MT GOX stood for ‘Magic: The Gathering Online eXchange’. It was a website where users could buy and sell trading cards known as ‘Magic: The Gathering’ or ‘MtG.’ After opening in 2010, the site became an exchange of real-life money called U.S. dollars (USD) to Magic: The Gathering Online (MtG Online) currency. In 2013, the site was shut down due to a massive loss of customer funds from hacking.
In late 2006 an anonymous individual or group named Satoshi Nakamoto released a white paper explaining Bitcoin and how it would work. Once the network went live in early 2009, people were able to join this new peer to peer network and mine , or create, Bitcoins. Early on 1 Bitcoin was equal to $1 USD.
By 2013 there were over 100 different exchanges where people could buy and sell Bitcoins. MtGox was one of the most popular exchanges because it had been operating since 2010 and seemed trustworthy, especially after earlier exchange problems in 2011, when a website known as “Bitcoinica” lost $1 million in customer funds to hackers.
In February 2014, MtGox stopped withdrawals from the site after detecting an issue with its Bitcoin wallet and Gox CEO Mark Karpelès said they were working on fixing it and trying to find out where Bitcoins had gone. By 15th February, all the Bitcoins in MtGox wallets had been withdrawn by hackers. The site was shut down and all customers were told that they would be reimbursed their lost funds.
In March 2014, Karpelès said he found 200,000 of the 850,000 missing Bitcoins in a “cold wallet” (an offline bank account). Karpelès said the Bitcoins were found in a wallet that was used before June 2011 and he probably forgot about it. Karpelès has been charged with embezzlement and manipulating financial records by Japanese authorities and is facing criminal charges in the United States.
In the end, over $480 million U.S. dollars worth of Bitcoin was missing from MtGox, which made it one of the biggest cryptocurrency hacks in history.