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US attorney Bharara issues subpoenas to MtGox and other bitcoin exchanges

Manhattan US attorney Preet Bharara’s office is investigating the reported cyber-attacks on MTGox, other exchanges and businesses related to the cyber-attacks, released on Reuters breaking report Wednesday afternoon.

According to the Bharara’s office, subpoenas have been sent to numerous businesses, including MtGox, once the largest bitcoin exchange, as well as other unnamed firms that did business with the Tokyo-based company, from an unnamed source.

MtGox has been persistently in the news since it shutdown February 7 and listed technical difficulties as the reason. At that time the specific issue of ‘transfer malleability’ was noted as the problem issue. This transfer problem occurs when a transaction does get listed on the public ledger and a second transaction is performed. Duplicate transactions and an accounting balance are incorrect for the bitcoins redeemed.

MtGox went totally dark online Tuesday Feb. 25 as reported by Reuters.

Now, the US attorney’s office wants to know more about the nature of the alleged cyber-attacks on MtGox and other exchanges and how those exchanges dealt with them.

Mark Karpeles, CEO of MtGox, issued a statement emailed to Reuters on Tuesday that news would be released ‘soonish’ and that MtGox was at a ‘turning point.’

Mark Williams, a risk management expert, who teaches finance at Boston University, was quoted in the Guardian on Wednesday, ‘If bitcoin is going to be a currency then it needs to actually play by the rules.’ Williams added, ‘At this point, there’s been no regulation in this sector.’

Williams also stated that, ‘They’re done, they’re toast, they’re Enron – they can’t resurrect themselves,’ in reference to the behavior of MtGox and the issue of broken trust.

On Wednesday, a spokesman for the Japanese government told the Wall Street Journal’s Takashi Mochizuki that the government would make ‘a proper assessment’ on the regulation of bitcoin. The spokesman also confirmed that the government was working with the country’s police to collect information on MtGox and was prepared to ‘take action.’

CNN Money has reported some interesting financial findings to MtGox. In 2012 the ledger for MtGox showed collections of $380,450 in revenue. But it lost 13 times that the next year, when U.S. government agents seized $5 million from its accounts for allegedly lying on bank documents.

CNN Money raises the question how did MtGox remain in business? Is it a Ponzi scheme?

Clearly much remains to be answered. However, leaders in the Bitcoin industry are taking responsible steps to operate Bitcoin exchanges. To view more about Bitcoin and responses to MtGox issue and Bitcoin leaders, please, see below in Author’s suggestions and view the video atop this article viewing bitcoin and its future.

I am on Twitter Victoria Wagner@Victoriaross888

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