Bitcoin trader Mt. Gox halts U.S. cash withdrawals for 14 days
Mt. Gox, the world’s largest Bitcoin exchange, is going through some more growing pains. On Thursday, the company announced it will shut down U.S. dollar cash withdrawals for the next two weeks, effective immediately. The shutdown does not affect withdrawals in other currencies; American dollar deposits and transfers to Tokyo-based Mt. Gox are also still working.
The company says the halt in cash withdrawals is necessary as Mt. Gox upgrades its systems to handle the increasing number of transactions on its systems.
“Over the past weeks Mt. Gox has experienced rising volumes of deposits and withdrawals,” Mt. Gox said in a statement on its website. “This increased volume has made it difficult for our bank to process the transactions smoothly and within a timely manner… This is especially so for those in the United States who are requesting wire transfer withdrawals from their accounts.”
Bitcoin is a virtual and semi-anonymous currency that can be traded online and exchanged for real world money. It can also be used to purchase goods from websites and a limited number physical retail operations.
Problems and more problems
Mt. Gox’s decision to suspend withdrawals for American greenbacks is just the latest in a string of technical and legal problems that have recently plagued the company. In early April, Mt. Gox was fending off a large distributed denial-of-service (DDoS) attack that the company believed was intended to manipulate Bitcoin pricing. Mt. Gox’s explanation, as we described at the time, would be for attackers to sell their Bitcoins while the prices were high. Then the crooks would initiate a DDoS attack in the hopes of triggering widespread panic and a fast sell-off of the currency. That would drive Bitcoin pricing down and make it widely available for purchase at a lower cost.
A week after the attack, the DDoS plan appeared to be working when Bitcoin prices on Mt. Gox quickly plummeted from a high of more than $200 down to around $120 following service lags on the site. After the price drop, Mt. Gox temporarily shut down trading for a short cooling off period. Mt. Gox later blamed the service lags on a large spike in trading on the site. Similar to the DDoS plan, the company said service lags caused some investors to panic and sell their currency causing Bitcoins to lose value.
Beyond its technical difficulties, Mt. Gox is also mired in legal troubles with a jilted business partner and the U.S. government. In early May, U.S.-based start-up CoinLab filed a $75 million suit against Mt. Gox alleging the Bitcoin exchange breached an agreement to connect the companies’ computer systems for North American trading. Mt. Gox was supposed to partner with CoinLab to make it easier for Americans and Canadians to purchase Bitcoins via the exchange. Also in May, authorities with the U.S. Immigration and Customs Enforcement seized Mt. Gox’s U.S.-based funds over allegations it failed to comply with American financial regulations.
While some Bitcoin fans are content to wait for Mt. Gox to harden its systems and chalk the current delays up to growing pains for an increasingly popular form of trading, others are getting fed up. What’s the point of investing in a virtual currency, after all, if you can’t cash out when you need to?
For its part, Mt. Gox says it intends to resume U.S. dollar withdrawals after the systems upgrade and says it will also introduce a “dramatically improved trading engine” in the coming weeks.