Mt. Gox lost hundreds of thousands of bitcoins without noticing

The story

Mt. Gox, based in Tokyo, started as a site for trading game cards and turned into a bitcoin exchange in 2010. By early 2014, it was handling more than 70 percent of all bitcoin trading in the world.

Customers began complaining that withdrawals were delayed. In February 2014, Mt. Gox stopped trading, closed its website and filed for bankruptcy protection. Hundreds of thousands of bitcoins were missing.

Later investigation by a Tokyo security company concluded that most of the coins had been stolen from the exchange’s online wallet bit by bit, starting in late 2011. Nobody at the exchange appeared to have noticed for years. The CEO was later arrested, and Japan created its first rules for cryptocurrency exchanges.

Why it mattered

Mt. Gox showed that money held by someone else is only as safe as their security, and that a theft can run for years when nobody is checking. For many people, it was a first lesson that cryptocurrency left on an exchange has none of the protections of a bank account.

The lesson today

The theft at Mt. Gox was slow and steady, with no single big event. It went unnoticed because nobody regularly checked that what the books said matched what was actually there. Businesses face the same risk with bank accounts, invoices and inventory. Regular checks of what should be there against what is there, and monitoring that looks for slow changes, catch problems that a single alarm never would.