mt gox

In 2014, Mt. Gox, the world's largest cryptocurrency exchange, experienced a major hack resulting in the loss of 750,000 Bitcoins. The hack was an inside job and the company filed for bankruptcy. This incident exposed the vulnerability of the blockchain and the risks associated with cryptocurrency exchanges. Despite this, the crypto industry has made significant technological advancements since then. However, it raises concerns about the security of current exchanges like Binance. How would you feel about buying an entire Bitcoin for 10 cents? Although this was possible for quite some time, all good things must come to an end. On the infamous 7th of February 2014, Mt. Gox halted all withdrawals, leaving early Bitcoin traders empty-handed. And Mt. Gox was in 2014 what Binance is today, the world's largest cryptocurrency exchange. And even though we've all, sorry, additionally there are only like 15 crypto exchanges back then, right now there are over 214. So headquartered in the beautiful Shibuya, Tokyo, the exchange handled as much as 70% of all Bitcoin transactions. And suddenly on the infamous 7th of February, it stated that it was insolvent after being the victim of an apparently undetected theft that had been occurring since 2011. So on that famous 7th of February, it stated that it was insolvent after being the victim of an apparently undetected theft that had been going since 2011. And then Mt. Gox decided to halt all withdrawals to gain a clear technical view what is going on in non-nerd language that means figure out what the fuck is going on. And then on the 24th of February, Mt. Gox halted all trading. The reason? The exchange found out that Bitcoins amounting up to half a billion dollars were missing, making it one of the biggest, making it the biggest Bitcoin loss in history. And before I talk about this gigantic Bitcoin hack, I want to tell you guys that this wasn't the first time Mt. Gox got hacked. And before I continue to talk about this gigantic Bitcoin hack, I want to tell you, and before I continue talking about this gigantic Bitcoin hack, and before I continue to talk about this gigantic Bitcoin hack, I want to tell you that this actually wasn't the first time that Mt. Gox got hacked. So today we will talk about the mysterious disappearance of 850 Bitcoins and how Mt. Gox changed the landscape of crypto forever. So three years prior in 2011, user data was leaked because one of the developer's computer was infected with a malware. So three years earlier in 2011, user data from Mt. Gox got stolen because one of the auditor's computer was infected with malware. And because of this, a whale account with 25,000 Bitcoin was hacked. Apart from stealing all the 25,000 Bitcoin, worth about 400k back then, the hacker also tried to sell the Mt. Gox user base, which had a pretty negative ripple effect on the crypto community as a whole. Additionally, he tried to cash out all the Bitcoins on Mt. Gox's exchange function, but he was confronted with a maximum $1,000 cash out limit. Although the hacker wasn't quite successful in the haste that he was planning, he crashed the price inside the exchange from $17.50 to less than a cent per dollar. He crashed the price from $17.50 to less than a cent. Imagine stacking up entire Bitcoins for less than a cent each. I seriously wish I had that time machine. But all of the traders were painfully confronted with the truth by Mt. Gox later. However, all of the traders got confronted with the painful truth only a day later by Mt. Gox. The site announced that it would reverse all illegal transactions that occurred at this crazy price and re-establishing the Bitcoin price at $17.50. Mt. Gox stated that the users bought Bitcoin for less than a cent might be disappointed, but that it is in the company's terms and conditions to reverse all of these transactions. And outside of Mt. Gox, the Bitcoin price dropped another 25% to $13. Good times, huh? Now if you haven't been in crypto since the early days, let me give you a bit of a background of Mt. Gox before I outline the biggest crypto heist in human history that happened in 2014. Because let's be honest, most of you probably don't know what Mt. Gox even is. Now if you haven't been in crypto since the early days, let me explain to you of what Mt. Gox really is and how the biggest crypto heist in human history happened in 2014. In late 2006, Jed McCallop wanted to build a website for Magic, the gathering online trading card players. His vision was to enable players to trade these cards like stocks. Mt. Gox actually stands for Magic, the Gathering Online Exchange. But in 2010, McCallop found out that there was something called Bitcoin and there was a community that needed a place to trade those funny little Bitcoins. So he took his name and rebranded the whole business model to go from playing cards to So that was the history of Mt. Gox. Let's find out what happened in 2014 that nearly killed Bitcoin. On the 10th of February 2014, three days later after the hack, Mt. Gox published a press release stating that a bug in their platform made it possible for someone to use the Bitcoin network and alter transactions to make it seem that sending of Bitcoins didn't occur while it actually did occur. This makes it look in the back end of the exchange that the transaction wasn't proceeded correctly even though it actually was. This is called the double spending issue. And this is something that even Satoshi Nakamoto warned about in the white paper that he wrote. The double spending issue of Bitcoin is essentially the biggest problem that Bitcoin will ever face since it allows anyone with more than 51% or more of the current hash rate to alternate the blockchain information. The double spending issue of Bitcoin is essentially the biggest problem that the blockchain faces. It means that anyone with control of more than 50% of the current hash rate is able to alternate the information on the blockchain. I can do a whole another video about Bitcoin, but for now you only need to know that because of that somebody was able to drain 750,000 Bitcoin from Mt. Gox back then. I'll say it again, 750,000 Bitcoin. And more importantly, these Bitcoins were stolen in one go, but over a period of three years. And then two weeks later, Mt. Gox filed for bankruptcy. And then two weeks later, Mt. Gox filed for bankruptcy in Japan and protection from creditors called Minji Saisai, which translates to civil rehabilitation. That's a bit fishy, right? So in total, Mt. Gox lost over 750,000 of its client Bitcoins and over 100,000 of its own Bitcoins. That makes it up over 7% of the total Bitcoin circulation. Luckily, 200,000 Bitcoin were found in an old wallet, reducing the damage to 650. And this is where things start getting a bit weird, because you might wonder, so who's responsible for the hack? And also, you might easily blame it on some mysterious hacker in a basement. Many people blame the French developer, Mark Karpolos, who bought Mt. Gox from McKellet in March 2011. So was it an inside job? After all, it's a bit weird that somebody buys the company and then suddenly these drains start to happen. For this reason, Karpolos was arrested in 2015 by Japanese police and charged with fraud and embezzlement. And additionally, he was charged with playing around with the Mt. Gox computer system. However, none of these charges really solved of who stole 650,000 Bitcoins, what happened with them, and who owns them. So in the end, we don't really know who stole the Bitcoin. The only thing that we know, that in 2014, more than 7% of the total Bitcoin supply got stolen, mysteriously an exchange declared bankruptcy, and for some time people were able to buy Bitcoins for less than a cent. And at this special day, Bitcoin is trading at more than $20,000, and most people have forgotten about Mt. Gox. However, the story of Mt. Gox is a beautiful example of the limitations, the strengths and limitations of the blockchain, and how it sometimes attracts bad players. But crypto moves on, and yet even though the price is down from its all-time high, tremendous advances in technology have been made in the last year. But before I wrap up this video, I want you to think about one thing, if Mt. Gox happened, what if Binance is next? See you in the next video.