Several months ago I wrote an article explaining that one of the top considerations in selecting an online payment system or online wallet is to make sure the company is a fully registered money remitter, ideally in a first-class banking regime country like Canada, the US or in Europe.
Failure to do so would mean exposing any funds or credit held with such a payment system to increased risk. And this is exactly happened today to the unfortunate people who ignored this advise and were using the services of Tokyo based Mt. Gox, which happened to be one of the world’s largest bitcoin exchanges.
Today, all across the web, the headline news story was that Mt. Gox has literally vanished. Their offices in Tokyo are closed, their CEO has vanished and so have all the company’s employees.
The rumour mill unofficially is reporting that hackers have stolen $350 million in bitcoins from the Mt. Gox holdings, which has rendered the company insolvent. Which means anyone who maintained a bitcoin credit with Mt. Gox has lost their money. On one news report, they showed a poor fellow from the UK who flew to Japan and has been camping out at the Mt. Gox offices to try and find the CEO to recover the $300,000 in bitcoins he has lost.
Some internet security experts were raising alarms about how poor the online security practices were at Mt. Gox in the past, and they are not surprised that this has happened. That is a glaring example of heard mentality. Obviously the Mt. Gox service was far and away removed from the first class banking regimes of North America and Canada, so users of the service liked the fact that their funds were far away from the snooping eyes and ears of western banking and government institutions. But these users also turned a blind eye to the fact the Mt. Gox was not registered as a money remitter in Canada, or the UK.
Being a registered money remitter means the company and officers are pre-vetted by the regulating institution. The company has to comply with certain record keeping requirements, and has to have an approved compliance regime document. So there are lot of reasons why you might want to consider using the services of an online payment system or online wallet that is a registered money remitter in a first classing banking regime. First and foremost, it will help lessen the risk of loosing your money like the poor folks using Mt. Gox learned today.