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Mt. Gox's Disappearance Is Latest Blow for Bitcoin Investors

Stocks in this article: EBAY GLD

NEW YORK (TheStreet) -- On Monday, I wrote that bitcoin exchange Mt. Gox appeared close to imploding. It was the first time I've written a prediction that I hoped wouldn't come true.

But on Monday night, my fears were realized. Mt. Gox's Web site went blank, without notice about the company or depositors' status.

Reuters reports Tuesday morning that the company's founder is unaccounted for and that Mt. Gox's office is empty with the exception of some protestors.

The rise and fall of the Tokyo-based exchange was swift. At one point in 2013, it reportedly processed the majority of all bitcoin exchange volume.

The surge in bitcoin's price and popularity unfortunately attracted cybercriminals bent on exploiting weaknesses. Several multimillion-dollar heists have already been reported. An online document outlining a crisis strategy also began circulating late Monday that may illuminate what happened and what to expect next.

According to the document, 777,408 bitcoins, or about $600 million (based on recent bitcoin prices before Mt.Gox halted withdrawals), are unaccounted for. That's a staggering amount.

Online payment processing fraud and theft aren't new to bitcoin, though. PayPal, now a unit of eBay (EBAY), experienced significant fraud in its early days and hired outside security experts to combat it.

The bitcoin market reacted rapidly to the latest news about Mt. Gox. According to Bitstamp, prices fell to 2014 lows of $400 before partially recovering near $500 at the time of writing.

People are asking whether Mt. Gox's apparent failure will spell the end of bitcoin, but the virtual currency appears to be bigger than one exchange.

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