How Mt. Gox destroyed Entire Fortunes In Cryptocurrency

By Jamesa Brown


What is Mt.Gox?

Mt. Gox is an early Bitcoin exchange company that was founded by Jed McCaleb in 2006. The name “Mt. Gox” is the abbreviation: “Magic The Gathering Online Exchange” because the site was initially used to trade the Magic The Gathering card series until it was bought by Mark Karpéles in March 2011. For three years, the Mt. Gox website was the world’s leading Bitcoin exchange company.

The Collapse of Mt. Gox

In 2014, nearly 400 million dollars, or 650 thousand Bitcoins, were hacked from the Mt. Gox website. A weakness in the general exchange was rumored to have been taken advantage of by the hackers. This situation forced the company into bankruptcy. According to Fortune.com, during the summer of 2015, Karpéles was placed in solitary confinement and forced to undergo daily interrogations for one year following the breach and collapse of Mt. Gox under charges of embezzlement and the manipulation of electronic data. In 2017, U.S. authorities arrested a Russian suspect by the name of Alexander Vinnik under money laundering charges due to his connection to the missing Bitcoins’ deposits into accounts that were under his control.

The Ongoing Recovery of Mt. Gox

A few days after the collapse of Mt. Gox, Karpéles found a digital wallet that contained nearly 200 thousand Bitcoins. By 2017, the wallet’s Bitcoin amount was worth billions of dollars. Under Japanese bankruptcy laws, Karpéles was allowed to keep the money, but he decided to give the creditors (those who lost the money back in 2014) the money. Since then, Karpéles continues to be on trial in Japan and fears for his safety. In March of 2018, the company’s trustee, Kobayashi, informed the public that enough Bitcoin has been sold to cover the creditors’ loss.