A security breach at Mt. Gox, one of the primary bitcoin exchanges, has led the company to announce a halt on all transactions following massive losses – to the tune of 744,000 BTC, roughly $409,200,000.
Because Mt. Gox isn’t a bank, it’s unfortunate, but those affected really don’t have any recourse. A bank would be insured, but those who have lost their accounts are just left with exactly that – a loss.
The transaction closure was announced on the Mt. Gox site itself, and reads simply:
Dear MtGox Customers,
In light of recent news reports from Etoro and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.
This is horrible news for those who had significant holdings in bitcoin, and a stark reminder that ANY type of financial exchange or institution requires extraordinary security. This is never more true than with new types of exchanges and currencies. It’s easy to fall into a trap of thinking that bitcoin isn’t real money, and doesn’t need the same level of security. It’s increasingly clear that that’s not the case.