What is Mt. Gox
Mt Gox was a cryptocurrency exchange company located in Tokyo, Japan. The company was established in July 2010, and run its operations until 2014. Mt Gox handled over 70% of all bitcoin relations globally as the biggest bitcoin transitional and the international bitcoins exchange. Unfortunately, the exchange was hacked and declared bankrupt in 2014. The website was closed and it filed for protection from its creditors.
Mt. Gox declared that about 850,000 bitcoins that belonged to its clients and the business were lost and probably embezzled. At that time, the amount was estimated to be $450. Even though 200,000 bitcoins have since been recovered, it was unclear the reasons for the disappearance. It was later discovered that the bitcoins were stolen from Mt Gox cryptocurrency wallet over a period from 2011. As of 2021, there were proceedings involving Mt. Gox, and efforts to track down those accountable for the hack, and even suggestions to resuscitate the exchange.
How Mt. Gox was Established
In 2006, Jed McCaleb created a fantasy-based game website. The website, “Magic: The Gathering” allowed gamers to trade their cards online. He transferred the website to Mark Karpeles in 2011, and in return, he received six months’ revenue. The website was renamed Mt.Gox, which was an acronym for “Magic: The Gathering Online Exchange”. Mark Karpeles became the largest shareholder and the CEO of Mt. Gox. At its highest moments, Mt. Gox was one of the world’s well-known bitcoin exchanges. It handled 70% to 80% of the exchange capacity. Mt Gox handled so many transactions and they gave it a massive role in defining the fate of bitcoin. In 2013, for example, it halted its trading for a few days to cool down the market.
Mt. Gox Concerns
Mt. Gox was a target for hackers due to its prominence. During its existence, it was hit by security threats several times. One incident happened in 2011 where stolen IDs were used to steal bitcoins. That year again, faulty network procedures led to the loss of several thousand bitcoins.
Customers started expressing their limitations and problems when it came to withdrawing funds in the months leading to February 2014. There were technical hitches that prevented mt. Gox from having a firm hold on transactions information, which included the uncertainty concerning if the bitcoins, had been transferred to customers’ digital wallets. A bug that gave customers access to change their transaction information, which is known as transaction malleability, brought the problem.
In 2014, the company halted all its withdrawal activities after it suspected not so usual activities in its digital wallets. The price of bitcoin was affected after the suspension, making it drop by 20%. At that time, the company realized it had lost 850,000 bitcoins that covered over 6% of bitcoins that were in movement. Later, the company was capable of recovering 200,000 bitcoins. The remaining balance that was not located shook the market. The bitcoin value was estimated to be over $450. The loss was a huge blow to the company that it was pushed to insolvency. The only option was to file for bankruptcy, a process that took place in Tokyo District Court. In April 2014, the company was ordered to liquidate. The Future of Mt. Gox
Mt. Gox’s future has not yet been determined despite filing for bankruptcy six years earlier. There are still lawsuits going on in efforts to get the hackers. Additionally, there are suggestions to revive the company. Mt. Gox remains controversial since the value of bitcoins rose drastically raising the dangers. Mt. Gox’s bankruptcy has become a complex issue because of different reasons. When the company was established, cryptocurrencies were a newly ventured business that was unregulated. Its users were from all over the world.
In 2015, Mt. Gox CEO was arrested and charged with embezzlement, fraud, in addition to manipulating the company’s computer system to increase the balance. He was also accused of mishandling $2.6 million in form of bitcoins and transferring it into an account he owned before the fall of Mt. Gox in 2014. When the company went bankrupt, Mt. Gox creditors demanded they had lost $2.4 trillion, which they demanded to be paid. Unfortunately, only $91 million in form of assets was recovered despite the company declaring it had more than $500 million in assets, weeks before it went bankrupt.
In 2019, Karpeles was charged in Tokyo District Court and was found guilty of fabricating data to expand his company. He was sentenced to thirty months in jail and given a suspension for four years. This meant that he would serve no time except that he committed other felonies. He was cleared from other charges including breach of trust and embezzlement because he told the court his acts had no ill intentions. In 2015, a security company in Tokyo presented new evidence. The evidence concluded that the stolen bitcoins were taken from the company’s wallet
2019 was a good year for Mt. Gox related reports. There was an assumption that the Russian hackers were responsible for the attack and there was renewed hope that some of the lost bitcoins could be located. Cryptocurrency businessperson, Brock Pierce gave a proposal that Mt Gox would be revived and its customers would receive their refunds. On the other hand, CoinLab continued to track the multibillion-dollar breach of contract lawsuit against Mt. Gox. Lawsuits by investors could stop customers from getting their refunds. As of 2021, there is no hope for Mt Gox.
During a meeting that was held in October 2021, it was publicized that the Civil Rehabilitation Plan was proposed by 99% of the investors and that billions of dollars in Bitcoin would be provided as recompense. The strategy was officially accepted on November 16, 2021