Mt. Gox
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Mt. Gox was a Tokyo-based bitcoin exchange founded in 2010 that once handled 70–80% of all bitcoin trades in the world. In February 2014, after freezing withdrawals, it disclosed it had lost 850,000 bitcoins — 750,000 belonging to customers and 100,000 of its own — then worth about $477 million, and filed for bankruptcy protection on February 28, 2014 with outstanding debt of about $63.6 million. Hackers had been quietly siphoning coins from its hot wallet since 2011; the company publicly blamed 'transaction malleability' but had never truly reconciled its books. CEO Mark Karpeles was later arrested, convicted of data manipulation and cleared of embezzlement.
02 / Mt. Gox FAILURE REASONS
Failure reasons
Mt. Gox's downfall was internal chaos, not a single hack. A single developer controlled the code with no version control, and the books were never reconciled — so the exchange could not see the hole until the vault was nearly empty. Investigators later concluded hackers had been bleeding coins from the hot wallet since 2011. Management's public explanation — a software quirk called 'transaction malleability' — was a distraction from the deeper truth: Mt. Gox never knew how many coins it held. About 200,000 coins were later found in a forgotten old-format wallet; Karpeles was convicted of manipulating data (prosecutors alleged he moved customer funds into an account in his name) and cleared of embezzlement; in 2023 US prosecutors charged two Russian nationals with the hack.
03 / EVENT HISTORY
Events in the structured record
- Company founded
Mt. Gox is launched as a bitcoin exchange in Tokyo; developer Mark Karpeles takes over in 2011.
- Bankruptcy
After freezing withdrawals in early February, Mt. Gox files for bankruptcy protection on February 28, 2014, disclosing 850,000 missing bitcoins (~$477M) and $63.6M in debt; about 200,000 coins are later recovered.
- CEO arrested
Mark Karpeles is arrested; he is later convicted of data manipulation and cleared of embezzlement.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
At its February 2014 bankruptcy filing, Mt. Gox disclosed 850,000 missing bitcoins (750,000 of customers' and 100,000 of its own), worth about $477 million at then-prevailing exchange rates, and outstanding debt of about $63.6 million. About 200,000 of the coins were later found. The $477M figure is the value of the missing bitcoins at the time of the filing — the loss is denominated in bitcoin and the dollar amount is an exchange-rate translation.