The Mt. Gox hack incident is one of the most representative security incidents in the crypto industry—it directly propelled the subsequent development of exchange risk control systems and compliance processes, and is also one of the most devastating loss events in blockchain history.

📌 1. What is Mt. Gox?

  • Once the world's largest Bitcoin exchange
  • At its peak, handled 70% of the network's BTC trading volume
  • Company located in Tokyo, Japan, operated by Mark Karpelès
  • Launched in 2010, peaked in 2013

At that time, most Bitcoin users' funds were kept on Mt. Gox, making it almost the industry's "centralized financial bank."

📌 2. The Core of the Incident: Loss of 850,000 BTC

✔️ In February 2014, Mt. Gox announced suspension of withdrawals

Users began to experience inability to withdraw funds.

✔️ Subsequently, the official admitted:

Total loss of 850,000 BTC (750,000 user + 100,000 platform)

At the then market price, approximately $450 million
At BTC ATH ($69,000), equivalent to $59 billion loss
At $70,000 in 2025, value exceeds $59.5 billion

This is one of the most destructive hack incidents in crypto history.

📌 3. Methods of the Hack (Core Causes)

💥 1) Long-term theft from hot wallet (biggest vulnerability)
Subsequent investigations revealed:

  • For years (2011–2014), hackers continuously stole BTC
  • Mt. Gox did not detect it
  • Internal accounts were completely chaotic, with no real-time reconciliation mechanism in the system

💥 2) Exchange software design flaw: Transaction Malleability attack
Attackers could modify transaction IDs, making the platform believe withdrawals failed and issue coins repeatedly.

💥 3) Chaotic internal management, no audit system

  • Improper separation of cold/hot wallet management
  • Operations team lacked security capabilities
  • No external audits
  • Extremely unprofessional private key management

In summary:
Hacker actions + extremely poor internal management = massive disaster.

📌 4. Event Timeline (Clear Version)

2011–2013:

  • Hackers began continuous intrusion into Mt. Gox wallets
  • Operations team failed to detect
  • BTC was slowly drained

February 2014: Withdrawal issues erupt

  • Users began unable to withdraw
  • Officials claimed technical issues
  • Industry-wide panic

February 28, 2014: Mt. Gox files for bankruptcy protection

  • Admitted loss of 850,000 BTC
  • Market crash
  • Global users suffered heavy losses

2014–2017: Audit and investigation phase

  • Japanese courts intervened
  • Later recovered 200,000 BTC (in an old wallet)

2018–2024: Compensation plans repeatedly delayed

  • Due to BTC price surges and complex legal procedures, compensation was postponed multiple times
  • Final compensation plan uses a mix of "fiat and BTC/BCH" settlement

2024–2025: Compensation begins to be distributed gradually

  • Victims began receiving partial BTC/BCH
  • Market saw short-term "Mt. Gox selling pressure concerns"

📌 5. Impacts of the Mt. Gox Collapse

1. Changed the security philosophy of the cryptocurrency exchange industry

  • Cold wallets + multi-signature became industry standards
  • Proof of Reserve concept was proposed

2. Greatly promoted exchange compliance

  • Japan introduced stricter crypto licensing regimes
  • Global regulatory frameworks began to take shape

3. Caused long-term distrust of centralized exchanges among users

  • "Not your keys, not your coins" became an industry mantra
  • Promoted the development of DEXs

4. Long-term impact on BTC price

  • After the incident, Bitcoin price dropped 30–50% at one point
  • But it also shaped Bitcoin's antifragility

📌 6. Mt. Gox Compensation (Latest Status)

In 2024–2025, creditors are gradually receiving:

  • BTC
  • BCH
  • Fiat (JPY/USD)

Compensation is categorized according to legal procedures, with different amounts received by different users.

Although compensation has begun, many investors have suffered huge losses because:

  • Compensation amounts are calculated based on the bankruptcy filing price
  • Far below today's BTC market price