Oct 2011 - Mt. Gox Coins Destroyed - $8k (Japan)
"Mt.Gox is the world's most established Bitcoin exchange. You can quickly and securely trade bitcoins with other people around the world with your local currency!" "It allows you to trade US Dollars (USD) for Bitcoins (BTC) or Bitcoins for US Dollars with other Mt Gox users. You set the price you want to buy or sell your BTC for." "Buy Bitcoins at market rates with your credit card or many other payment methods." "Automate your trading with our Trading API" "Dark pools allow you to trade large quantities without moving the market."
"4 Easy Steps: 1. Make an Account. 2. Add some funds. 3. Buy or Sell Bitcoins. 4. Withdraw your converted funds." "Fully automated, always available, 24 hours a day, Safe and Easy."
"Mt.Gox is protected by Prolexic and certified by VeriSign, which means all communications with our servers are encrypted with SSL technology." "We're always on. Buy and sell Bitcoin 24/7/365 with the world's most sophisticated trading platform." "Buying and selling Bitcoin doesn't have to be complicated! Get trading in a few simple steps." "The only multi-currency Bitcoin trading platform where you can trade with the entire world in your local currency."
"October 28, 2011, about two dozen transactions appeared in the block chain (Block 150951) that sent a total of 2,609 BTC to invalid addresses. As no private key could ever be assigned to them, these bitcoins were effectively lost." "Exactly 2609.36304319"
“Mt. Gox fully reimbursed customers after this incident.” "Mt. Gox did not pass the impacts of this incident on to customers."
Further Analysis
Mt. Gox originally had a glitch where some bitcoins were sent to invalid addresses, effectively burning them. This loss was not passed on to customers.
How Could This Have Been Prevented?
There were no losses to customers in this case. The use of multi-signature wallets allows each key holder to check the outgoing transaction for validity. All systems would be checked over by two reviewers prior to launch, and only a small minority of funds would be in hot wallets. In the event that these measures fail to prevent loss, an industry insurance fund would be available to cover it.
More Cryptocurrency Exchange Hacks/Scams/Frauds
Bitcoinica Linode Web Host Hack > > < < Bitcoin7 Exchange Hack/Fraud
Sources/Further Reading
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses [Old] (Jan 28)
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses (Feb 15)
The Rise and Fall of Mt. Gox – Darknet Diaries (Jun 25)
Mt.Gox - Bitcoin Exchange - January 12th, 2012 - Internet Archive (Oct 13)
Mt Gox - Bitcoin Exchange - February 3rd, 2011 - Internet Archive (Oct 13)
Bitcointalk history of MtGox and how a Bitcointalk post caught the MtGox hacker. (Dec 22)
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses (Dec 22)
CRYPTOCURRENCY: LIST OF BIGGEST BITCOIN SCAMS AND HEISTS (Dec 22)
Transaction: 111291fcf8ab84803d42ec59cb4eaceadd661185242a1e8f4b7e49b79ecbe5f3 | Blockchain Explorer (Dec 22)
Transaction: 81f591582b436c5b129f347fe7e681afd6811417973c4a4f83b18e92a9d130fd | Blockchain Explorer (Dec 22)
Transaction: ddddf9f04b4c1d4e1185cacf5cf302f3d11dee5d74f71721d741fbb507062e9e | Blockchain Explorer (Dec 22)
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