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Any bitcoin ‘regulation’ should involve intl cooperation: Japan Virtual currency investors call for legal action on Mt Gox

TOKYO, Feb 27, (Agencies): Any regulation of the bitcoin crypto-currency should involve international cooperation to avoid loopholes, Japanese vice finance minister Jiro Aichi said on Thursday.
Commenting on the closure this week of Tokyo-based Mt Gox, once the world’s biggest exchange for the bitcoin virtual currency, Aichi said the ministry would respond to the problems “if necessary”, after finding out exactly what happened.
“It’s not just the Ministry of Finance; many other agencies are related,” Aichi told a news conference. “As for its legal position, a currency (under Japan’s jurisdiction) would be coins or notes issued by the Bank of Japan. At the very least, we can say bitcoin is not a currency.”
The Mt Gox website and Twitter feed went blank on Tuesday after weeks of turmoil. It suspended withdrawals on Feb. 7 following a series of cyber attacks, leaving customers unable to recover their funds.


A document circulating on the internet saying that more than 744,000 bitcoins — worth around $423 million at current rates — were missing from Mt Gox was created by a Tokyo-based consulting firm, said Ryan Selkis, a blogger who initially leaked scans of the document. Selkis, who uses the handle “twobitidiot”, said in an email that the “Crisis Strategy Draft” had been written by consulting firm Mandalah in meetings with Mt Gox CEO Mark Karpeles.
Mandalah said it could not immediately comment.
On Wednesday, Karpeles had sought to assure investors that he was working with others to solve the problems. “As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” he said in a statement posted on the Mt Gox website.
While proponents of bitcoin hail its anonymity and lack of ties to traditional banking, regulators have become increasingly interested in the digital currency due to its volatility and usage by criminal elements.


Process
Bitcoins are created, or “mined”, in a process using a network of computers that solve complex mathematical problems as part of a process that verifies and permanently records the details of every bitcoin transaction that is made. At current prices, the bitcoin market is worth about $7 billion.
Anxious bitcoin investors in Tokyo called Thursday for legal action against the chief executive of an exchange where hundreds of millions of dollars’ worth of the virtual currency appear to have vanished.
Dozens of members of “Bitcoin Tokyo” gathered in a restaurant in the Japanese capital, some nursing possible six-figure losses after an apparent grand theft from the digital vaults of the Mt Gox exchange.
American IT engineer Aaron Gotman said he had 463 bitcoins at Mt Gox, worth well over $200,000.
“What happened at Mt Gox was first incompetence, but then it could have gone to fraud at the end if they were knowing they didn’t have the bitcoins they were selling,” he said.
“If that’s true, (Mt Gox CEO Mark) Karpeles should face justice and go to jail,” he said. “Now only a miracle could give me back my bitcoins.”
Gotman, 35, is one of a reported one million people who had an account at Mt Gox, the first exchange for the crypto-currency.
Bitcoin continued its rollercoaster ride Thursday, trading around $577 at 1330 GMT, according to the Coindesk index, which showed it had been around $20 lower at one point on Thursday.
The value swing is characteristic of a currency that began life worth a few cents and topped out last year well above $1,000.
The Mt Gox website, which went dark on Tuesday, remained largely empty, save for a message from Karpeles, the France-born chief executive who has not been seen in public for several days.

“As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” he said.
“Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for further announcements and updates.”
A bitcoin derivatives company — btc.sx — said it was suspending trading “due to the current closure of our main partner exchange”.
The company, which allows investors to carry out leveraged trades against the future price of a bitcoin, said: “All customer balances are secure and we will honour any withdrawal requests.”

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