Bitcoin goes bust? Major exchange files for bankruptcy

Where are your bitcoins now?

Bitcoin goes bust

Update 2: MtGox has filed for bankruptcy protection in Japan, where it told the court that it had debts of 6.5bn yen (£38m / US$64m / AU$71m). No word on what that means for its users' bitcoins yet, but it's not looking good.

Update 1: A thin statement has appeared on MtGox's formerly blank website, opaquely explaining why the Bitcoin exchange has put a stopper on transactions.

"Dear MtGox Customers," it begins. "In light of recent news reports 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."

We'll keep an eye and ear out for more updates, but it appears there's still no word on the status of customers' bitcoins.

Original story below...

The biggest Bitcoin exchange in the world, MtGox, has gone dark with no word on whether the 750,000 bitcoins it was housing are safe or lost or real or what.

The shut-down comes after MtGox spotted some "unusual activity", and stopped all transfers to external addresses earlier this month because it had found a loophole that allowed thieves to dupe the system into doubling the number of bitcoins requested.

People who have bitcoins with the company are still waiting to hear if they've been robbed, if the exchange has collapsed or if it's just a glitch in the matrix.

Bad eggs

Other bitcoin exchanges are concerned that people will take this to mean that digital money is deeply unreliable and should generally be avoided at all costs.

Six of them got together to describe the MtGox situation as a "tragic violation of the trust of users" and keenly point out that it is "the result of one company's actions and does not reflect the resilience or value of Bitcoin and the digital currency industry."

The statement goes on to say that MtGox has "confirmed its issues in private discussions with other members of the Bitcoin community" adding that "certain bad actors... need to be weeded out."

It certainly sounds as though something fishy has gone down, although there's no official confirmation of that yet.

If you're still befuddled by the whole Bitcoin phenomenon, we've broken it down into manageable chunks for you over here. Pay attention: there'll be a test at the end.