Mt. Gox was a cryptocurrency exchange that operated between 2010 and 2014. It was originally founded by Jed McCaleb and sold to Mark Karpelès in 2011, who served as CEO until it ceased operations. Mt. Gox became the leading bitcoin exchange, handling over 70% of global bitcoin transactions in 2013.
This sudden rise of Mt. Gox made it a target for hackers. It experienced several security problems over the years. In 2014, it suffered a devastating blow when hackers stole 740,000 Bitcoins from Mt. Gox customers and 100,000 Bitcoins from the company. At the time the stolen bitcoins were worth around $460 million. The company was unable to control the event and went bankrupt.
The fall of the exchange
It is believed that fraudulent activity had been taking place as early as 2011. The first publicly recorded attack took place in June 2011 and resulted in 25,000 bitcoin being stolen, worth around $400,00 at the time. Other bitcoin losses occurred in the same year. 2,609 BTC were sent to invalid addresses, resulting in the permanent loss of the coins. Mt. Gox recovered from these incidents and managed to become the world's leading bitcoin trading platform by 2013.
Despite its popularity, Mt. Gox faced many internal problems. These included poor code quality and security, and a lack of financial accounting. As a result, in February 2014, the team discovered the theft of around 850,000 BTC. This is up to date the biggest hack in the history of cryptocurrencies. 200,000 bitcoins were able to be recovered. The remaining 540,000 lost BTC would be worth more than CHF 24 billion at today's prices. This massive hack proved to be the final nail in the coffin for Mt. Gox, which declared bankruptcy later that month.
Mt. Gox legal proceedings
Since its collapse, legal proceedings have been ongoing. Victims of the Mt. Gox hack have organised in groups to collect data and testimonies. This led to the successful development of legal proceedings. In June 2018, the court approved the reimbursement procedure, allowing creditors to claim their lost BTC. In 2020, a trustee for Mt. Gox, Mr Kobyashi, announced the rehabilitation plan for Mt. Gox. This rehabilitation plan established a registration and compensation plan for various creditors.
The distribution phase started in 2021 and is still ongoing. Some creditors have received their share of BTC and BTC cash. Currently, new creditors are unable to file claims as the court has sealed the case, preventing new claims from being filed.