Wisconsin Regulators Warn of Bitcoin Risks as Gox Founder Says Lost $50,000 in Exchange Collapse

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Wisconsin Regulators Warn of Bitcoin Risks as Gox Founder Says Lost $50,000 in Exchange Collapse

The original owner of Mt.Gox, Jed McCaleb, said he incurred an estimated loss of $50,000 (in dollars not, bitcoins) when the bitcoin exchange he created collapsed. The fallen exchange facilitated both US dollar and bitcoin deposits into customer wallets in the US.

McCaleb told Arstechnica he has no dealings with the firm that grew to become the largest bitcoin exchange in the world after selling it to Mark Karpeles. Karpeles is in the middle of the firm’s collapse and bankruptcy proceedings in Tokyo, although he has said nothing about its fall from grace. However, McCaleb retained 12% stake in the collapsed Mt.Gox.

“I met [Karpeles] I think on bitcointalk.org. The Bitcoin community was very small at that time and I asked him to do some software development for me. He did that task and I was looking for someone else to run Mt. Gox so I could focus on other things,” said McCaleb.

He said the two held talks about prospects of Karpeles acquiring Mt. Gox and went ahead to sell it to him in 2011.

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McCaleb, who’s the initial creator of the eDonkey filesharing solution, first developed Mt.Gox in 2010. He later embarked on the creation of the Ripple protocol, a cryptocurrency just like bitcoin.

He said the latest legal developments around Mt. Gox have brought him back to the exchange for the first time in years. The American entrepreneur said he has never met Karpeles in person and the current Mt. Gox CEO has never sent him any proceeds from the venture.

In the meantime, financial regulators in the state of Wisconsin have warned businesses and consumers about the risks of using cryptocurrency such as bitcoin.

As WSAW reports, The Wisconsin Department of Financial Institutions mentioned volatility, absence of regulation, and exposure to theft or cybercrime as part of the risks associated with virtual currency trading.

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To contact the reporter of this story; Deepak Tiwari at deepak@forexminute.com

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Deepak Tiwari, a law graduate, has been working as a journalist for six years now. He currently writes on Bitcoin, economic, and Forex related news at ForexMinute, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers for readers, traders and brokers. His other specialties include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc.