Mt. Gox Victims to Receive $Billions 7 Years After Infamous Hack

The long and tortuous Mt. Gox saga is finally coming to an end. How has crypto changed since then, and what does it mean for Binance Smart Chain?

End Of Mt. Gox Fiasco?

Creditors have reached an agreement with Mt. Gox seven years after the notorious crypto exchange closed its doors for good. In February 2014, Mt. Gox declared insolvency after discovering that 850,000 bitcoin had been stolen from its hot wallets over several years. The total value of the theft at the time was $450 million. Today, those same coins are valued at $50 billion.

In the years following the theft, some of that stolen bitcoin was recovered. The settlement conducted by the Rehabilitation Trustee agrees to redistribute 150,000 BTC ($9 billion) of those stolen tokens back to the injured parties.

“The Rehabilitation Trustee would like to express sincere gratitude to all involved parties for their understanding and support, which led to the approval of the Draft Rehabilitation Plan by a large majority of rehabilitation creditors and the confirmation order of the Rehabilitation Plan,” said Nobuaki Kobayashi, the officially appointed Rehabilitation Trustee, on October 20th. “Depending on the situation, the confirmation order is expected to become final and binding in approximately one month from today,” he confirmed.

Since the value of bitcoin has increased markedly over the intervening years, there is a possibility that the bulk of those compensated creditors may choose to sell the bulk of their recovered tokens. In theory, such a big sell-off at the retail level could flood the market and have a chilling effect on the price of bitcoin and the broader market.

The logo for the now defunct Mt. Gox exchange

Mt. Gox: The Beginning

Between 2013 and 2014, Mt. Gox was believed to be handling around 70% of all bitcoin transactions around the world. It was also operating out of its depth, with incredibly lax security and an inability to properly calculate how much money it should hold at any one time. Later forensic research and chain analysis would confirm that the exchange was being robbed from as early as 2011 – unbeknownst to anyone at the firm.

The crime went undetected for years until the collapse of the exchange in 2014. A cloud of suspicion immediately formed on its CEO Mark Karpeles, but the most likely perpetrator wasn’t discovered until later. Today, it is widely believed that Mt. Gox was robbed by  Alexander Vinnik, who was not your typical garden variety hacker. Instead, Alexander Vinnik was the CEO of rival exchange BTC-e.

Vinnik stands accused of being a major player within a criminal empire involving hacking, fraud, identity theft, tax refund fraud, public corruption, drug trafficking, and laundering to the value of $4 billion. Some of those funds, which included the stolen Mt. Gox billions, are believed to have funded terrorist activity in Eastern Ukraine and have been linked to the shooting down of Malaysian Airlines Flight 17.

Vinnik is currently in French custody, serving a 5-year prison sentence. He was the subject of a Russian-led assassination plot while in Greek custody and remains a person of interest for US authorities who have placed an extradition request on the former CEO. BTC-e has also been linked to the ‘Fancy Bear’ hacking group which breached Democratic National Committee computers in 2015.

The Middle

While crypto is still prone to hacks, attacks, and other malicious actors, the sector as a whole is in the middle of a civilizing process. The cryptosphere of 7-8 years ago may have been a wild west of sorts, but the railroad and the lawmen are now in town. Thanks to auditschain analysisbug bounties and other security measures we’re in a far better position today than back then. Binance Smart Chain even confirmed that security is priority number one.

Better still, that civilization process has not come at the cost of innovation. There are still plenty of frontiers left in the cryptosphere, but perhaps we can finally and gratefully close the book on Mt. Gox and outlaws like Alexander Vinnik.

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