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Bitcoin

US federal prosecutor investigating failed bitcoin exchange Mt Gox

PUBLISHED : Thursday, 27 February, 2014, 11:30pm
UPDATED : Friday, 28 February, 2014, 7:51am

Manhattan federal prosecutor Preet Bharara has sent subpoenas to Mt Gox, other bitcoin exchanges, and businesses that deal in the virtual currency to seek information on how they handled recent cyberattacks.

Bharara and the Federal Bureau of Investigation are also probing possible criminal violations tied to the shutdown of Tokyo bitcoin exchange Mt Gox.

Mt Gox, which had the largest market share of all digital-currency exchanges as recently as last April, went offline on Wednesday after halting customer withdrawals on February 7. A document posted on the internet said Mt Gox had lost 744,408 bitcoins as a result of theft that "went unnoticed for several years".

The Bitcoin Foundation, an advocacy group for the nascent digital currency, provided information to US prosecutors that aided the probe.

"The Bitcoin Foundation proactively reached out to the Southern district of New York to offer assistance," the Seattle-based organisation said. "We are continuing to help them and we are co-operating fully with their investigation."

Shortly after Mt Gox's chief executive officer, Mark Karpeles, quit the foundation's board on Monday, the group briefed the Manhattan federal prosecutor's office with information about the possible theft of as much as US$400 million from the bitcoin exchange, according to two people familiar with the effort.

Bharara's office also requested information from the foundation and companies that have done business with Mt Gox.

Watch: A MtGox bitcoin user seeks answers outside offices in Tokyo

The foundation and the companies are reportedly not targets of the investigation.

Japanese authorities said earlier they were probing the exchange's shutdown as well.

"This is certainly not the end of bitcoin," the foundation said in an e-mail. "As our industry matures, we are seeing a second wave of capable, responsible entrepreneurs and investors who are building reliable services for this ecosystem."