Mt. Gox - was the first legalized crypto exchange, and their bankruptcy still influences the market up to this day. Investigations, lawsuits, the selling of their assets, and the search for the missing money, it felt as if this uproar would never end. But another wave is on its way: in order to return the creditors their money, a trusted representative of Mt. Got will need to sell an unknown amount of bitcoin, which will probably lead to a fall of bitcoin’s price.
Mt. Gox started functioning in 2010 when no-one had even heard of bitcoin yet, and the names of crypto enthusiasts weren’t appearing in business media. Back then the French crypto enthusiast Mark Karpelès, who at the time was living in Japan, bought an exchange from the programmer Jeba McCalebb the developer and participant of many crypto projects (amongst them are Ripple and Stellar blockchains).
The first crypto exchanges didn’t exactly shine when it came to matters of technology, their popularity was very limited, and it was a couple of years before there was an explosion of the demand on bitcoin. A hacker used this situation to his benefit in 2011, stealing $8,75 million worth of crypto assets. It was then, when, the now recognized thanks to bitcoin cash, Roger Ver, help Mark to patch up the holes in the code.
But his efforts didn’t result in anything. In February of 2014, gigantic losses came to the attention of everyone: on the Mt.Gox platform 744,400 bitcoins belonging to the users of the platform, and about 100,000 bitcoin belonging to the exchange itself. In those days, when the word “cryptocurrency” couldn’t be heard on every corner, the stolen crypto amounted to 7% of all the available coin in circulation.
The word “legalized” mentioned at the beginning of the article in relation to Mt. Gox was used on purpose. Japan, the country that beat cyberpunk (?), was one of the first to recognize crypto with legislation. It was considered as a business despite its unknown nature. Users, among whom there were several thousand inhabitants of Japan, began to file collective claims. Mark Karpelès was in debt and under threat of being arrested. The exchange was quickly declared bankrupt.
At the beginning of the summer of 2014, the Tokyo police started a criminal case against Karpelès and began an investigation that lasted for quite a while. It became a precedent: this was the first time state regulators were dealing with cryptocurrencies. Given the transparency of the bitcoin network, the Japanese company WizSec began its own investigation, studying the movements of funds on the wallets of the exchange. The company came to the conclusion that the coins began disappearing long ago through the holes in the code of Mt. Gox. On August 1, 2015, Mark Karpelès was briefly arrested. Then another arrest followed. And only a year later, Mark was bailed out for 95 thousand dollars.
About 750,000 bitcoins were recognized as permanently lost, and 200,000 later found on the exchange accounts and will be required to be returned to the creditors. Payments for a thousand lawsuits, given that bitcoin’s price, soared many times since 2014, will become the expected, but an unlikely event of 2017. The process was supervised by Nobuaki Kobayashi, the court-appointed lawyer, who attracted the attention of the crypto community.
The first debt payments of Mt. Gox began in March this year. For this, 35,000 bitcoins were sold, and the same amount of bitcoin cash. The turmoil around the exchange turned into an endless series, and the appearance of a large amount of currency on the market attributed pressure to the rate. But the impact was overvalued since the crypto was not realized all at the same time.
The next portion of payments is on its way. Those who want to receive lost funds can fill out the form for their return online or contact the office in Tokyo. In the coming months, Mt. Gox’s attorney will collect the data. Lawsuits against Mark Karpelès haven’t stopped coming in: only a few days ago another application was filed in the court of Illinois, but the plaintiff reasonably noted that he was French, and all cases regarding Mt. Gox are investigated in Japan. So there is yet hope that the case will be wrapped up, and there will not be an escalation of this protracted conflict.
The unfortunates of Mt. Gox have been given various names: the robbery of the century (750,000 bitcoins seems to have been lost forever), the biggest trauma of the cryptocurrency market, and the main process of the last decade. Given that the current exchanges, in case of asset losses, cover losses during a maximum of six months and the security situation on the market is much better, that what occurred with Mt. Gox can be called an important lesson to all. It seems to me that we will hear more about this exchange, especially since Mark Karpelès has casually mentioned that Mt. Gox might open again.