Though these three incidents are not necessarily interrelated, there has been some major drama in the bitcoin world this past week. First, Tokyo-based bitcoin exchange Mt. Gox, recently the largest of the existing exchanges, filed for bankruptcy following a $460 million heist by hackers. Then, Canada-based Flexcoin suffered a much smaller heist by hackers, losing $600,000 in bitcoin that it says it can not recover from.
And on Friday, the 28-year-old American CEO of bitcoin exchange First Meta, Autumn Radtke, died from an apparent suicide in her Singapore apartment. The NY Post connects her death with seven other "questionable deaths" that have occurred in the broader financial sector so far this year.
Both the Mt. Gox and Flexcoin heists call into question the viability of the new digital currency, which is looking to be priority number one for idle hackers given the potential windfalls.
As Wired points out, despite all its potential for decentralizing currency, bitcoin is "a technology that was pushed forward by a community of people who were unprepared or unwilling to deal with even the basics of everyday business."
San Francisco-based bitcoin enthusiast Jesse Powell, now CEO of competitive bitcoin exchange Kraken, was once flown out to help out at Mt. Gox following an earlier, smaller hacker heist in 2011. He describes a stressful time in which CEO Mark Karpeles took a weekend off in the midst of a crisis, and later focused a bunch of attention on building a Bitcoin Cafe in Tokyo which would have accepted bitcoin in exchange for wine, beer, and food. "[The project] was probably some light for [him] in a very dark world of dealing with banks and customer complaints all day." But now he's got to deal with customers who are out millions of dollars, potentially, after a heist that might have taken years to execute.
Also, these stories follow on the story that came out last month connecting bitcoin exchange Bitinstant, which was partly funded by the Winklevoss twins, to the illegal online black market The Silk Road. Bitinstant's founder, Mark Shrem, was arrested on federal charges of money laundering, claiming his exchange was simply a way for drug sellers to launder money made through Silk Road.
At its peak last year, bitcoins were trading at $1,200 apiece, and that exchange rate is now down at $663.
So, yes, the world of bitcoin is just as shady and insane as we'd all imagined, and the lives of these hacker-turned-millionaires are not so enviable after all. Also, don't go investing your kid's college fund in bitcoin just yet.