In late February 2014, Daniel was sitting at his computer trading bitcoins on the Tokyo-based cryptocurrency exchange Mt. Gox. Suddenly, the website went blank and stopped responding. Panicking, Daniel searched for answers on the Bitcoin Talk internet forum, where speculation had already begun: Mt. Gox was in trouble.
Daniel, who lives in Europe, was a college student at the time. After making some money trading bitcoins on Mt. Gox, he had deposited almost all of his wealth into the platform. When Mt. Gox went down, Daniel says he went into “full crisis mode.” He needed that money to fund the rest of his time at school.
On February 28 of that year, Mt. Gox filed for bankruptcy. Hundreds of thousands of bitcoins (then worth about $400 million, now worth $45 billion) had been stolen in an identity theft attempt. Elaborate robberythe company said. It had virtually no funds remaining with which to process the withdrawals.
So began a Kafkaesque experience for Mt. Gox customers, who for the past decade have struggled through a tortuous, bureaucratic corporate reorganization process in hopes of recovering the bitcoins they lost. WIRED spoke to eight former Mt. Gox customers, all but one of whom, like Daniel, asked to appear under a pseudonym to protect their financial privacy. They all told a similar story, characterized by confusion, repeated delays, and an infuriating lack of control.
“The first few weeks were the worst,” says Daniel, who fell into a depression during that period and began drinking. Although he later secured a loan to finish college, Daniel turned for a time to credit card fraud to replace the stolen funds, telling himself that nothing bad would happen to the cardholders, who were insured. After he was nearly caught, he looked for a steady job, but by that point he had “pretty much given up on life,” Daniel says.
Ten years later, Mt. Gox customers are about to be reunited with their bitcoins. On June 24, the trustee responsible for managing the estate, veteran bankruptcy lawyer Nobuaki Kobayashi, Announced that cryptocurrency refunds would start trickling in from July. On Friday, the coins began to move.
In a highly atypical turn of events, Mt. Gox customers will actually benefit financially from their participation in the bankruptcy. Because only a limited amount of bitcoins were recovered, customers will receive only about 15 percent of the bitcoins they held on the exchange. However, the hundred-fold increase in price in the intervening period means that the dollar value of the coins will far exceed the value of their original stack. In total, about $9 billion in value of bitcoin will be returned. “I’ve seen the cryptocurrency universe grow, die, and grow again,” says Daniel. “I watch the bitcoin charts every day.”
Mount Gox was Founded in 2010 by Jed McCaleb, one of the first Bitcoiners in the United States. McCaleb sold the platform in 2011 to Mark Karpeles, a young French developer, under whose leadership it became the largest in the world. In 2013, Three-quarters of the world’s bitcoin transactions They were reported to be passing through Mount Gox.