In late February 2014, Daniel was at his computer trading bitcoin on Tokyo-based crypto exchange Mt. Gox. Suddenly, the website flashed white and became unresponsive. In a panic, Daniel turned for answers to internet forum Bitcoin Talk, where speculation had already begun: Mt. Gox was in trouble.
Daniel, who lives in Europe, was a university student at the time. After making a bit of money trading bitcoin on Mt. Gox, he had posted almost all of his wealth to the exchange. When Mt. Gox fell offline, Daniel says, he went into “full crisis mode.” He needed that money to fund the remainder of his time in school.
On February 28 of that year, Mt. Gox filed for bankruptcy. Hundreds of thousands of bitcoin—back then worth around $400 million, now $45 billion—had been stolen in an elaborate heist, the company said. It had practically no remaining funds with which to process withdrawals.
Thus began a Kafkaesque ordeal for Mt. Gox customers, who for the past decade have wrestled through a winding and bureaucratic corporate reorganization process in hope of recovering the bitcoin they lost. WIRED spoke to eight former Mt. Gox customers, all but one of whom, like Daniel, asked to appear under a pseudonym to protect their financial privacy. They each told a similar story, characterized by confusion, repeated delays, and a maddening lack of control.
“The first few weeks were the worst,” says Daniel, who fell into a depression in this period and began to drink. Though he later secured a loan to finish college, Daniel resorted for a time to credit card fraud to replace the stolen funds, telling himself that no harm would come to the individual card owners, who were insured. After nearly being caught, he sought out a stable job, but at the time, he “had pretty much given up on life,” says Daniel.
Ten years later, Mt. Gox customers are about to be reunited with their bitcoin. On June 24, the trustee responsible for managing the estate, veteran bankruptcy lawyer Nobuaki Kobayashi, announced that crypto repayments would begin to filter through from July onward. On Friday, the coins began to move.
In a highly atypical turn of events, Mt. Gox customers actually stand to profit financially from their involvement in the bankruptcy. Because only a limited amount of bitcoin was recovered, customers will receive only roughly 15 percent of the bitcoin they held on the exchange. However, the hundredfold increase in price in the intervening period means the dollar-value of the coins will far exceed the worth of their original pile. In all, around $9 billion worth of bitcoin will be returned. “I’ve seen the crypto universe rise, die, and rise again,” says Daniel. “I’m watching the bitcoin charts daily.”
Mt. Gox was started in 2010 by Jed McCaleb, an early bitcoiner from the US. McCaleb sold the exchange in 2011 to Mark Karpelès, a young French developer, under whom it became the largest in the world. In 2013, three-quarters of global bitcoin trades were reportedly passing through Mt. Gox.
By the end of 2013, things had started to go wrong. Rumor spread of problems behind the scenes at Mt. Gox, says Eline Ronner, a Dutch journalist who has followed the case and herself has funds tied up in the exchange. “I already knew something was fishy,” she says. “There was a lot of talk about software problems. It was slow in processing transactions and I could not get my money out.”
On February 7, 2014, the exchange suspended bitcoin withdrawals to perform maintenance that would resolve withdrawal issues, it said. Two weeks later, outside its headquarters in Tokyo, an angry customer brandished a sign at Karpelès: “Mt. Gox, where is our money?” “A lot of us had the same question,” says Ronner. “To this day, there is not a satisfying answer.”
At a press conference in Tokyo, Karpelès announced the company had gone bankrupt. “We had weaknesses in our system, and our bitcoins vanished,” he said. “We’ve caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened.”
In the past decade, repeated setbacks and changes in course have worn down Mt. Gox customers trying to recover their bitcoin through the bankruptcy process. “It’s a never-ending, maddening mindfuck nightmare,” as Michael, one US-based customer, describes it. “My entire life is in limbo.”
For three years after the collapse, Mt. Gox followed a traditional bankruptcy process, under which customers’ claims were valued in Japanese yen based on the price of bitcoin in 2014. To allow customers to benefit from the rise in the price of bitcoin, the bankruptcy was converted in 2018 into a civil rehabilitation, a framework under Japanese law that affords greater flexibility, but which required claims to be refiled. The deadline for filing those claims was later extended multiple times before the trustee could begin the process of separating legitimate claims from bogus ones, itself a laborious and time-consuming process.
Progress updates arrived infrequently and in broken English that made it difficult to understand what was going on, multiple customers say. Meanwhile, Mt. Gox customers claim they were repeatedly targeted by scammers and hackers posing as agents of the estate.
The Mt. Gox estate was by now sitting on 200,000 bitcoin that had been recovered from a “forgotten” wallet, previously assumed by the exchange to be empty but that had not been drained by the hackers. But repayments were further pushed back by a legal scrap with CoinLab, a company that had sued Mt. Gox prior to the bankruptcy in search of financial damages over an alleged breach of contract. A compromise was reached in 2021 that allowed customers to opt for an earlier payout while the legal issues rumbled on, partly in cash and partly in crypto, even if doing so meant forgoing further potential gains. The decision to take the early repayment was “an easy one,” says Michael. “I’m not going to live forever. I would rather get some money while I’m alive.”
The final rehabilitation plan was approved by the Tokyo courts in June 2023 and, after yet more delays, the final date for customers that chose the early payout to be repaid was set for October 31, 2024.
The prospect of the imminent return of the bitcoin has lifted spirits among customers, but those made cynical by the repeated setbacks “seem to mentally struggle more the further the process goes,” says another Mt. Gox user. “I guess the night is always darkest before dawn,” they say.
On Friday, in a public Telegram channel for Mt. Gox customers, word spread that bitcoin was beginning to flow from Mt. Gox wallets. In a letter, the trustee confirmed that the first tranches of bitcoin had been delivered to some of the exchanges responsible for distributing coins to individual Mt. Gox customers, with the rest to follow. The celebrations began.
In their excitement, Mt. Gox customers are planning how they might use the cash injection; a special bottle of Dom Pérignon will be top of the list, says one. Others consider themselves lucky, in a perverse way, to have been caught in the bankruptcy. A customer from Sweden, who was 17 when he lost a couple of thousand dollars’ worth of bitcoin to Mt. Gox, finds himself in line for a $70,000 windfall. “I’m happy that kid was dumb enough to use Mt. Gox,” he says. “I know I would have spent all the coins way earlier if my hands weren’t tied this whole time.”
But for others, the repayments represent an urgent lifeline—“I’m about to lose my house. If they hurry up with the BTC payments it will save my life,” says another Mt. Gox customer—or a painful reminder of the trauma they have experienced. “For all the stress and mental strangulation of the past 10 years, I somehow can’t feel happy about it any more,” says Daniel.
There is also a degree to which the arrival of large amounts of bitcoin in the wallets of customers, whose details have previously been leaked, threatens to make them a target for hacking and physical robbery. In the US last month, a group of men were convicted of a spree of violent home-invasions in which victims were threatened into handing over their cryptocurrency. “I don’t want to dox myself,” says Michael. “Anyone who does is setting themselves up to be robbed at gunpoint, just like a lottery winner.”
Until the coins are safely in their custody, there remains a bubbling suspicion among Mt. Gox customers that another complication will come from left field to threaten the return of crypto funds. “It’s been a marathon—and it still isn’t finished,” says Ronner. “I have a wait-and-see attitude. It ain’t over until the fat lady sings, right?”
