Mt Gox Saga Explained
In a previous story, I had explained the infamous DAO Hack in detail. However, the DAO hack was not the first or the last hack in the wild world of crypto tokens. In this story, I will explore the first major crypto hack, the infamous Mt Gox, the effects of which still could not be recovered.
Mt Gox had been founded by Jed McCaleb in 2010, sold to Mark Karpeles in March 2011 and it was the biggest Bitcoin exchange in late 2013-early 2014.
Mt Gox went through two hacks in 2011 and 2014 respectively. The one in 2011 was relatively small and manageable. The attackers managed to take over the account of an Mt Gox auditor by stealing hot waller private keys that were stored in a wallet.dat file. By using the privileges of that account, the attackers were able to arbitrarily assign himself a large number of Bitcoins and, by selling these Bitcoins, they reduced the price of Bitcoin to 1 cent from 17 USD. Then they withdrew approximately 2000 BTCs from this low price. Additionally, approximately 650 BTC were purchased by Mt Gox customers from that low price.
On the front side, Mt Gox seemed to be handling this crisis in a reasonable manner. Karpeles issued an extensive statement explaining the hack, the recovery procedure, and measures that would be taken, including but not limited to compensation for 2000 stolen BTCs and transferring a substantial amount of…
