Mt. Gox Bitcoin Disaster #bitcoin

Mt. Gox was a messy combination of poor management, neglect, and raw inexperience. Its collapse led to a disappearance of $460 million, and another $27.4 million missing from its bank accounts. The company, was largely a reflection of its CEO, Mark Karpeles, a man who was more of a computer coder than a chief executive and yet was sometimes distracted even from his technical duties when they were most needed. “Mark liked the idea of being CEO, but the day-to-day reality bored him”.

“We had weaknesses in our system, and our bitcoins vanished. We’ve caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened,” Karpeles said.

The 28-year-old Karpeles was born in France, but after spending some time in Israel, he settled down in Japan. There he got married, posted cat videos and became a father. In 2011, he acquired the Mt. Gox exchange in from an American entrepreneur named Jed McCaleb. The idea was simple: he’d provide a single place to connect bitcoin buyers and sellers.

Karpeles soon set about rewriting the site’s back-end software, eventually turning it into the world’s most popular bitcoin exchange. A June 2011 hack took the site offline for several days, and according to bitcoin enthusiasts Jesse Powell and Roger Ver, who helped the company respond to the hack, Karpeles was strangely nonchalant about the crisis. But he and Mt. Gox eventually made good on their obligations, earning a reputation as honest players in the bitcoin community. Other bitcoin companies had been hacked and lost customer funds. Most of the time, they simply folded. But Karpeles and Mt. Gox did not.

As bitcoin prices took off, jumping from $13 at the start of 2013 to more than $1,200 at its peak, Karpeles, as Mt. Gox’s largest stake holder, appeared to become an extremely wealthy man. Mt. Gox did not offer company equity to employees, and by the time of the most recent hack, the company had squirreled away more than 100,000 bitcoins, or $50 million. Karpeles owns 88 percent of the company. According to an insider “He likes to be praised, and he likes to be called the king of bitcoin.”

But beneath it all, some say, Mt. Gox was a disaster in waiting. Mt. Gox, didn’t use any type of version control software — a standard tool in any professional software development environment. The world’s largest bitcoin exchange had only recently introduced a test environment, meaning that, previously, untested software changes were pushed out to the exchanges customers. There was only one person who could approve changes to the site’s source code: Mark Karpeles. That meant that some bug fixes — even security fixes — could languish for weeks, waiting for Karpeles to get to the code.

By the fall of 2013, Federal agents had seized $5 million from the company’s U.S. bank account, because the company had not registered with the government as a money transmitter, and Mt. Gox was being sued for $75 million by a former business partner called CoinLab.

By the fall of 2013, Mt. Gox’s business was also a mess. Federal agents had seized $5 million from the company’s U.S. bank account, because the company had not registered with the government as a money transmitter, and Mt. Gox was being sued for $75 million by a former business partner called CoinLab.

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