Mt. Gox

Mt. Gox was the first big Bitcoin disaster. The domain was registered in 2007 for a site 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. Independent investigators at WizSec later concluded that most or all of the missing coins had been stolen from the exchange's hot wallet bit by bit, starting in late 2011, leaving Mt. Gox insolvent long before it collapsed. 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 of falsifying the exchange's records to inflate its holdings. He was acquitted of the more serious charges, including a charge that he had embezzled about $3 million of customers' money. In 2018, on a petition from some creditors, a Tokyo court switched the bankruptcy to a civil rehabilitation, so creditors could be repaid in bitcoin instead of having their claims turned into cash. Creditors reported receiving the first repayments, in yen, at the end of 2023, and the trustee began repaying in bitcoin in July 2024. People who left their coins on Mt. Gox waited more than ten years to get any of the bitcoin back.

See Mt. Gox to FTX: The Custody Graveyard for the full decade of failures it began.