Vircurex Follows MtGox Into Insolvency

Vircurex

Today, the Beijing-based virtual currency exchange Vircurex has stopped withdrawals of Bitcoin, Litecoin and other coins, and will freeze existing user accounts due to serious financial problems. The Next Web reports:

Vircurex was hacked twice last year and had been using a reserve of ‘cold storage‘ currency to reimburse users whose balances were affected by the hacks.  However, “large fund withdrawals in the last weeks… have lead to a complete depletion” of the reserves, the company says, meaning that it doesn’t have the funds to pay back affected users. (The exact amount lost to hackers was never made public by Vircurex.)

Vircurex has a plan to pay back affected users rather than file for bankruptcy like MtGox. It’s posted this statement on its website explaining how the company plans to pay back customers and return the exchange to positive financial health

The Next Web says, “In order for its plan to work, Vircurex is betting that new users will continue to sign up to use its service despite the fact that it has become insolvent, while it is also relying on not being hacked again. Those are two huge risk factors, and it remains to be seen how the plan will play out.”

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