The latest WSJ article regarding MtGox might be of interest to this thread. It's paywalled, but has been quoted on reddit. Bolding mine.
www.reddit.com/r/Bitcoin/comments/1ytb3o/japans_authorities_decline_to_step_in_on_bitcoin/TOKYO—Investors with funds tied up at Mt. Gox are looking for guidance from local authorities on how to get their bitcoin back, but without success, highlighting the regulatory vacuum in which the bitcoin exchange operates in Japan.
Japanese financial authorities decline to take responsibility for the crypto-currency.
Tokyo-based Mt. Gox, which accounted for more than 80% of all bitcoin trading at one point last year, halted all customer bitcoin withdrawals earlier this month, saying a bug in the bitcoin software allowed some users to alter transactions, a flaw that could make fraudulent withdrawals possible.The exchange told customers last week it was still working on restarting bitcoin withdrawals.
On Monday, Mt. Gox chief Mark Karpeles resigned from the board of the Bitcoin Foundation, the most influential trade group advocating for the virtual currency. After the news, which came Sunday evening in New York, Mt. Gox bitcoin continued a recent slide, trading at around $150 late in Tokyo on Monday, while the Coindesk bitcoin index, which tracks the price of the currency on two other major exchanges, traded at $575. At the end of January, Mt. Gox bitcoin was at $939
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Investors with bitcoins tied up at Mt. Gox have flown from as far away as the U.K. to protest outside the exchange’s offices. Some investors say they have contacted the Financial Services Agency, Japan’s banking watchdog, to ask regulators whether there are any rules protecting Mt. Gox customers, but obtained no clear answers.
Some lawyers and other legal experts say a deposit-taking entity such as Mt. Gox would normally fall under the FSA’s jurisdiction. The FSA, however, said it isn’t the agency’s job to supervise crypto-currency exchanges.
“Bitcoin isn’t a currency; it works as an alternative to currencies, like gold,” an FSA spokesman said Monday. “The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight.”
Unlike their counterparts in many major economies, including the European Union, China, Russia and the U.S., Japanese authorities have been relatively silent about bitcoin. When asked in December for his view on bitcoin generally, Bank of Japan Gov. Haruhiko Kuroda said that he was “very interested.” He said the central bank’s research arm was looking into the currency, but that he couldn’t comment further.
A Bank of Japan spokesman said Friday that the bank “is not in a position” to regulate bitcoin and its exchanges.
The Ministry of Finance said on Monday that it isn’t its job to supervise bitcoin and related services. The Ministry of Internal Affairs and Communications, which is in charge of information technology and related issues, said, “We are not in a position to make any judgments on this matter.”
Mr. Karpeles told The Wall Street Journal last week that he has discussed the company’s business model with Japanese authorities to ensure the firm was operating within the law. He didn’t elaborate. People with knowledge of Mt. Gox’s business say the exchange had had communications with the FSA. The FSA said Monday it hasn’t corresponded with Mt. Gox recently and hasn’t given the exchange any operational advice.
No country has recognized bitcoin as legal tender, though some accept it as a virtual payment method and have moved to regulate bitcoin exchanges. Mt. Gox registered as a money-services business in the U.S. in June last year after authorities said it wasn’t properly registered in the country.
There are also concerns about how authorities should respond to possible cases of fraud involving bitcoin, even if they don’t recognize bitcoin as a currency. In China, local media reported that three people were arrested for allegedly operating a fraudulent exchange and absconding with investors’ money last fall. The country’s central bank forbids financial institutions from doing bitcoin-related business, though individuals aren’t barred from trading the currency.
In the case of Mt. Gox, investors haven’t put forward fraud allegations but expressed concern that given the potential that bitcoins were improperly withdrawn in the past, the exchange might not be able to meet its commitments.
According to documents seen by The Wall Street Journal, Tibanne Co., which operates Mt. Gox, is expected to generate a small profit in the fiscal year ending in March from exchange transaction fees. The forecast, however, assumes bitcoin prices well above current levels.
Two people briefed on the exchange’s operations said the company has enough money to process all the customer withdrawal requests, saying external factors were behind any payment delays.
Eric Bosma, a 60-year-old part-time health-care worker from Mission, British Columbia, said he has been trading bitcoins for the past six months to try to earn extra income, but hasn’t been able to withdraw the roughly 5.25 bitcoins he has in Mt. Gox. “I have contacted Mt. Gox many, many times in the past two weeks and all I get is what seems to be bot emails,” he said in an email. “All I want is my bitcoin back.”
For more than a week, Londoner Kolin Burges spent his days camped outside the Mt. Gox offices, holding a sign reading “MT. GOX — WHERE IS OUR MONEY”. He had deposited 250 bitcoins at the exchange in early January, thinking to keep them there temporarily, but has been unable to withdraw them.
“I want to get my bitcoin back, or get Mt.Gox to bring back public confidence that the company is solvent and people’s money are safe,” said Mr. Burges as he started his protest on Valentine’s Day. Mr. Burges was later joined by another protester. The two added chairs and a live video stream to their setup. On the stream online, the two could be seen mostly checking their laptops, with signs propped up calling for others to join the protest.
Mt. Gox didn’t respond to phone calls and emailed questions about Mr. Karpeles’s resignation, its financial position or the status of its customers’ bitcoin. In an email interview last week, Mr. Karpeles declined to answer any questions about customers’ funds.
Other people interested in bitcoin are divided over the need for outside regulation.
“Mt. Gox seems to be the microcosm of why self-regulation doesn’t work,” as customers are left unprotected from potential losses, said Boston University professor Mark T. Williams. He acknowledged, though, that Japanese regulators are in a “precarious situation.”
Weighing in on the Mt. Gox matter would force authorities to become an active enforcer of bitcoin businesses, yet continued silence could invite other Japanese businesses to start trading bitcoin, he said.
Many in the bitcoin community say regulation goes against the spirit of the currency.
“Philosophically I’m opposed to the very idea of regulation,” Roger Ver, a well-known, Tokyo-based bitcoin investor said on Monday, though he added he couldn’t speak to the case of Japan. He also declined to speak specifically about Mt. Gox.
Patrick Murck, general counsel at the Bitcoin Foundation, told a U.S. congressional hearing in November that more work needed to be done on the legal framework around bitcoin. “Though challenges exist, Bitcoin does not pose a unique or unsolvable challenge to law enforcement or existing regulatory structures,” he said.
Meanwhile, Japan took a clear stance on regulations for protesters. Mr, Burges and his fellow protester, who spent last week outside of Mt. Gox’s offices, were told by police Friday that registration was needed in order to demonstrate. The two said they planned to continue their protest in other ways.
