Bitcoin Boondoggle

(Yuya Shino/Reuters) Mark Karpeles, second from left, attended a news conference after his company, Mt. Gox, filed for bankruptcy.

Erosion of Faith Was Death Knell for Mt. Gox

By RACHEL ABRAMS, MATTHEW GOLDSTEIN, HIROKO TABUCHI, NYT

As the Bitcoin exchange Mt. Gox was careening toward collapse in early February, its owner, Mark Karpeles, found that even some of his fellow virtual currency advocates were losing faith.

Members of the Bitcoin Foundation’s board, an important promoter of virtual currencies, were losing confidence because the exchange had been associated with another foundation member who was arrested in January on money-laundering charges. The young currency in recent months had been increasingly backed by prominent investors, but the taint of any criminal activity was starting to take over the headlines.

Some wanted Mr. Karpeles, chief executive of Mt. Gox, the Tokyo-based site that once had been the favored place to buy Bitcoins, to either resign from the foundation or be removed from its board, said people briefed on the matter.

(More here.)