The "Mentougou incident" occurred in February 2014, when Mentougou claimed that it had lost about 750,000 bitcoins belonging to its customers and 100,000 bitcoins of its own.
"Mentougou" is the Chinese translation of MT.Gox, which is a Bitcoin exchange located in Tokyo, Japan. It started Bitcoin trading business as early as 2010 and was one of the earliest platforms to participate in this business. Due to its early participation and few competitors, it once became the largest Bitcoin exchange in the world, and its trading volume accounted for as much as 80% of the world's total. Many Chinese Bitcoin users also traded on MT.Gox at the beginning, and MT.Gox was once very popular.
However, in February 2014, MT.Gox exchange announced its closure and filed for bankruptcy. For a time, there were many different opinions on the Internet.
Someone revealed that the reason for the closure was: "Because of a hacker attack, a total of 744,000 bitcoins were stolen and their whereabouts are still unknown."
“The exchange itself stole the coins and sold them to other trading platforms.”
You should know that according to the Bitcoin price at that time, the stolen Bitcoins were worth about 350 million US dollars. If we look at the current Bitcoin price, 750,000 Bitcoins are worth about 14.5 billion US dollars! It is a huge amount. This black swan event directly caused the price of Bitcoin to drop from 600 US dollars to 400 US dollars at that time, a 30% drop in a short period of time.
The total amount of these stolen Bitcoins accounts for 7% of the world's total
After the incident, Mt. Gox's CEO, Karpelè, was also deeply affected.
In early 2015, Karpelè was charged with fraud and embezzlement. Before going to prison, he admitted that he had "found" 200,000 missing bitcoins and stored them in a cold wallet. But later, someone found through analysis that the 200,000 stolen bitcoins were evenly divided into 100 accounts after "split-integrate-split-integrate again". This means that it is very likely that the same person or the same team is operating this.
In mid-2017, Karpelè was transferred to a Tokyo court to stand trial for embezzlement and data manipulation, during which he admitted to operating the debt swap.
Later that year, Karpelès proposed raising $245 million through an initial coin offering to rebuild the Mt. Gox exchange.
Among them, the trustee who followed up the bankruptcy case, Kobayashi, once publicly stated that he had sold 35,800 bitcoins from December 2017 to February 2018 to repay the large amount of assets lost by users in 2013. Some people believe that the multiple sharp drops in Bitcoin are related to the selling of lawyer Kobayashi. Lawyer Kobayashi clarified that he sold through over-the-counter transactions and would not affect the market price.
On March 15, 2019, Bloomberg's correspondent in Japan, Yuji Nakamura, tweeted that a Tokyo court found Mark Karpeles, the head of the cryptocurrency exchange Mt. Gox, guilty and sentenced him to 2.5 years in prison, suspended for four years. Nakamura also said that Karpeles was found guilty of tampering with financial records, but he was not charged with embezzlement.
These reports are still under investigation, the case has not been solved, and the bitcoins have not been found. As time goes by, I believe the final result of this matter will come to light.
It is just a difficult journey for a large number of users to protect their rights. They went to MT.Gox to complain and to the Tokyo Court to sue, but they still could not get back their coins or get corresponding compensation.
In the development process of cryptocurrency, the Mentougou incident has always been a historical node that cannot be avoided in the circle.
After the Mentougou incident, there have been many Bitcoin thefts, such as the theft of coins from Bitfinex and a famous domestic altcoin exchange. Security incidents in the crypto industry continue to occur.
The biggest impact of these thefts is on the entire ecosystem of Bitcoin and blockchain. People's trust in Bitcoin and exchanges will decline, and they will question the concept of decentralization promoted by blockchain.
We cannot completely prevent encryption security incidents, but we can continuously improve the relevant regulatory systems so that the encryption market can develop better.
