Mt Gox

“Mt. Gox, once the world’s leading Bitcoin exchange, collapsed in February 2014 after a series of breaches culminating in the loss of 850,000 BTC, valued at approximately $473 million USD at the time. Founded in 2010 and acquired by Mark Karpelès in 2011, the Japan-based platform facilitated global Bitcoin trading but suffered from persistent security flaws. Early incidents included a June 2011 hack stealing 25,000 BTC ($400,000) and a user database leak, followed by a fraudulent trading scheme that crashed Bitcoin’s price to one cent on the exchange. By 2014, Mt. Gox faced mounting customer complaints over withdrawal delays, and on February 7, it halted all withdrawals, citing a “”transaction malleability”” bug.

A leaked crisis document revealed the exchange had lost 744,408 customer BTC and 100,000 of its own, undetected for years, likely stolen from hot wallets since late 2011, per WizSec’s 2015 analysis. On February 24, trading was suspended, and the website went offline, with Mt. Gox filing for bankruptcy on February 28, reporting liabilities of $65 million. The loss, aligned with Bitcoin’s $550-$600 price in early 2014 per CoinGecko, devastated users and triggered a 36% market price drop. Partial recovery of 199,999.99 BTC ($116 million) from an old wallet reduced the net loss to 650,000 BTC, but no further funds were returned. Karpelès, arrested in 2015, faced charges of fraud and data falsification, receiving a suspended sentence in 2019.

The unregulated 2014 crypto landscape hindered recourse, though a 2021 rehabilitation plan promised creditor repayments. The Mt. Gox saga, detailed by Reuters and CoinDesk, exposed systemic risks in centralized exchanges, driving adoption of cold storage, multi-signature wallets, and regulatory frameworks to protect the crypto ecosystem.”