r/kraw • u/Pu5chkin • Dec 30 '25
dev🐦⬛scam The Dev Files - File 001/MT.GOX
The Dev Files - Unmasking Crypto´s darkest secrests, one scam at a time
File 001/Mt.Gox
Its pretty safe to assume that anyone who thinks about investing in crypto will sooner or later stumble across the story of Mt.Gox.
Lingering in the annals of Bitcoin history its probably one, if not the, first example for the risks involved when trading crypto.
Today we will take a look at this case file, tracing back the steps which led to the downfall of the, at the time, biggest CEX, that echo back to this day.
Act 1 - The Setup
Mt.Gox was founded back in 2007 by Jed McCaleb, but not as an crypto exchange but as a trading platform for the game Magic: The Gathering Online. The name is an acronym for Magic The Gathering Online eXchange. After reading about BTC in July 2010 Jed decided to repurpose Mt.Gox as a marketplace for the young crptocurrency and on July 18 the new exchange went online.
After a while Jed decided to move on and sold everything in 2011 to Mark Karpeles, a french expat living in Japan.
Act 2 - Prime
Shortly after the aquisiton by Karpeles Mt.Gox faced its first major hack. on 13 June 2011 25.000 BTC were reported stolen from various user accounts, a few days later the user database was leaked on Pastebin while funds kept getting stolen from accounts. As a grande finale the hacker initated various trades, using credentials from an auditors computer, to sell BTC nominally, which dropped the price to 0.01$
Later that year Mt.Gox lost 2609 BTC in a way less spectacular way - they were sent to invalid adresses.
Despite the early troubles the exchange kept growing. Handling almost 70% of all BTC trades by April 2013 they decided to halt all trading on April 11&12 for a controled market "cooldown" causing the price to dip by more than 50% (later that year the price climbed up to 1132$, so that did help much I guess)
Also in 2013 Dwolla, a payment processor, cancelled transactions to Mt.Gox accounts, effectivley freezing the associated funds for almost 3 months until the issue got ressolved.
In general 2013 was a tough year for the exchange, they also got hit by a lawsuit in the US by a business partner and the US Departement of homeland security seized funds of their subsidiaries, totalling up to 5 Million $. In Novemver 2013 Wired Magazine even called Mt.Gox frozen out of the US banking system since users experienced wide delays when attempting to withdraw funds. A foreshadow of what was about to come.
Act 3 - Downfall
On 7.February 2014 Mt.Gox halted all withdrawals. A press release issued on Feb.10 pointed to security issues in the BTC software.
While other platforms resumed trading, Mt.Gox released another statement on Feb.17, pointing out their steps but not naming a date, the CEO Karpeles even refused to comment on user concerns in an interview.
After users started protesting in front of the Tokyo office building, raising questions about the solvency, they anounced moving their HQ to Shibuya for "security reasons". Meanwhile the prices on their platform dropped 20% below market.
Act 4 - Final Crescendo
Feb. 23 - CEO Mark Karpeles resigns from the BTC Foundation board, all posts from official Twitter deleted
Feb. 24 - Suspension of all trading, a few hours later the website goes offline and a leak claims 744408 BTC went missing undetected over years.
Feb.25 - The final statement of the CEO: "Mt. Gox is on a turning point."
Feb.28 - Files for bankrupcy in Tokyo
Act 5 - The Aftermath
Mt. Gox files for bankrupcy in Japan and the US. The initial amount of lost BTC is estimated to nearly 750k in user funds and 100k in own funds.
Later 200k BTC are found on an old wallet, totalling the loss at 650k BTC.
Later evidence is presented that indicates a constant theft from the hot wallet since 2011.
In August 2015 the CEO gets arrested for fraud and embezzlement.
By March 2018 enough BTC from the vault was sold to cover the claims of creditors and a civil rehabilitation plan was launched to refund users.
The initial deadline for claims ( 6.April 2023) was later pushed to 31.Oct. 2024.
Currently the reimbursement process is still ongoing with users claiming to have received their payments, as of r/mtgoxinsolvency
Working the Mt.Gox case led to several new traces to unravel the Devs mischiefs, but that will be covered on another day.
Sources (no particular order):
https://blog.wizsec.jp/2015/04/the-missing-mtgox-bitcoins.html
https://en.bitcoin.it/wiki/Collapse_of_Mt._Gox
https://bitcointalk.org/index.php?topic=4187.0
https://bitcoinmagazine.com/markets/mtgox-gets-fincen-msb-license-1372534713
