It is possible that MtGox lost its money by dipping into deposits and pending cash withdrawals for its own use. Then, maybe some bad investments snowballed and they couldn't recover.
This seems more likely than someone hacking them and ripping off hundreds of millions of dollars worth of bitcoins without them noticing.
There is regulation that prevents this (most of the time) in banks, but in an unregulated exchange it would be easy (and stupid) to start gambling with customer deposits and pending withdrawals.
A few months ago I set up a MtGox account, and noticed the MtGox policy of taking weeks or months to wire the proceeds from a bitcoin sale. That seemed like a red flag, and made me wonder what they're doing with the cash between the bitcoin sale and the wire transfer. I'm glad I opted out of MtGox.
This seems more likely than someone hacking them and ripping off hundreds of millions of dollars worth of bitcoins without them noticing.
There is regulation that prevents this (most of the time) in banks, but in an unregulated exchange it would be easy (and stupid) to start gambling with customer deposits and pending withdrawals.
A few months ago I set up a MtGox account, and noticed the MtGox policy of taking weeks or months to wire the proceeds from a bitcoin sale. That seemed like a red flag, and made me wonder what they're doing with the cash between the bitcoin sale and the wire transfer. I'm glad I opted out of MtGox.