New Clues About Why Mt. Gox Failed (thedailybeast.com)

An anonymous reader writes: The Daily Beast is investigating internal emails, contracts, and new information provided by a former accounting employee at Mt. Gox for clues about how and why the world's largest bitcoin exchange failed in 2014. They conclude that CEO Mark Karpeles "bought a company already missing tens of thousands of bitcoins" in 2011, leading to an email exchange a few months later where the previous owner suggested ways to make up the $800,000 shortfall. Unfortunately, Karpeles "had signed a non-disclosure agreement that left him unable to discuss the loss," and after a second larger hack, he moved the majority of bitcoins offline into "cold storage," leaving only enough online to complete transactions.

According to the article, former Mt. Gox employees "claim rogue U.S. government agents seized $5 million of Mt. Gox funds in summer 2013 in retaliation for Karpeles's refusal to cooperate with them. This seizure supposedly cut into the firm's operating reserves, which may have been the beginning of the end, at least according to the former Mt. Gox accountant."
While $450 million eventually disappeared, Thursday ZDNet reported that a class-action lawsuit brought against the bitcoin exchange by investors "has been dismissed."

Comments

Not a Mountain

[freeze128]

It's MTGOX, not Mt. Gox.

The website was originally named because it was a trading site for "Magic the Gathering" cards. It's an acronym for "Magic The Gathering Online Exchange". It's not a mountain named Gox.

It failed for the same reason it succeeded.

[Brannon]

It was an anti-establishment un-regulated bank for a rogue currency. That was a huge draw with a certain segment of society.

But it turns out that there are good reasons for bank regulations.