MtGox MELTDOWN: Quits Bitcoin Foundation board, deletes Twitter

Second board member to resign in two months amid murky dealings


Embattled Bitcoin exchange MtGox has taken steps to withdraw itself from the wider Bitcoin community, having resigned its seat on the Bitcoin Foundation board and reduced its presence in social media.

"Effective immediately, Mt. Gox has submitted their resignation from the board of directors," the Bitcoin Foundation's Jon Matonis said in a terse statement on Sunday. "We are grateful for their early and valuable contributions as a founding member in launching the Bitcoin Foundation."

Until its resignation, MtGox held one of three elected board seats representing the Bitcoin industry. The current board includes three other elected individuals and one founder.

Matonis added that details of procedures to elect a new board member to occupy the seat vacated by MtGox would be announced shortly.

MtGox's board seat isn't the only one the Bitcoin Foundation needs to fill, however. On February 18, the Foundation announced that it was seeking to fill another "vacant industry seat" and that it would accept nominations through April 7, 2014.

The Foundation's blog post didn't specifically mention who used to occupy that seat, but it doesn't take much sleuthing to deduce that it was BitInstant founder Charlie Shrem, who resigned from the board in January.

On Sunday, Shrem posted to Reddit that MtGox's decision to likewise step down was "good news," saying, "I applaud Mark and the MtGox team for making the right decision as I had to do the same."

Shrem's comments did little to assuage many Redditers, however, as the reason he "had to do the same" was because he faces charges of money-laundering and breach of fiduciary duty over his alleged involvement with drug trafficking via the anonymizing online black market Silk Road.

At the time, the Bitcoin Foundation – whose self-stated aim is to clean up Bitcoin's "undeserved reputation" – said that it "does not condone illegal activ ities and values transparency, accountability and a high level of responsibility towards its members and overall community."

MtGox, meanwhile, provoked uproar in the Bitcoin community earlier this month when it suspended all withdrawals of Bitcoins from its servers to private wallets. Shortly thereafter, the trading price of a Bitcoin on MtGox plummeted to well below that quoted by other exchanges, indicating traders' dwindling faith in the service. Many on public forums have voiced fears that the company may already be insolvent.

Initially, MtGox claimed that the withdrawal shutdown was due to a technical glitch in the Bitcoin protocol itself. But the Bitcoin Foundation pooh-poohed those claims, saying MtGox had had years to address the issue, which was made public in 2011.

Last week, MtGox said it did have a fix ready, but that testing and implementing it would take time. No firm date was given for when Bitcoin withdrawals would resume.

That hasn't pleased many MtGox customers, some of whom have reportedly been protesting outside the company's offices. Last Thursday, the Tokyo, Japan–based company said that it had been forced to relocate to its previous office space in the Shibuya special ward to escape "security problems."

MtGox has made no further public statements since then, whether regarding its resignation from the Bitcoin Foundation board or on any other topic.

In fact, it has done rather the opposite. Disturbingly, followers of MtGox's official Twitter feed found it had been scrubbed clean of all tweets on Sunday, and although the account has 28,100 followers, @MtGox itself now follows no one. In the past, MtGox also maintained official pages on Facebook and Google+, but neither has been updated since December 2013.

Still, BitInstant's Shrem saw reason for optimism.

"Speaking very lengthy to [MtGox CEO Mark Karpeles] and the team over the weekend," Shrem wrote on Reddit, "I see good news on the horizon for people who have funds stuck in MtGox (I also have funds in MtGox stuck)." ®

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