Mt. Gox
The Tokyo exchange that once handled most of the world's Bitcoin trading until it collapsed in 2014 with roughly 850,000 BTC missing. The original 'not your keys, not your coins' catastrophe.
Mt. Gox was the first big Bitcoin disaster. The site started in 2007 as a place to trade Magic: The Gathering cards (the name is short for "Magic: The Gathering Online eXchange") and was turned into a Bitcoin exchange in 2010. Mark Karpeles bought it in 2011, and by 2013 it was handling roughly 70 percent of all Bitcoin trades in the world.
It froze withdrawals on 7 February 2014 and filed for bankruptcy in Tokyo on 28 February. Roughly 850,000 BTC were gone, about 750,000 of them customer coins and 100,000 the company's own, which came to nearly 7 percent of all the bitcoin that existed then. It wasn't one big hack. The coins had been leaking out for years through bad controls and theft nobody caught, hidden behind balance numbers that were faked. In March 2014 the company found 199,999 BTC sitting in an old wallet it had forgotten about, which gives you a sense of how the place was run.
Karpeles was convicted in a Japanese court in 2019, but for manipulating data to inflate balances, not for stealing the coins. He was acquitted of that. The bankruptcy was later switched to a civil rehabilitation so creditors would be repaid in bitcoin instead of its much lower 2014 dollar value, and those repayments finally started in July 2024. People who left their coins on Mt. Gox waited more than ten years to get a portion of them back.
See Mt. Gox to FTX: The Custody Graveyard for the full decade of failures it began.
Key takeaways
- At its peak it handled around 70 percent of global Bitcoin trades; it halted withdrawals in February 2014 and filed for bankruptcy with roughly 850,000 BTC gone (about 750,000 customer, 100,000 company)
- There was no single dramatic hack - the coins bled out over years through poor controls and undetected theft, hidden behind faked balances
- Creditor repayments finally began in July 2024, more than a decade later, paid in bitcoin that was worth far more than the dollars originally lost