Mt. Gox: The Exchange That Lost Everything

On 7 February 2014, customers of the biggest Bitcoin exchange in the world tried to take their money out and found they could not. Three weeks later the website went blank. On 28 February, Mt. Gox filed for bankruptcy in Tokyo and admitted that about 850,000 bitcoin had gone: roughly 750,000 belonging to customers and 100,000 of its own.

At the prices of the day that was about $460 million. At Bitcoin's price in late September 2026, around $84,000 a coin, the same 850,000 coins would be worth roughly $71 billion. No theft in crypto has come close in coin terms, and twelve years later some of the people it robbed are still waiting to be paid.

From playing cards to 70% of Bitcoin

The name is a joke that outlived its purpose. Mt. Gox stood for "Magic: The Gathering Online eXchange", a site for swapping fantasy trading cards. In July 2010 the American programmer Jed McCaleb, who later co-founded Ripple and Stellar, turned the domain into a place to buy and sell bitcoin. In early 2011 he sold it to Mark Karpelès, a French developer living in Tokyo who went by the online name MagicalTux.

An exchange, in crypto, does the job a stockbroker and a stock exchange do together. Customers send in dollars or yen, buy coins, and leave both sitting in accounts the exchange controls. That last part is the whole story. A customer at Mt. Gox did not hold bitcoin in any meaningful sense. They held a promise, written in Mt. Gox's own database, that Mt. Gox held it for them.

Bitcoin was tiny then, and Mt. Gox was most of it. By 2013 it was handling around 70% of all Bitcoin trading. Its price was, for practical purposes, the Bitcoin price.

How the coins disappeared

The trouble started almost as soon as Karpelès arrived. In 2011 Mt. Gox was hacked more than once; in one incident a compromised account dumped coins on the market and briefly crashed the price on the exchange to a cent. Some 79,956 stolen bitcoin from that year ended up at a single address beginning "1Feex", where they still sit untouched.

The bigger leak was quieter. United States prosecutors later said that from around September 2011, a group of hackers got into the server that held Mt. Gox's wallet files. A wallet, here, means the set of secret keys that prove ownership of coins; whoever copies the keys can spend the coins, the way anyone holding a signed blank cheque can cash it. The hackers did exactly that, draining coins over the following years while the exchange's own books kept showing balances that were no longer there.

When withdrawals stopped in February 2014, Mt. Gox blamed "transaction malleability", a quirk in Bitcoin that let someone alter a transaction's reference number after it was sent, so a withdrawal could look as though it had failed and be requested again. The excuse did not hold up. Researchers Christian Decker and Roger Wattenhofer at ETH Zurich studied the network that month and found malleability attacks could account for only about 386 coins. The rest had been leaving for years.

There was one piece of good news. In March 2014 Karpelès found 200,000 bitcoin in an old-format wallet the company had forgotten about, which cut the true loss to about 650,000 coins.

Who was blamed, and who paid

Karpelès was arrested in Tokyo on 1 August 2015 and spent nearly a year in detention. Prosecutors asked for ten years. On 15 March 2019 the Tokyo District Court acquitted him of embezzlement and breach of trust but convicted him of manipulating electronic records, and gave him two and a half years, suspended for four. The Tokyo High Court rejected his appeal on 11 June 2020. He never served a prison sentence.

The trail of the stolen coins was followed for years by Kim Nilsson, a Swedish engineer and Mt. Gox customer whose investigation group WizSec traced much of the money to BTC-e, a Russian-run exchange popular with criminals. In July 2017 Greek police arrested Alexander Vinnik, accused of running BTC-e. He was eventually extradited to the United States, pleaded guilty to a money-laundering conspiracy in May 2024, and was sent home to Russia in February 2025 as part of a prisoner exchange.

In June 2023 the US Department of Justice unsealed charges against two Russian nationals, Alexey Bilyuchenko and Aleksandr Verner, accusing them of stealing from Mt. Gox and laundering about 647,000 bitcoin. Both are alleged, not convicted, and neither is in American custody.

Twelve years of waiting

For creditors, the cruellest part came after the theft. Under Japanese bankruptcy law, their claims would have been paid in yen at the 2014 price of roughly $480 a coin, and any surplus would have gone to the company's shareholders, which meant Karpelès. As Bitcoin's price rose, the Mt. Gox estate became worth far more than its debts. Creditors fought to change the process, and on 22 June 2018 the Tokyo District Court moved the case into civil rehabilitation, a reorganisation that allowed repayment in bitcoin itself. The trustee, Tokyo lawyer Nobuaki Kobayashi, had by then already sold about 35,800 bitcoin to raise cash.

A repayment plan was confirmed in November 2021. The actual money took almost three more years. Repayments in bitcoin and Bitcoin Cash began on 5 July 2024 through two Japanese exchanges, Bitbank and SBI VC Trade, followed by Kraken, Bitstamp and the custody firm BitGo. The trustee said about 17,000 creditors had been paid by the end of July 2024; by early 2025 the number was reported at about 19,500 of roughly 24,000.

Not everyone has been paid. The trustee has said the remaining creditors mostly have "not completed the necessary procedures", meaning paperwork, identity checks or bank and exchange details. The deadline for the main repayments has been pushed back three times: from 31 October 2023 to 2024, then to 2025, and on 27 October 2025, with court approval, to 31 October 2026, Japan time.

That deadline is now two weeks away. Blockchain analytics firm Arkham tracked about 34,388 bitcoin still in wallets linked to the estate at 30 September 2026, worth roughly $2.9 billion. In June 2026 the estate moved about 10,400 of those coins between its own addresses, which was read as housekeeping rather than a sale. As of mid-October, the trustee's website showed no new notice about a fourth extension.

Karpelès, meanwhile, has proposed his own ending. In February 2026 he published a proposal asking the Bitcoin network to change its rules once, for one address, so that the 79,956 coins stuck at "1Feex" could be returned to the estate for creditors. Critics said that rewriting ownership for a single case would break the rule that makes Bitcoin worth anything: that nobody can take your coins without your key. The proposal has not been adopted.

Mt. Gox gave the industry its most repeated slogan, "not your keys, not your crypto." It did not stop the next exchange from failing in the same way, or the one after that.