Kim Hjelmgaard

USA TODAY

Mt. Gox CEO says system failures to blame

Mt. Gox has filed for bankruptcy protection

Japan FM says Bitcoins not recognized as real currency

Embattled Bitcoin exchange Mt. Gox filed for bankruptcy protection, the Tokyo-based firm announced Friday.

The virtual currency firm's CEO, Mark Karpeles, seemed to suggest a hacking attack into the exchange's systems was behind the massive loss of the virtual currency. He was speaking in a court in Tokyo.

The loss involved 750,000 bitcoins from users and 100,000 of the company's own bitcoins. That would amount to about $425 million at recent prices.

"I am sorry for the troubles I have caused all the people," Karpeles said in Japanese at a Tokyo court.

The unplugging earlier this week of the Tokyo-based Mt. Gox Bitcoin exchange and accusations it suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.

The price of Bitcoin is down nearly 4% at $554.86.

Kyodo News said debts at Mt. Gox totaled more than 6.5 billion yen ($65 million), surpassing its assets.

Japan's finance minister scoffed at Bitcoin woes as inevitable Friday, and Vietnam banned the virtual currency.

"No one recognizes them as a real currency," Japan's Finance Minister Taro Aso told reporters in Tokyo. "I expected such a thing to collapse."

Law firm Edelson PC filed a lawsuit in a federal court in Illinois seeking class action status representing people in the U.S. who had bitcoins held by Mt. Gox.

"This is either a case of gross incompetence, a real breach of fiduciary care, or an outright fraud," Jay Edelson, managing partner of Edelson PC, said in a statement.

Edelson estimates approximately 600,000 people in the U.S. had bitcoins tied to Mt. Gox, valued at several hundred million dollars. He also says his firm is exploring similar class-action filings in other countries.

Contributing: Associated Press