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Mt.Gox: Decision was made to close transactions for the time being

Reuters with CNBC.com
Tuesday, 25 Feb 2014 | 10:47 AM ET
Mt. Gox underscores problem with unregulated exchange: Lawsky
Tuesday, 25 Feb 2014 | 10:46 AM ET
Benjamin Lawsky, NYS Department of Financial Services superintendent, discusses the closing of bitcoin exchange Mt.Gox and the state of the bitcoin technology. CNBC's Mary Thompson provides insight.

Prominent bitcoin exchange Mt.Gox posted an update on its website on Tuesday, saying a "decision was taken to close all transactions for the time being," citing "recent news reports and the potential repercussions on MtGox's operations."

(Read more: Bitcoin's Mt.Gox disappears, insolvency feared)

The website went dark on Tuesday and its chief executive told Reuters that the business was "at a turning point." Mt.Gox halted withdrawals earlier this month after detecting what it called "unusual activity."

"We will be closely monitoring the situation and will react accordingly," the website said.

(Read more: Mt.Gox CEO says bitcoin exchange at 'turning point')

Six bitcoin exchanges distanced themselves from Mt.Gox in a statement, calling the exchange's activities a "tragic violation of the trust of users of Mt.Gox."

Not a 'death knell': Official

New York state's superintendent of financial services Benjamin Lawsky weighed in on the bitcoin turmoil.

"I think that the question is, is this a continuing of the shaking out of a fledgling industry? My gut is that's part of what you're seeing. It's a new industry," Lawsky told CNBC. "It's obviously not regulated in any significant way yet...It may be a significant bump in the road, but I don't think they're going away or it's any kind of death knell."

(Read more: How can you make money with bitcoin?)

Lawsky cautioned that bitcoin's not yet ready for the average person to invest a lot of money.

"But if things shake out and if regulators are thoughtful and careful and take a balanced approach that isn't too heavy-handed ... ultimately this could be in the long run a more positive development. You're really making lemons out of lemonade," he added.

Filling the void

Meanwhile, Alexis Ohanian, a co-founder of Reddit and investor in Coinbase and Buttercoin, told CNBC that the Mt. Gox decision was "long overdue," adding that the exchange had outgrown its capability.

"So I'm excited to see new entrants come in and fill in the void," Ohanian said. "I'm betting innovation is going to keep up, and crypto-currency is still evolving. It's still risky. But I think it's still changing the world."

By Reuters. CNBC.com contributed to this report.

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