Mt. Gox: The Rise and Fall of Bitcoin’s Biggest Exchange

On February 24, 2014, the world’s largest Bitcoin exchange, Mt. Gox, went dark. Hackers breached the exchange, which handled 70% of all global Bitcoin transactions. Consequently, the loss was astronomical at over 800,000 BTC. This devastating fallout sent the nascent crypto industry into a winter that took it years to emerge from. 

Table of Contents

• How Mt. Gox was created
• The early warning signs
• Inside the collapse
• The aftermath and slow recovery

How Mt. Gox was created

But despite its dark ending, Mt. Gox has an unexpected origin story. The site was launched by programmer Jed McCaleb, who would go on to be one of Ripple‘s architects. However, it did not start as a Bitcoin exchange. McCaleb first bought the domain for a different project. He wanted an online exchange for Magic: The Gathering Online trading cards, hence the domain name mtgox.com. After a few months, he abandoned this idea.

Later in 2010, McCaleb read about Bitcoin. He realized Bitcoiners needed a place to trade this new currency online. Therefore, he used his spare mtgox.com domain to launch the platform. Mt. Gox went live on July 18.

Less than a year later, in March 2011, McCaleb sold the exchange to French developer Mark Karpelès. Karpelès, who already lived in Japan, absorbed the platform into his Tokyo-based company and operated the exchange from there.

At the time, McCaleb posted on BitcoinTalk to explain the sale, saying:

The early warning signs

The problems at Mt. Gox started much earlier than 2014. For instance, in June 2011, users watched in horror as the Bitcoin price on the exchange plummeted from $16.85 down to $0.01 within minutes. Panic immediately spread. A hacker gained access through a compromised auditor’s computer. Then, they altered the price of BTC and transferred out coins at a drastically reduced rate.

Consequently, Mt. Gox halted trading for several days. Mark Karpelès issued public statements to acknowledge the breach. Despite this major error, the exchange survived the bad publicity.

Unfortunately, in September 2011, hackers copied a file containing the private keys to Mt. Gox’s hot wallets. Over the following years, these thieves quietly siphoned off Bitcoin.

Inside the collapse

Following the collapse, the public began demanding answers about how this disaster happened. Soon, Mt. Gox insiders started sharing stories about the company’s internal operations.

Karpelès acted as the sole programmer responsible for checking and pushing backend code. Reportedly, various side projects frequently distracted him. Consequently, important security patches often sat for weeks before reaching the live site. While serving as the senior backend developer, he also held the CEO position. After the collapse, an insider told Wired:

“Mark liked the idea of being CEO, but the day-to-day reality bored him.”

Ultimately, the hack and massive loss of funds set the cryptocurrency industry back for years. For context, the Bitcoin price previously hit an all-time high of $1,242 in late November 2013. By February 28, once most hack details emerged, the price dropped to $561 per coin.

The BBC’s Economics Editor at the time, Robert Peston, described it as a “life-or-death” moment for Bitcoin. He wrote:

To stop a complete market crash, the CEOs of six other major Bitcoin exchanges released a joint statement. These leaders, including those from Coinbase and Kraken, denounced Mt. Gox and distanced themselves from the disaster.

The aftermath and slow recovery

In 2015, Japanese police arrested Karpelès for illicitly adding $1 million to his personal account. The police released a short statement explaining that he created false information about the transfer. 

The Japanese trust overseeing the bankruptcy case initially reported tracking down only $91 million out of the $500 million missing assets. Altogether, they identified 127,000 affected users.

In 2023, the U.S. Department of Justice officially charged two Russian nationals, Alexey Bilyuchenko and Aleksandr Verner, with the 2011 server breach and the subsequent theft of BTC from Mt. Gox.

It took ten years for victims to begin receiving repayments. The exchange’s trustee announced plans to reimburse a portion of the original losses in 2023 using recovered cryptocurrency and fiat. 

As of late 2025, roughly 19,500 creditors successfully received payouts. Meanwhile, authorities pushed the final repayment deadline back yet again to October 2026. 

All these years later, the Mt. Gox saga remains unfinished.

Since the Mt. Gox collapse of 2014, the crypto space has seen many other crashes. Newer catastrophes, like the collapse of FTX, often overshadow Mt. Gox in the minds of modern Bitcoiners. Nevertheless, it remains a vital cautionary tale from the early days of crypto that the industry should never forget.

Read More

• The 5 Biggest Crashes in Bitcoin’s History
• How Bitcoin Gets Lost and How To Keep Yours Safe
• The 12 Biggest Successes and Fails in the History of Bitcoin

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