In February 2014, the Mentougou incident shocked the world when MT.Gox, a bitcoin exchange in Tokyo, Japan, announced that it had lost about 750,000 bitcoins belonging to its customers and 100,000 bitcoins owned by the platform.
As one of the early entrants into the Bitcoin trading market, MT.Gox started operations in 2010. Due to the low market competition, it quickly became the world's largest Bitcoin exchange, accounting for 80% of the global trading volume. Many Chinese users also traded on MT.Gox, which once made it extremely popular.
However, in February 2014, MT.Gox suddenly announced its closure and filed for bankruptcy because the platform lost a large number of bitcoins. The official explanation was that the platform was hacked, resulting in the theft of 744,000 bitcoins. There were also rumors that insiders of the exchange stole the bitcoins and sold them to other trading platforms.
According to the bitcoin price at the time, the stolen bitcoins were worth about $350 million, while according to the current price, the value of 750,000 bitcoins is as high as $14.5 billion. This incident directly caused the bitcoin price to plummet from $600 to $400, a drop of 30% in a short period of time.
The stolen bitcoins account for 7% of the world's total. After the incident, MT.Gox CEO Mark Karpelès was deeply affected. In early 2015, Karpelès was charged with fraud and embezzlement. He once said that he had found 200,000 missing bitcoins and stored them in cold wallets, but subsequent analysis found that these bitcoins were dispersed into 100 accounts, suspected to be operated by the same team.
In 2017, Karpelès was transferred to a Tokyo court for trial. During the trial, he admitted to having conducted a debt exchange operation. At the end of the same year, Karpelès proposed to raise $245 million through an initial coin offering to rebuild MT.Gox.
Kobayashi, the trustee who followed up on the bankruptcy case, once publicly stated that he sold 35,800 bitcoins to repay user losses from the end of 2017 to the beginning of 2018. Some people believe that the multiple sharp drops in Bitcoin are related to Kobayashi's selling, but he clarified that selling through over-the-counter transactions does not affect the market price.
On March 15, 2019, a Tokyo court found Mark Karpelès guilty of tampering with financial records and sentenced him to 2.5 years in prison, suspended for four years. However, the charge of embezzlement was not established. The case is still under investigation and a large amount of Bitcoin has not yet been found.
This incident resulted in many users’ rights protection being fruitless. They went to MT.Gox and the Tokyo court to complain, but failed to get their bitcoins back or get compensation. The Mentougou incident became an important node in the history of cryptocurrency development. Subsequently, several theft incidents occurred, such as Bitfinex and a famous domestic altcoin exchange, which intensified the distrust of Bitcoin and blockchain.
Although it is difficult to completely prevent encryption security incidents, improving the relevant regulatory system is the key to promoting the healthy development of the encryption market.
