LESS than a year ago Mt Gox was the pinnacle of bitcoin trading, accounting for an estimated 70% of the cryptocurrency’s global transactions. Today Mt Gox is apparently gone—early Wednesday Tokyo time, its website, which had been blank all Tuesday, displayed a short message saying the exchange was closed “for the time being”. The firm’s Tokyo offices appear to be abandoned, and its chief executive and sort-of founder, Mark Karpeles, has dropped out of sight. (The only thing that has been heard from him since Sunday is an e-mail sent to Reuters, saying "We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties.") Worse, according to a document entitled “Crisis Strategy Draft” that is circulating on the web and appears to come from Mt Gox, 744,400 Bitcoins are also missing, the result of “malleability-related theft” that may have been going on since the exchange began operating. When Bitcoins are traded, each transaction is recorded in a log known as the “blockchain”. But a software bug—which Bitcoin’s developers have known about since 2011, but done little to fix—creates a brief time period in which the unique ID (or TXID) of each transaction can be changed.

The bug seems to have enabled cyberthieves to steal Bitcoins by making it appear that transactions didn’t occur—a problem exacerbated by Mt Gox’s custom software (many other Bitcoin exchanges use standard, “core” Bitcoin software), which made the bug even easier to exploit because it used an automated system to approve withdrawals. The result is a heist that, even at today’s tumbling Bitcoin values, could be in excess of $390 million, or about 6% of all Bitcoins in circulation. That would make it the largest-ever currency-related cybertheft in history.

Mt Gox has always been an accident waiting to happen. Originally an exchange for trading cards used in the game “Magic: The Gathering” (its name is taken from Magic: The Gathering Online eXchange), the site was converted into a Bitcoin exchange by its founder, Jed McCaleb, who then sold it to Mr Karpeles in 2011. Since then, Mt Gox has been plagued with problems. It has been hacked on a regular basis, has frequently suspended trading and withdrawals, was sued by Bitcoin business-incubator CoinLab, and had some $5 million in assets seized when federal authorities shut down two of its American bank accounts, leaving Mt Gox unable to transfer Bitcoins to America. On February 7th Mt Gox halted all Bitcoin withdrawals, “to obtain a clear technical view of the currency processes”. On Sunday, Mr. Karpeles resigned from the Bitcoin Foundation, the virtual currency’s trade group. Two days later both he and Mt Gox were gone.

Bitcoin enthusiasts, who often seem to operate within a Steve-Jobs-like reality-distortion field, were quick to distance themselves from Mt Gox—forgetting, perhaps, that until recently they had often lauded it as the most “trusted brand” in Bitcoinland. Other exchanges have rushed to assure customers that all is well, conveniently disregarding the fact that many of them, too, have been the target of a massive and clearly well-coordinated distributed denial-of-service (DDoS) cyber-attack in recent weeks—an attack also aimed at the malleability bug.

In a recent blog post, Gavin Andresen, chief scientist of the Bitcoin Foundation and a prominent Bitcoin luminary, wrote that “it’s important to note that [D]DoS attacks do not affect people’s bitcoin wallets or funds.” Like so much else in Bitcoinland, this sounds like magical thinking. Blockchain.info, which says it is Bitcoin’s most popular online “wallet”, is less sanguine. Speaking with Coindesk.com, a virtual-currency news service, Andreas Antonopoulos, Blockchain.info’s chief security officer, said that as a result of the DDoS attacks, “malformed/parallel transactions are also being created so as to create a fog of confusion over the entire network, which then affects almost every single implementation out there.” He also assured Bitcoin enthusiasts that no funds had been lost from the system—but in the wake of the massive Mt Gox theft, that seems optimistic.

So: Mt Gox and hundreds of millions of dollars of Bitcoins have disappeared; large parts of the Bitcoin trading system may have been compromised; the value of a Bitcoin is less than half last year’s peak and fluctuating wildly; and hordes of Bitcoin users seem either to have lost their cryptocash for good, or are unable to withdraw or trade their funds. Many are screaming for help from financial regulators, but none are likely to come to the rescue of a currency that has constantly bragged it is outside the system. Japan’s Financial Services Authority says it isn’t going to help. The only response from America has been the launch of an investigation into Bitcoin by a panel of regulators and the Conference of State Bank Supervisors. And the cryptocurrency’s Stateside woes increased today when the Alabama Securities Commission warned people to steer clear of Bitcoin—a move likely to be followed by other states.

But as ever, much of the Bitcoin community continues to act as if nothing has happened. Six Bitcoin businesses issued a statement saying that recent events don’t “reflect the resilience or value of bitcoin.” And today’s entry on the Bitcoin Foundation’s blog is an invitation to “Bitcoin 2014” in Amsterdam (“Bitcoin is a game changer on a global scale — don’t miss out!”). It’s hard not to think that the real problem in Bitcoinland isn’t denial-of-service attacks. It’s denial.