claimed that it handled around 80 percent of all global dollar trades for the currency. However, the exchange hasn’t been without its own set of public relation disasters.
It recently experienced lengthy delays when exchanging bitcoin into U.S. dollars and has previously experienced high-profile DDoS (distributed denial-of-service attacks) hacking attacks which slow down its user experience. Meanwhile, the U.S. Department of Homeland Security seized its bank account in May 2013, saying it had never properly registered as a money services company.
Customers have taken to social media to express their dissatisfaction about the latest halt to trade, and bitcoin news website CoinDesk reported on Friday that a small protest had been conducted outside the offices of Mt Gox in Tokyo.
Bitcoin is a “virtual” currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining. Some 12 million bitcoins are believed to be in circulation, with a cap of 21 million — meaning no more bitcoins can be created after that point.
—By CNBC.com’s Matt Clinch; Follow him on Twitter @mattclinch81
