Mt Gox Files For Bankruptcy After $473 Million In Bitcoins "Disappeared"

Tyler Durden's picture

For a case study of a blistering rise and an absolutely epic fall of an exchange that i) was named after Magic: the Gathering and ii) transacted in a digital currency which many have speculated was conceived by the NSA nearly two decades ago and was used as a honeypot to trap the gullible, look no further than Mt.Gox which after halting withdrawals for the second (and final time) has finally done the honorable thing, and filed for bankruptcy. As the WSJ reports, "Bitcoin exchange Mt. Gox said Friday it was filing for bankruptcy protection after losing almost 750,000 of its customers' bitcoins, marking the collapse of a marketplace that once dominated trading in the virtual currency. The company said it also lost around 100,000 of its own bitcoins. Together, the lost bitcoins would be worth approximately $473 million at market prices charted by the CoinDesk bitcoin index, although the price of Mt. Gox bitcoin had fallen well below that index after it stopped bitcoin withdrawals in early February."

The punchline: speaking to reporters at Tokyo District Court Friday after the bankruptcy filing, Mt. Gox owner Mark Karpelès said technical issues had opened the way for fraudulent withdrawals, and he apologized to customers.  

"There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble"

So $473 million Bitcoins disappear just like that? But you heard the man - he is sorry. So all is well - and why not: it works for the TBTF banks every day.

What is amazing is that at the time of filing Mt. Gox had outstanding debt of about ¥6.5 billion ($63.6 million), and just as amazing is that it actually had assets worth ¥3.84 billion.

Elsewhere, prices on the CoinDesk index, which tracks the Bitstamp and BTC-e bitcoin exchanges, fell slightly after the announcement but appeared to stave off a larger drop.

Mr. Karpelès, wearing a gray suit and a blue tie, appeared calm while his lawyer did most of the talking, but he appeared to have difficulty finding words when reporters asked him to send a message to his investors, just repeating his apology.

Computer geeks who were hoping to ride the momentum train to riches, and apparently had never heard of gold, were unhappy:

"It is disappointing they hid so much for so long," said Jonathan Waller, a 30-year-old game developer who said he had had 211 bitcoin in Mt. Gox. "I hope they manage to become a fully-functioning exchange again, but their reputation is so damaged it may not be possible," he said.


Over the past month, customers from as far away as the U.K. and Australia had come to air their complaints outside the company's Tokyo offices. One of them, Londoner Kolin Burges, figured in news photos around the world holding a sign saying, "MT GOX—WHERE IS OUR MONEY."


William Banks, a website developer in Australia, said he lost about 100 bitcoins in Mt. Gox. He had been using the platform since the end of 2012, when he bought some bitcoins at $40 each. Recently, he bought more at about $800 a pop as he became more confident in the virtual currency. He said he has contacted a Japan-based lawyer to look into legal action.


About Mt. Gox's loss of bitcoins, he said, "That seems impossible to me. It's just such an astronomical amount of coins to lose."

Only when redenominated in USD. Remember: BTC is its own currency so why fret? As for the collapse of this latest Ponzi scheme: if things appear too good to be true (wink wink S&P 500), they usually are.

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Tinky's picture

Well, thank goodness for my failsafe paper wallet...

Zero_Sum's picture

BitCorzine'd, so to speak.

duo's picture

Bitcoin, 2014's version of the gold miner stocks.

wallstreetaposteriori's picture

I guess this should be bullish for shitcoins....right foneystar.  

Sudden Debt's picture

That 50 dollar he had invested my be gone right now...

well... that will be 4 more blowjobs he'll have to perform at that reststop I guess to get it back...

MillionDollarBonus_'s picture

I tried to warn bitcoinbugz that this eccentric experiment in decentralized currency would end badly, but of course libertarians and power-hungry hackers always think they know better than everyone else. This bankruptcy is proof that bitcoin will never be a legitimate currency and simply cannot stand up to the tangible, centralized alternatives. Currency needs to be backed by a strong authority or it simply cannot function. Economists have proved this over and over again and yet somehow libertarians still don't get it.

TruthInSunshine's picture

"William Banks, a website developer in Australia, said he lost about 100 bitcoins in Mt. Gox. He had been using the platform since the end of 2012, when he bought some bitcoins at $40 each. Recently, he bought more at about $800 a pop as he became more confident in the virtual currency. He said he has contacted a Japan-based lawyer to look into legal action."

Better call Japan's version of Saul Goodman-san!
"About Mt. Gox's loss of bitcoins, he said, "That seems impossible to me. It's just such an astronomical amount of coins to lose." "

It's just a 400 million USD heist. Mr. Karpeles did say that he "is sorry for causing trouble."

What more do you want, whiner?


Keyser's picture

Paging Fonestar... Fonestar, please pick up one of the white courtesy telephones for an informational message... Something about where all your bitcoins went and what currency was used to cash them out... 

Gief Gold Plox's picture

I'm honestly amazed he hasn't shown up yet... talking about how noone cares about Mt. Gox.

More and more I'm starting to think that he's been planted here by some fed agency as to deter people from getting into bitcoin.

I know I feel ashamed in admitting I own some of the same currency as that idiot does.

CH1's picture

And the Haters have their day.

They seem to think that Bitcoin itself is dead, and not just one exchange... probably just a function of their malicious joy.

GetZeeGold's picture




It's only $473 Million....I'm sure it will turn up somewhere.

AlaricBalth's picture

And in other news today, the NSA's 2014 operating budget was just increased by $473,000,000. A spox for the NSA stated, "We are pleased that the administration has shown confidence in our ability to fight terrorism and defend freedom, which justifies this increase in our funding."

Skin666's picture

Yes they really did outdo themselves with the Boston Bombing

TruthInSunshine's picture

p.s. - How does Bitcoin Bankruptcy Court work? (since Magic, the gathering was part of the bitcoin currency exchange)

TerminalDebt's picture

It's only half a billion fiat currency, that's nothing. Not like fiat currency is worth anything anyway.



Manthong's picture

Nothing like a little counter-party risk to negate the value of the blockchain.

BaBaBouy's picture

Maybe FukashimaCoin's Are A Better Bet For The Suckers That Are Still Into This Crap...???...

ultraticum's picture

Why is it that everybody talks about the exchanges synonymously with Bitcoin, and not on the protocol/currency itself?  Is it because this is a financial site, and we're all used to turning over digital $US or EURO or YEN fiat to the bankster?  We can't imagine a currency without the bankster?  One of Bitcoin's attributes is that it can OBVIATE the exchanges and middle-men money jobbers.

The people who kept their money with an exchange (either for day trading or whatever) deserve to lose it of the exchange goes belly up. That is a simple free market concept we, as FDIC-insured thoroughly indoctrinated statist muppets, have totally lost along the way. 

If only the TBTF fiat currency exchanges (i.e. banks) had been allowed to fail as spectacularly in 2008 as Mt. Gox . . .

Cue the universal cry for "government regulation" of Bitcoin, due to acts perpetuated outside the protocol by banksters, in 3 . . . 2 . . . 1

Prisoners_dilemna's picture

An excellent explanation of transaction malleability and how mt.gox operated.


The interviewee gives an excellent analogy to explain where mt gox went wrong, how it ended up operating in a fractional reserve manner, eventually led to a run, and finally collapsed.

Because bitcoin is in the wild we see beautiful free market solutions popping up such as the one at


Weak hands to strong hands.

honey badger dont give a fuck.

boogerbently's picture

How many other MORONS, in typical American fashion, incapable of admitting a mistake, will leave their $$$ in other exchanges, thinking it is just a "MtGox" problem ???

"Hey, would you sell JPM because WFC has a problem?"

Mark Twain nailed it:

Man is the only animal that can be skinned more than once.

Prisoners_dilemna's picture


The blockchain isn't negated. Exchanges (they;re kinda new and all) haven't implemented this type of self reporting yet.

The system is designed to be trustless. It is. We just need to continue implementing it correctly, not half assed like gox did.


The tools exist to allow bitcoin to inherently prevent wildcat banks from existing. The exchanges just choose not to implement this yet. To the customers loss.

boogerbently's picture

Pay no attention to the man behind the curtain.

fonestar's picture

Why?  What happened to fonestar?

AlaricBalth's picture

Welcome back fonestarnac the magnificent. Heaven has no brighter star than our omniscient stellar guest, that omnipotent master of the east and former manicurist to Satochi Nakamoto.

I hold in my hand these envelopes. As a child of four can plainly see, these envelopes have been hermetically sealed. They've been kept in a #2 mayonnaise jar since noon today on Funk and Wagnell's porch. No one knows the contents of these envelopes, but you, in your divine and mystical way, will ascertain the answers to these questions having never seen them before.

Here are the questions: Bitcoin, Mt Gox and hacked hash.

We await in silence your wise response...



Mad Mohel's picture

Don't humor the pumping cunt.

fonestar's picture

fonestar doesn't need to pump dipshit.  Bitcoins are so far advanced of your "dollars" they overpower them easily.

silverserfer's picture


The correct answer was, "I'm am going to have to sell of all my magic the gathering and pokemon card collections on ebay now to pay mom for next months rent."


Stackers's picture

Poor Fonestar bought BTC at $10 and can still sell them for $500+


Idiots that keep BTC or fiat in exchange accounts for more than 72 hours get what they deserve. Greed killed the people using MtGox. One look at MtGox's wire out transfer policy would have seen they were insolvent. Only insolvent fractionally backed companies take 1-2 months to process a wire transfer request as a stated terms of service

pods's picture

Search the archives, "fonestar" got out at $780 IIRC. 

Fonestar is just one of us (read some non BTC stuff he posts)  who bought a magic mirror and cannot look away from all the awesome it shows him.

It is an act.


fonestar's picture

Yes, fonestar is not very poor.  Thanks in large part to Satoshi Nakamoto and the socratic method.

walküre's picture

You also got your family involved to buy at the top. Not sure if should loathe you or contact you for a bridge I'd like to sell. Sure you can pull it of!

silverserfer's picture

Yeah I bet you got heavily involved in Statoshi's scroatic method. Teabag on the forehead lessons were exhausting i'm sure. 


But I'm sure they were worth it, just look where you are today! 

pods's picture

I would trade my skittle shitting unicorm Beanie Baby for that card!


boogerbently's picture

Another thought.

Does he file "imaginary" bankrupcy, for losing this "imaginary" money?

Johnny Cocknballs's picture

You go before a Dungeon Master, who asks you riddles three...

Patriot Eke's picture

In other words, it's just another tax.

gold-is-not-dead's picture

it went to china, two days ago...

Patriot Eke's picture

That's another possibility.  The US Dollar is going to zero, and our creditors are pissed.  How do you repay them?  Hey, let's create this digital currency thing, and then we'll let our creditors cash in.  It sure is a lot less hassle than invading nations or moving gold bars.  har har

giggler321's picture

The best way to rob a bank is own a bank, poor Gox.  There is more to this than one first thinks.

Bindar Dundat's picture

Right on giggler and there is more bad history  (can we say crooked?)  than meets the eye. It will/should come out by Monday and it will not be pretty.

To those that think this is about bitcoin, not a bad actor, please enjoy your moment of gloating because reality has a way of catching up with people who gloat to soon.  Bitcoin (the network and the invention) is not going away because there are five billion people in the world who need low cost banking services and could care less about the U.S. reserve status.  Bankers in your system would think this crook is a light weight if he only managed to steal $470M.  

fonestar's picture


Another Bitcoin thread?  Sometimes fonestar wishes he was not on Pacific Time!

Bangin7GramRocks's picture

It's not that it is just $470 million. Isn't that like 10% of the total value of all these virtual collectibles? A similar heist in the dollar would be trillions. Oh well, more suckers will line up for the next get rich without working for the money scheme.

Bindar Dundat's picture

The people who diss BTC are usually the ones who can borrow money and have access to traditional banking services.  Most of the naysayers are in America or Europe because the system has treated them better than the other five billion people in the world.  Listen up you greedy punks : Digital stateless currency is here to stay and the central bankers and their trolls can stick it up their  lazy inovation-free buts.  The invention of the blockchain is not going away and a central bank can be replaced with a few hundred lines of code.  The ability to send micro payments  and larger payements for virtually nothing will upset the banking applecart and that is fine with a lot of us who are tired of currency manipulation.  Zero hedgers complain bitch and whine about the central banks but none of you have the brains or the balls to actually spend time learning about digital currency.  Go ahead - down arrow me -- make my day you crudites.

Toolshed's picture

Why don't you tell us why you come to this site?