On the Rise and Fall of a Bitcoin Empire – Axtschmiede
On the Rise and Fall of a Bitcoin Empire
The history of the Bitcoin exchange Mt.Gox has triggered a landslide in the crypto world. The platform quickly became the world’s largest crypto exchange — then the crash came. The result: spoiled customers, missing Bitcoin, bankruptcy proceedings and many unanswered questions. We trace the inglorious history of the stock exchange and ask about the current status.
It’s the year 2009. The effects of the financial crisis can still be felt everywhere, Satoshi Nakamoto’s white paper is only one year old and Bitcoin is the first cryptocurrency to learn to run. The fact that one can get big money with the digital currency is at most a foreboding of a few crypto experts.
Five years later. Thousands of customers are waiting in vain for their balances to be paid, Mt.Gox owner Mark Karpelès is on trial and the stock exchange has filed for bankruptcy. What happened in the short period of time?
From trading cards to the Bitcoin exchange
The story of Mt.Gox begins in 2009. Jed McCaleb founds an online exchange for trading cards for the trading card game “Magic”. Hence the name of the stock exchange: M agic: T he G athering O nline E x change. Speaking of McCaleb: The founder of Mt.Gox is anything but a blank slate in the crypto scene. He was co-founder of Stellar and later founded Ripple. But back to the action.
Mt.Gox, The Rise and Fall of a Bitcoin Empire
At the same time, Mark Karpelès decides to emigrate from France to Japan and founds the IT service provider Tibanne Co. Ltd. in Tokyo. Two years later, Karpelès and Tibanne took over the Mt.Gox exchange, which has meanwhile been switched to Bitcoin. From there, the inglorious story takes its course.
The exchange quickly developed into the largest trading platform for Bitcoin. In August 2013, 60 percent of Bitcoin’s global trading volume is processed via Mt.Gox. The exchange has established itself as the most prominent marketplace for the cryptocurrency that is currently booming. As rapid as the stock market rose within a very short time — the demise is already becoming apparent.
The house of cards collapses
Inconsistencies in the stock market are gradually increasing. A not insignificant amount of 850,000 Bitcoin have fallen victim to a hacker attack, according to the company. The loss is valued at $ 500 million, at the current bitcoin rate , that would be just under $ 7.9 billion.
Mt.Gox owner Karpelès is suspected of being linked to the ominous disappearance of Bitcoin. However, the claim can never be substantiated. In any case, the loss of the virtual coins is the beginning of the end.
On February 28, 2014, Mt.Gox filed for bankruptcy at a Japanese district court. The exchange then stops paying to its customers.
The Mt.Gox case is also of increasing interest to the judiciary. In the course of the legal proceedings, 200,000 of the missing Bitcoin suddenly appear again. At the time, these were found in old wallets. At this point at the latest, the story gets a bitter aftertaste.
In addition, it emerges that Karpelès manipulated computer data to pay bills between 2013 and 2015 and that the exchange did not yet have the licenses it needed. The handheld trick, in which 200,000 Bitcoin were just pulled out of a hat, is the last wind of the exchange — the noose is gradually tightening.
A pile of broken glass
This leaves thousands of customers who have been chipped away waiting for their assets to be paid out. Until the end of May 2015 , they can assert their claims against Mt.Gox via an online settlement process. However, the payments are still outstanding. In May 2016 , a class action lawsuit against the Bitcoin marketplace in Canada was dismissed.
Meanwhile, Karpelès has been arrested by the Japanese police and faces trial for fraud and embezzlement, but is released on bail in July 2016 after 10 months in prison. It seems that the Mt.Gox case is finally closed.
But then a notorious person prepares to save the stock market from ruin. None other than Brock Pierce, a former Disney child star, now a crypto entrepreneur with a penchant for eccentric hats and a suspect in child abuse allegations, plans to take over Mt.Gox. He would like to compensate the 24,000 creditors and rebuild the stock exchange. So is there hope for the victims?
Probably not. Brock Pierce’s attempt to revive Mt.Gox through an ICO has so far failed. This requires the consent of all partners. Curious: Brock Pierce recently said in an interview that he owned 100 percent of the company through shares he had acquired. Karpelès disagrees, however. He only signed a letter of intent, but he never sold the company’s shares. So the plans seem to be put on hold and sound more like a tired PR gag on the back of the creditors.
aftermath
So what do we learn from history? The Mt.Gox case has shown that the Bitcoin gold rush promoted an unregulated exchange system that opened the door for fraudsters. The stock exchange has told a story that is as old as mankind itself: a few enrich themselves at the expense of many.
It may sound cynical, but the case has also had positive effects. Customers are sensitized to their investments, stock exchanges are more or less checked and unreal promises that lure with quick money are viewed with more skepticism. This does not prevent similar incidents from happening again. But you can’t say you couldn’t have known.
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Published at Sun, 29 Dec 2019 14:12:59 +0000
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