The collapse of Mt. Gox, once the largest cryptocurrency exchange, serves as a cautionary tale about the potential pitfalls in the industry. It took a full decade after the exchange’s failure for creditors to begin receiving their reimbursements.
This incident forced the entire cryptocurrency sector to reevaluate its security measures.
What is Mt. Gox?
The Mt. Gox saga began in 2007, long before Bitcoin and other cryptocurrencies gained traction. That year, developer Jed McCaleb launched a website called Magic: The Gathering Online Exchange (MTGOX) for trading cards from the beloved fantasy game, Magic: The Gathering.
In 2010, after discovering Bitcoin (BTC), McCaleb decided to transform the platform into a cryptocurrency exchange. However, less than a year after this shift, he sold the platform to Mark Karpeles, a French developer residing in Japan, due to his inability to commit sufficient time to the project.
During this period, Mt. Gox surged in popularity. By 2011, it had accumulated tens of thousands of users, and by 2013 it was responsible for handling over 70% of all BTC transactions globally. In February 2014, the exchange suspended trading, and by April 2014, it had filed for bankruptcy protection in the United States.
This downfall was precipitated by the theft of 850,000 BTC, valued at $450 million at that time, stolen from the wallets of Mt. Gox. This incident marked the largest such theft up to that point, severely shaking the confidence of the Bitcoin community.
Details of the Mt. Gox Bankruptcy
On February 24, 2014, Mt. Gox abruptly halted all Bitcoin transactions, and within hours, its website was taken offline. It soon became apparent that around 750,000 BTC, belonging to users, had been misappropriated over several years, leaving the platform unable to recover from the loss. Just four days later, on February 28, Mt. Gox filed for bankruptcy and announced its closure.
As part of its bankruptcy filing, the exchange disclosed that, alongside the user funds that had been stolen, hackers had also seized 100,000 BTC from the exchange’s own reserves. Overall, this theft amounted to a staggering 850,000 BTC, nearly 7% of the total Bitcoin in existence at that time.
Investigations unveiled that the perpetrators had stolen the private key to an Mt. Gox wallet back in September 2011. This key enabled them to manipulate the flow of cryptocurrency into and out of the exchange, allowing the attackers to deplete its funds over several years.
In May 2016, the Kraken exchange, which had assisted with the investigation, completed a thorough collection and analysis of creditors’ claims. According to reports, around 24,750 users filed for compensation.
Experts, including Tokyo-based security firm WizSec, have claimed that the theft dates back to 2011 when the exchange lost roughly $400,000 worth of Bitcoin. Despite continuing to grow and reach its peak market share in 2013, problems began in 2014 when users reported slow withdrawal times. This led to the suspension of all withdrawals and an announcement outlining the full extent of losses.
Payments to Mt. Gox Creditors
In September 2018, a Japanese court approved a rehabilitation plan that would allow creditors of Mt. Gox to receive approximately $1 billion in restitution.
The first disbursements to investors occurred in December 2023, nearly ten years after their funds were frozen in February 2014. As of March 2025, Mt. Gox still possessed around 35,000 bitcoins, valued at about $3.08 billion.
Last year, the exchange postponed its repayment deadline for creditors, moving it from October 31, 2024, to October 31, 2025, due to delays in verification and processing.
Mt. Gox Developments in 2025
On March 25, 2025, Arkham Intelligence reported significant movement from the Mt. Gox wallet. A total of 893 bitcoins were sent to a new address, while another 10,608 BTC were transferred to a different wallet under Mt. Gox’s management. Additionally, a minor amount of 0.000017 BTC was sent to Kraken, likely for testing purposes.
This has spurred speculation that the transfers may be connected to upcoming repayments for creditors. These transactions followed other substantial transfers earlier in the month, such as 12,000 BTC on March 6 and 11,833 BTC on March 11, with some of these earlier transfers making their way to the Bitstamp exchange, as noted by Spot On Chain.
Who Was Behind the Mt. Gox Hack?
Who exactly orchestrated the Mt. Gox hack? This question remains a mystery in the crypto community. While no definitive answers exist, several theories continue to entice speculation.
Some believe it was an insider job, suggesting that someone with internal access to the platform’s systems exploited vulnerabilities. Others posit that North Korean hackers might have been involved, possibly to instigate disorder in the global financial markets.
However, without concrete evidence to support any of these theories, the true identity of the hackers remains ambiguous.
Reflecting on Mt. Gox
Mt. Gox was a dominant player during Bitcoin’s formative years. Bitcoin surged from under $1 to over $1,000 during this time. Had Mt. Gox maintained its prominence, it could have easily remained the largest cryptocurrency exchange today, facilitating billions in trading volumes.
Nonetheless, its downfall catalyzed important advancements in crypto security, prompting regulators to undertake client protection initiatives.
Mt. Gox’s hack resulted in a loss of 850,000 BTC, some of which stemmed from alleged mismanagement, leading to a series of lawsuits in the ensuing years. Even after years of legal battles, the estates of Mt. Gox are still subject to ongoing claims.