Mt. Gox: the Famous Hack
The infamous Bitcoin exchange and the story of the biggest crypto hack! Mt. Gox in today’s Throwback by BTCMEX.
Security is the key! Every cryptocurrency exchange knows that. The lesson was learned after the biggest Bitcoin theft. Everything you need to know about Mt. Gox story.
It all began in 2006, when a programmer Jed McCaleb, now involved in Stellar and Ripple, built a website for exchanging “Magic: The Gathering” gaming cards like stocks online. The name Mt. Gox stands for Magic The Gathering Online Exchange.
In 2010, after McCaleb found out about Bitcoin he redesigned the site into a cryptocurrency exchange that allowed users to trade Bitcoin against fiat currencies. But he was not the first one. Read about the first Bitcoin exchange here. Mt. Gox became the biggest exchange in the world, handling 70% of all cryptocurrency transactions at that time.
In 2011 the founder sold the site to a French developer Mark Karpeles. Soon after the company experienced a huge security breach. It turned out that hacker(s) used the companies’ internal computers to make malicious transactions, and eventually made off with 8.75 million US dollars!
Mt Gox reacted moving all the funds to a cold storage, but a month later, in October 2011, a total of 2,609 BTC to invalid addresses. These Bitcoins were lost forever. Financial regulators stepped in and, following the introduction of new anti-money laundering requirements, an online payment system Dwolla suspended all the transactions from the exchange.
In 2014 Mt. Gox stopped all the Bitcoin withdrawals without reviewing the hack! Later, the exchange suspended all trading and the website went offline. The company filed for bankruptcy in Tokyo. Mark Karpeles was arrested for falsifying corporate computers’ information.
On the day Mt. Gox entered the bankruptcy process, Bitcoin traded under 500 USD, today the price goes around $10 k. The rehabilitation process is complicated and, as it was reported ion 2019, the date of refund claims was pushed to March 31, 2020. There are no plans to resume the operations of the exchange.
Unlike Mt. Gox, modern crypto exchanges build state-of-art security. BTCMEX keeps users’ funds in the Multi-Signature Cold Wallet – the safest facility in the industry!