Mt. Gox Exchange Collapse: The $8 Billion Crypto Disaster
• The fall of FTX, a crypto empire, has caused much worry in the ecosystem.
• In 2014 world’s largest bitcoin exchange Mt. Gox went bankrupt due to a series of hacks and mismanagement issues.
• These issues were caused by inadequate technical code, inexperienced CEO and transaction malleability.
FTX’s Fall Causes Worry
The fall of FTX, a crypto empire that defrauded investors, customers and employees to the tune of $8 billion, rattled the ecosystem, with many worrying whether the ecosystem would survive.
Mt. Gox’s Failure
Unbeknown to many cryptocurrency newcomers, in 2014 the world’s largest bitcoin exchange, Mt. Gox, went bankrupt following a series of hacks and mismanagement issues. The fall resulted in customers losing over 800,000 bitcoin — a level of worry that makes FTX seem like a blip in time.
Mt. Gox Setup
Tokyo-based Mt. Gox, whose domain (MtGox.com) was originally registered in 2007 to host a trading site for the wildly popular “Magic: The Gathering” game cards, began operating as a rudimentary bitcoin exchange in late 2010. As business began to drive huge traffic, the owner sold the platform to Mark Karpelès who beefed up its web platform’s code to handle an increased volume of bitcoin transactions and buy and sell orders but did not do enough technically or management-wise for it be successful long-term..
On February 24th 2014 Mt. Gox suspended trading and went offline revealing attackers had slowly robbed them of their bitcoins by manipulating transaction data known as transaction malleability leading Mt .Gox to believe certain withdrawals hadn’t happened thus sending requested funds multiple times earlier that month which resulted from Bitcoin protocol being faulty on its observing mechanism when receiving withdrawal requests .
The fall of both FTX and MtGox demonstrate how even big players can fail due to inadequate technical code/infrastructure or lack of experience/knowledge in managing such businesses as well as security flaws within blockchain protocols leading exchanges vulnerable to attack however lessons have been taken from these events showing us what not to do so future events such as this can be avoided