BANKRUPT: MtGox CEO Mark Karpeles... facing a class-action lawsuit.
BANKRUPT: MtGox CEO Mark Karpeles... facing a class-action lawsuit. AAP

Bitcoin is a bit shaky

BITCOIN earnt its reputation as a virtual currency free of the control and carelessness of the global financial system - but, if anything, Bitcoin exchanges have proved to be even less competent than the banks.

The Tokyo-based MtGox exchange, which filed for bankruptcy in February after mislaying most of its crypto-currency, announced this week that it had stumbled across 200,000 Bitcoins hidden in a digital storage file, or "old-format wallet".

Last month, MtGox's chief executive, Mark Karpeles, said it had lost 850,000 Bitcoins, worth about $848.5m. Some 750,000 of those belonged to customers.

The exchange, Mr Karpeles claimed, was left with just 2000 Bitcoins. But according to a statement posted on the MtGox website this week, when the company researched its older "wallets", unused since June 2011, it found the 200,000 Bitcoins, worth almost $125.8 million last week.

As he declared bankruptcy on February 28, Mr Karpeles said technical issues had opened the door to hackers to make fraudulent withdrawals.

This week's news, however, raises questions about exactly where the 650,000 Bitcoins still missing might be. MtGox is now the defendant in a class-action lawsuit by customers who argue that the exchange deliberately misled them by claiming to offer quick, secure trading.

Bitcoin first emerged online in 2009 as an alternative to currencies shaken by the global financial crisis. It has grown in popularity as a way of moving funds across borders anonymously, independent of banks and governments.

Beloved by tech geeks and libertarians, Bitcoin has drawn criticism for facilitating criminal deals, and for its dramatic instability.

At the beginning of 2013, a single Bitcoin was worth a little under AUD $14. By December 2013, its value had soared to around AUD $1293. But by last week, it was back down to AUD $646.

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