Crypto Hacks: Crypto Exchange Hacks & Cryptocurrency Hackers

Mt. Gox was hacked in 2011, when the attackers compromised an account belonging to Jed McCaleb, the former owner of the exchange, who had admin-level access to the system. During the attack, hackers managed to create a large number of fake BTC and then flooded the exchange with the artificial supply. As a result, the BTC price dropped from $17.50 to a single cent, thereby allowing for the nefarious purchase and withdrawal of at least 2,000 real BTC before the exchange suspended trading. 

On top of this, on June 20, a Mt. Gox user named Kevin, who was not involved in the hack, took advantage of the price drop initiated by the hack and claimed to have bought 250,000 Bitcoins for just $2,613. Of these, he was able to transfer 643 BTC into his personal wallet. However, Kevin said that he immediately contacted Karpeles about the situation. Mt. Gox didn’t calculate these 643 BTC as a portion of the 2,000 BTC it claimed were sent to external wallets. Thus, the total loss from this hack should be considered to be roughly 2,650 BTC.

In February 2014, Mt. Gox revealed that the exchange was compromised back in 2011 and hackers had siphoned off hundreds of thousands of Bitcoins over a period of three years. At the time, Mt. Gox accounted for more than 70% of all Bitcoin transactions. The incident is still the largest Bitcoin heist in history.

On Feb. 7, 2014, the Tokyo-based exchange halted all BTC withdrawals, causing a general panic to break out among the crypto community.

CEO Mark Karpeles left the Bitcoin Foundation during the same month and deleted all of his Twitter posts. On Feb. 24, 2014, the exchange suspended all trading operations while the site went offline. In total, Mt. Gox lost about 750,000 of its users’ BTC and 100,000 BTC of its own holdings — or nearly 7% of all the coins that were in circulation then.

The damage the hack had on the reputation of the exchange, as well as the exorbitant financial liabilities, forced Mt. Gox to file for bankruptcy.

On March 20, 2014, Mt. Gox announced finding a wallet holding a balance of approximately 200,000 BTC. So far, none of this has been used for compensation. However, the number of Bitcoins stolen was updated and estimated to be approximately 650,000 BTC.