Mt Gox blames hackers for loss

Summary:The Tokyo bitcoin exchange that filed for bankruptcy protection has blamed theft through hacking for its losses, and said it was looking into a criminal complaint.

In an announcement posted on the MtGox exchange's website overnight, CEO Mark Karpeles outlined the events that resulted in the company's insolvency and said there was a "high probability" theft was behind the disappearance of bitcoins.

"We will make all efforts to ensure that crimes are punished and damages recovered," Karpeles said.

He said MtGox will try to resume business as a way of increasing repayments to its creditors.

The online exchange was unplugged early last week as rumours of its insolvency swirled, adding to doubts about the viability of bitcoins overall. Its woes are a setback for bitcoin, a virtual currency that has grown in popularity since its 2009 creation as a way to make transactions across borders without third parties such as banks.

Bitcoin has also become a highly speculative form of investing. But it comes with risks, as the MtGox debacle has illustrated, partly because bitcoins are not regulated by central banks or other financial authorities.

The statement said illegal access to MtGox in early February abused a bug in its computer system.

It also said "large discrepancies" were found between the amount of cash held in financial institutions and the amount deposited by users, meaning that about Y2.8 billion (AU$31.06 million) was unaccounted for.

Meanwhile Warren Buffett, chief executive of investment conglomerate Berkshire Hathaway and one of the world's most respected investors, has told CNBC television in the US that bitcoin "does not meet the test of a currency".

"I wouldn't be surprised if it's not around in 10 or 20 years," said the 83-year-old billionaire.

Buffett called the virtual currency, which has no central bank backing and is generated by an automated computer program, "very speculative, a Buck Rogers kind of thing" like the Dutch tulip mania in 1637.

Topics: Tech Industry

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