Mt. Gox began its life as a website where people could trade Magic the Gathering playing cards via an online exchange; hence the name. What does this have to do with anything? Well, the founder quickly got bored of the idea and nearly four years later, on the 18th of July 2010, the website was repurposed as the first ever bitcoin exchange. Despite such pioneering efforts, history would not be kind to Mt. Gox. The name is now synonymous with the largest hack in crypto, one that continues to affect the industry to this very day.

Was Mt. Gox responsible for filling a niche, or creating one? Debatable, but by 2013 it was handling upwards of 70% of all bitcoin trades. The website was in no small part responsible for the early fame, and infamy, of the original cryptocurrency. Under its tenure, the price of bitcoin went from $0.07 on the day the exchange went live, up to $1242 by November 2013. Then it all came tumbling down, and bitcoin would not see such prices for another three years.

What went wrong? The problems actually started long before the exchange was forced to close. In June 2011, Mt. Gox revealed that 25,000 bitcoin had been stolen. The same week, the user database was leaked. A couple of days after that, a series of fraudulent trades were carried out with the hacker effectively buying bitcoin at whatever price he wanted. In October, a further 2,600 BTC were sent to invalid addresses, losing them forever.

Not exactly smooth sailing, but a walk in the park compared to what was to come. In early February 2014, seemingly out of nowhere, withdrawals were suspended. On the 24th, the website went blank. A leaked internal document would reveal that the company was insolvent, and that it had lost no less than 744,000 of their customers’ bitcoin, in a theft that remained undetected for years. It would also be revealed that the company had lost 100,000 of its own holdings, bringing the total loss to around half a billion USD at the time of the theft. Four days later, Mt. Gox filed for bankruptcy. The ripple effects from these events would condemn bitcoin to its first real bear market.

Customers were understandably upset with the way Mt. Gox had conducted itself, the loss of funds and the lack of communication. Some people even travelled to Japan to confront the owner of the company, a Mr. Mark Karpelès. Face to face, signs in hand, under the cold Tokyo snow, they would receive no answer.

But all was not lost. The following month, it was revealed on the website that 200,000 bitcoin had been found in an old wallet. This changed everything. Due to the way bitcoin transactions work, it was assumed that the missing coins were irretrievably gone. A bitcoin transaction cannot simply be undone. Once they are gone, they are unrecoverable. The old wallet gave some degree of hope, there was now something to hold out for, even if it was only a quarter of the missing balance.

What would follow would be almost a decade of legal wrangling. The problems were two-fold. First of all, at the time of the hack, there was absolutely no legal infrastructure to deal with such a problem. One could argue there still isn’t. Crypto moves a lot faster than the traditional legal system. The second problem is that although the company was set up in Japan, almost none of the customers affected by the hack lived there. It was a legal nightmare.

Despite the obvious discontent with the owner, the consensus remains that Mark is guilty of negligence rather than anything genuinely malicious. At the time of writing, there are a plethora of crypto auditing firms, common security practices, and increasingly, actual regulations that dictate how user funds should be secured. Back in 2011, none of this existed. Security was unbelievably lax by today’s standards (which are in turn lax by traditional financial standards).

There is a silver lining to those who lost out in the Mt. Gox hack. Because of the 200,000 that was found later on, affected parties may expect to receive approximately 21% of the bitcoin they lost. This sounds like a poor deal on the face of it, only receiving a fifth of what they originally had, but we have to take into account the fact that bitcoin is now worth about 30 times more than at the time of the hack. The old guard of the Mt. Gox era was certainly an extremely committed group of people to the idea of bitcoin, but the assumption that every single one of them would have held for the following decade is a difficult position to defend. Considering they thought all had been lost, things could have been much worse.

There is an important point to be made out of the emergence of this scandal. The fact of the matter is that we now have much stronger frameworks in place to secure people’s financial wellbeing in the crypto sphere than we otherwise would have had. Things are not perfect by any stretch of the imagination. Subsequent hacks would be many and close between, each deserving of their own writeup; but with every attack against it, crypto becomes more resilient. Anti-fragile as some would say.

This is to say nothing of the surge in financial legitimacy that bitcoin has benefitted from in recent years. From humble anarcho-capitalist origins, through its use in the trading of illegal substances, to blatant online scams, to a legitimate online currency, the U.S. Securities and Exchange Commission has now approved the creation of bitcoin exchange traded funds, opening the door wide open to institutional investment.

As for good old Mt. Gox, the platform that initially got the ball rolling, the question of who carried out the theft remains unsolved to this day. It is arguably one of the biggest mysteries in crypto, second only to the identity of the creator of bitcoin himself.