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Summary:

How does the Bitcoin ecosystem handle a hacking crisis? The Manhattan U.S. attorney wants to know. Meanwhile, everyone wants to know what went down at MtGox, which has reportedly failed to find a buyer for some strange reason.

Bitcoin watchers! Grab your popcorn and enjoy: As the MtGox car crash plays out in slow motion, there have been a few interesting new developments.

First off, the Japanese authorities are investigating the collapse of the Tokyo-based exchange, which used to handle the bulk of Bitcoin trades before a hack attack forced it to freeze withdrawals. U.S. law enforcement is also investigating MtGox, according to Reuters, and the FBI has reportedly pricked up its ears too.

Bitcoin tussle

The fraud incident instantly set up MtGox against the rest of the Bitcoin community, which was desperate to point out that the vulnerability was in MtGox’s software, not in the Bitcoin protocol per se. That point is still up for debate, as a few other exchanges — and even the murky Silk Road marketplace — have been hit by fraudsters exploiting the same “malleability issue.”

What’s less debatable is that the attack exposed MtGox’s lack of liquidity – the theft, which appears to have gone unnoticed for years, has been valued by some at over $400 million, and MtGox’s customers are deeply unlikely to get their money back.

Japan’s financial regulators have tried their best to ignore the debacle until now, but on Wednesday Chief Cabinet Secretary Yoshihide Suga said that “ministries and agencies concerned — financial services, police and the finance ministry — are looking into the matter to learn the full scope of the issue.” There’s no word on what the next steps might be.

Meanwhile, Manhattan U.S. Attorney Preet Bharara has issued subpoenas to MtGox and other exchanges and businesses in the Bitcoin ecosystem, according to a Reuters source. Bharara wants to know what the heck happened with this wave of fraudulent cyber attacks, and how Bitcoin outfits handled it.

A reminder for those who need it: there is currently no fallback for those who buy into Bitcoin, unlike with traditional currencies, where banks will generally replace their customers’ stolen funds, and where there are regulatory frameworks to prop up failing banks.

No takers, apparently

MtGox’s subpoena will need to wing its way over to Japan, where CEO Mark Karpeles says he remains. In note on the firm’s suddenly very spartan website, Karpeles said on Wednesday that he was “working very hard with the support of different parties to find a solution to our recent issues,” and urged everyone to stop hassling his staff.

He has his work cut out for him. On Thursday, the blogger who leaked Karpeles’s “crisis strategy draft” earlier this week said in a new post that MtGox has not been able to find an investor. Which may have something to do with the outfit having allegedly conducted zero audits of its customer deposits.

According to the post by Bitcoin entrepreneur Ryan Selkis, “the solicited investors rebuffed Karpeles and his colleagues, demanded they come clean to customers and stakeholders immediately, and then notified other industry executives, including those at the Bitcoin Foundation, of the catastrophic losses at Mt. Gox.” That led to the statement in which everyone piled onto the exchange for its “tragic violation of the trust of users.”

Even juicier: Selkis went on to say investors approached by MtGox were so horrified by the situation at the exchange that they subsequently “restricted their own employees from buying or selling bitcoin themselves.” Selkis, too, got rid of his bitcoin holdings when he posted the leaked document, despite being heavily invested in the cryptocurrency.

So much for the “put announce for mtgox acq [acquisition] here” placeholder that was briefly hidden in the site’s source code until a couple days ago.