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28 February 2014 · Markets

What happened to Mt. Gox?

UTXOHub · Bitcoin's history

Mt. Gox, a Tokyo exchange that once handled most of the world's bitcoin trading, stopped withdrawals in February 2014, went offline and sought bankruptcy protection, saying about 850,000 bitcoins had disappeared (about 200,000 were found weeks later). A court-appointed trustee began repaying creditors in bitcoin in July 2024, and the deadline for repayments is now 31 October 2027.

2 Sept 2013 – 28 Aug 2014 · Week of 28 Feb 2014: $681High $1,080

What Mt. Gox was

Mt. Gox was an exchange: a website where people swapped ordinary money for bitcoin and back. Customers left their coins and cash with it, so they relied on it to keep them safe. By 2013 it was “handling 70 percent of all bitcoin trades worldwide”, according to CoinDesk. Reuters later wrote that it “once handled 80 percent of the world's bitcoin trades”. The company, MtGox Co., Ltd., was based in Tokyo and led by Mark Karpelès.

How it collapsed in February 2014

On 7 February 2014 Mt. Gox told customers that “all bitcoin withdrawals will be paused”, so nobody could take coins out, CoinDesk reported. On 24 February it stopped all trading and its website went offline, according to CoinDesk's history; NPR reported the site offline on Tuesday 25 February. On 28 February the company applied to the Tokyo District Court for civil rehabilitation, a form of bankruptcy protection. Its notice said it owed about 6.5 billion yen but had assets of only about 3.8 billion yen, and blamed the “abuse of a bug in the bitcoin system”. Karpelès apologised at a news conference at the court, NPR reported, citing Reuters.

How many bitcoins went missing

The company said about 750,000 bitcoins belonging to customers and about 100,000 of its own had disappeared: about 850,000 in all, worth $473 million according to Bloomberg News, as quoted by NPR. On 20 March 2014 it announced that it had found 199,999.99 bitcoins in an old-format walletWalletAn app or device that holds your keys and makes, signs and sends payments. The bitcoin itself stays on the blockchain. used before June 2011, which cut the missing total to about 650,000. Later reports give other figures: in 2024 CNBC wrote that “up to 950,000 bitcoin” had disappeared. In March 2019 a Tokyo court found Karpelès guilty of data manipulation and acquitted him of embezzlement, giving him two and a half years in prison, suspended for four years, Reuters reported. Japan's Supreme Court dismissed his last appeal on 27 January 2021, making the conviction final, the Sankei Shimbun reported.

The long court case

On 16 April 2014 the court turned down the rehabilitation application, and on 24 April it opened bankruptcy proceedings with the lawyer Nobuaki Kobayashi as trustee. In November 2017 some creditors asked the court to switch the case to civil rehabilitation, and it agreed on 22 June 2018, which stopped the bankruptcy. After selling some coins for yen, the trustee held 141,686 bitcoins on 21 September 2018. Creditors approved a repayment plan on 20 October 2021, with about 99% of those voting in favour, and the court confirmed it the same day.

Repayments since 2023

Some creditors said they received cash payments in yen in late December 2023, The Block reported; the trustee did not comment. On 5 July 2024 the trustee made the first repayments in bitcoin and bitcoin cash, through cryptocurrency exchanges chosen to receive them for creditors. On 16 October 2026 it said it had “largely completed” repayments to creditors who had finished the paperwork without problems, but that “many rehabilitation creditors still have not received their Repayments”. With the court's permission it moved the deadline from 31 October 2026 to 31 October 2027, Japan time. It has moved the deadline back by a year each autumn since 2023, as its list of notices shows.

Bitcoin's history

References

  1. CoinDesk, “Mt. Gox”, 5 June 2020.
  2. Reuters, via NBC News, “Japan court hands Mt. Gox founder 2.5 years suspended sentence”, 15 March 2019.
  3. CoinDesk, “Mt. Gox Halts ALL Bitcoin Withdrawals, Price Drop Follows”, 7 February 2014.
  4. NPR, via Vermont Public, “Bitcoin Exchange Mt. Gox Goes Dark After Theft Report”, 25 February 2014.
  5. MtGox Co., Ltd., “Announcement regarding an application for commencement of a procedure of civil rehabilitation”, 28 February 2014.
  6. NPR, via MPR News, “Bitcoin exchange MtGox files for bankruptcy”, 28 February 2014.
  7. MtGox Co., Ltd., “Announcement regarding the balance of Bitcoin held by the company”, 20 March 2014.
  8. CNBC, via NBC News, “Mt. Gox begins repaying bitcoin to creditors a decade after exchange's collapse. What it means.”, 5 July 2024.
  9. Sankei Shimbun (archived, in Japanese), “ビットコイン事件　カルプレス被告の有罪確定へ (Bitcoin case: Karpelès's conviction to become final)”, 28 January 2021.
  10. MtGox Co., Ltd., “Information regarding the dismissal of the application for commencement of a civil rehabilitation procedure and the order for provisional administration”, 16 April 2014.
  11. Mt. Gox bankruptcy trustee, “Announcement of Commencement of Bankruptcy Proceedings”, 24 April 2014.
  12. Mt. Gox rehabilitation trustee, “Announcement of Commencement of Civil Rehabilitation Proceedings”, 22 June 2018.
  13. Mt. Gox rehabilitation trustee, “Documents distributed at the Meeting for reporting the status of property”, 26 September 2018.
  14. Mt. Gox rehabilitation trustee, “Notice of Confirmation Order of Rehabilitation Plan”, 20 October 2021.
  15. The Block, “Mt. Gox reportedly starts repaying some creditors via PayPal”, 26 December 2023.
  16. Mt. Gox rehabilitation trustee, “Notice regarding Repayment in Bitcoin and Bitcoin Cash”, 5 July 2024.
  17. Mt. Gox rehabilitation trustee, “Notice Concerning Change of Repayments Deadline”, 16 October 2026.
  18. Mt. Gox rehabilitation trustee, “MtGox.com”.