Report: Mt. Gox was Broke Six Months before Filing for Bankruptcy

358 — Defunct Bitcoin exchange Mt. Gox is reported to have been broken six months before it filed for bankruptcy.

According to the fresh allegations made by the Tokyo Police the Tokyo-based company appears to be in deficit and was using the customers’ account balances to fulfill its operations. The company’s document shows Mt. Gox to have had around $30.6 million worth of balance during March 2013, including Bitcoin and other assets. However by August 2013, the same account balances seemed insufficient to pay customers waiting for the cash reimbursements from their Bitcoin holdings.

These increased liabilities eventually prompted Mt. Gox officials to declare bankruptcy in February 2014, the same month when the exchange allegedly suffered a security breach and lost around 850,000 Bitcoins.

The new evidences, meanwhile, are occurring right upon the arrest of Mt. Gox’s endmost CEO Mark Karpeles. He is accused to tampering with the financial records of the company, and also for artificially inflating his bank account by $1 million. As the reports are flourishing all around the world, it is possible that the 30-year old Bitcoin entrepreneur was responsible in the said theft. Just a few days back, one of the Mt. Gox’s earliest employees, named Adam Turner, had blamed Karpeles for being an ignorant, non-communicative head.

“Mark was definitely in over his head [..] and didn’t have the logic/communicative skills to know how to ask for help,” Tuner stated in his recent AMA round.

“He desperately needed it, but didn’t even know it. It was incredibly frustrating. All in all, I felt Mt.Gox was an RPG to Mark, as he didn’t quite grasp the reality that the money being in deposited into his bank account meant more to other people than just numbers on his screen.”

From the way it looks, Karpeles seems to be in a great legal trouble. There is a possibility that Mt. Gox security was never breached from the outside. We would be monitoring this story further.