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Bitcoin value plunges on Japanese exchange

TOKYO--The value of Bitcoin on a Tokyo exchange was less than half that on other platforms Wednesday, two weeks after it suspended withdrawals claiming a bug in the software that underpins the virtual currency.

MtGox, one of the world's oldest Bitcoin exchanges, this month stopped processing client requests to withdraw money held at its “wallet,” citing a problem with the technology.

On Wednesday afternoon a single Bitcoin at MtGox stood around US$286 while other exchanges around the world were offering more than US$600. In January a Bitcoin was worth over US$900 at the Tokyo exchange.

Bitcoin is at the leading edge of the nascent crypto-currency movement. It is based on an open-source computer code designed by an anonymous person or people five years ago.

Unlike fiat currencies like the dollar or the euro, the Bitcoin is not backed by a central bank or a government, but depends on cryptography to control the creation and transfer of money.

MtGox, which began life as a trading card exchange late last decade, was one of the first online exchanges for Bitcoin and has grown quickly to become one of the world's largest repositories.

In a release, it said a glitch in the open-source software that powers the unit makes it possible for users “to alter transaction details to make it seem like a sending of Bitcoins to a Bitcoin wallet did not occur when, in fact, it did.”

This would allow someone to purchase a single unit and then to claim that it had never been received, which may then result in another Bitcoin being sent or a refund being given, the company said.

“We apologize for the inconvenience caused by the recent suspension of external Bitcoin transfers,” the company said in a separate statement dated Monday.

Transactions are still permitted between users on MtGox, but not to a third party. It is also possible to exchange Bitcoins for real-world currencies, including U.S. dollars and Japanese yen.

However, the price appeared to have been undercut by a loss of faith in the exchange.

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