Mt. Gox: What Happened?
Now infamous, Mt. Gox was one of the first crypto exchanges to collapse more than a decade ago, but investors are finally starting to see refunds. Learn more.
Mt. Gox was a digital currency trading platform that functioned from 2010 to 2014.
At its peak, Mt. Gox handled more than 70% of global Bitcoin trades.
In 2014, a major security breach led to the theft of thousands of Bitcoins, prompting the company to declare bankruptcy.
By 2021, a settlement was finalized between creditors and the Tokyo District Court regarding Mt. Gox’s rehabilitation.
Investors began seeing partial refunds of cash in 2023, crypto in 2024, and final payments are expected by October 2025.
What was Mt. Gox?
Mt. Gox (short for "Magic: The Gathering Online Exchange") was originally a trading site for Magic cards but was repurposed into a Bitcoin exchange in 2010.
Based in Tokyo, Japan, Mt. Gox quickly became the dominant platform for buying and selling Bitcoin, at one point processing over 70% of all global Bitcoin transactions.
However, in 2014, Mt. Gox suffered a massive security breach. The incident revealed serious management and security failures. As a result, Mt. Gox halted trading, filed for bankruptcy, and triggered one of the most significant scandals in cryptocurrency history.
Years of legal proceedings followed, culminating in a 2021 rehabilitation plan approved by the Tokyo District Court to repay affected creditors.
Read next: Bitcoin Scams & Crypto Scams
What happened in the Mt. Gox hack?
The Mt. Gox hack was one of the biggest scandals in cryptocurrency history, but it didn’t happen overnight. Instead, Mt. Gox had been leaking Bitcoin for years without realizing it.
The exchange had poor security and almost no internal controls. Hackers are believed to have gained access to Mt. Gox’s hot wallet sometime around late 2011. From that point on, they slowly drained funds over time. By early 2014, nearly all of the exchange’s Bitcoin, about 850,000 BTC, was gone.
Mt. Gox didn’t properly track customer balances or separate its own funds from user deposits. As a result, it kept operating as if nothing was wrong, even though it had already lost most of its reserves. In early February 2014, users started complaining about withdrawal issues. The company blamed a technical problem known as “transaction malleability,” which was more of a distraction than a cause. On February 24, 2014, Mt. Gox shut down its website. Days later, it filed for bankruptcy.
Later, Mt. Gox said it had found 200,000 BTC in an old wallet, which brought the total missing amount down to about 650,000 BTC.
Mt. Gox bankruptcy and legal proceedings
Mt. Gox legal proceedings have been going on for over a decade at this point. Key points in the timeline include:
February 28, 2014: Mt. Gox files for civil rehabilitation (minji saisei) in Tokyo, a form of bankruptcy protection that allows the court to explore the possibility of selling the company. At the time of the filing, Mt. Gox reported liabilities of around 6.5 billion yen (approximately $65 million) and assets totaling 3.84 billion yen.
March 9, 2014: Mt. Gox files for bankruptcy protection in the United States in an attempt to halt legal actions brought by American traders alleging fraud.
March 20, 2014: Mt. Gox announces it has recovered 199,999.99 Bitcoins, worth approximately $116 million, from an old digital wallet that hadn’t been used since before June 2011. This reduces the total missing from 850,000 to 650,000 Bitcoins.
April 2015: Tokyo cybersecurity firm WizSec presents evidence showing that most, if not all, of the stolen Bitcoins were taken directly from Mt. Gox’s hot wallet over a period beginning in late 2011.
April 14, 2014: Mt. Gox’s legal team informs a Dallas court that CEO Karpelès will not appear for a deposition or comply with a subpoena issued by the U.S. Financial Crimes Enforcement Network (FinCEN).
April 16, 2014: Mt. Gox abandons its rehabilitation efforts and asks a Tokyo court to approve the liquidation of the company.
January 6, 2015: Kraken CEO Jesse Powell confirms that his exchange has been appointed by the Japanese bankruptcy trustee to help handle claims for the roughly 127,000 Mt. Gox creditors.
August 2015: CEO Mark Karpelès is arrested by Japanese police and charged with fraud, embezzlement, and data manipulation. Authorities accuse him of inflating account balances and misappropriating ¥315 million (around $2.6 million) in user-deposited Bitcoin approximately six months before the exchange collapsed.
May 2016: Creditors report a total of $2.4 trillion in claims, while the bankruptcy trustee says only $91 million in assets have been located. Prior to collapse, Mt. Gox had claimed to hold over $500 million. Legal and accounting fees for the case have reached $5.5 million by this point.
March 2018: Trustee Nobuaki Kobayashi states that enough Bitcoin has been sold to cover approved creditor claims.
March 14, 2019: The Tokyo District Court finds Karpelès guilty of falsifying data to inflate Mt. Gox’s balance sheet by $33.5 million. He receives a 30-month prison sentence, suspended for four years. The court acquits him on more serious charges, including embezzlement, but criticizes his misuse of authority and the damage caused to users' trust.
January 15, 2021: Bloomberg reports that CoinLab Inc., the bankruptcy trustee, and the Mt. Gox Investment Fund (a Fortress Investment Group affiliate) reach an agreement to offer creditors up to 90% of the remaining Bitcoin still tied up in legal proceedings.
October 20, 2021: At a creditor meeting, 99% of voting participants (representing 83% of claim value) approve the Civil Rehabilitation Plan, which includes billions in Bitcoin compensation.
November 16, 2021: The Tokyo District Court officially approves the Civil Rehabilitation Plan.
April 6, 2023: Mt. Gox announces that the deadline to file claims has passed and that repayments are expected to begin before October 31, 2023.
September 21, 2023: Mt. Gox pushes the final repayment deadline back to October 31, 2024, though it says some eligible creditors may begin receiving funds before the end of 2023.
July 6, 2022: The Japanese trustee overseeing the Mt. Gox estate confirms custody of approximately 142,000 Bitcoins to be used in repayments to creditors.
October 16, 2024: The Japanese bankruptcy trustee overseeing Mt. Gox extends the repayment deadline by one more year, moving it from October 31, 2024, to October 31, 2025, due to many creditors missing deadlines or encountering submission issues, and with around 200,000 BTC and JPY 698 million still tied up in the estate.
March 11, 2025: Mt. Gox moves 11,834 BTC (approx. $930 million) into new wallets, $26 million to an “operations wallet” and the remainder to a “change wallet”, in what appears to signal a ramp-up toward creditor payouts as the October 31, 2025, deadline approaches.
When will Mt. Gox payout?
In theory, all payouts by Mt. Gox must be made by October 2025, but this date has previously been pushed back several times.
However, some customers who opted for the early lump sum payment option have begun receiving initial payouts.
Recently, it was reported that Mt. Gox had moved $930 million of Bitcoin into new wallets, which may indicate that payouts are imminent.
Mt. Gox repayment plan and options
April 6, 2023, marked the final date for creditors to register for Mt Gox repayment—after this, only receiving funds remains.
Creditors who chose ELSP (Early Lump Sum Payment) or the Intermediate portion of the final payment should receive funds by October 31, 2025, with cash payments starting around Christmas 2023 and crypto payouts commencing in July 2024.
If your initial payout feels small, it's likely because you selected the “Final Payment” option, receiving only the Intermediate Payment so far, roughly 6% of your total claim. The balance waits until disputed claims are resolved.
It’s estimated total eventual repayment will be about 21% of your claim, meaning after 6% paid initially, roughly another 15% remains in the final payout.
Not all claims are paid uniformly. Two factors are prioritized before proportional redistribution:
Cash-claimed creditors get full repayment (100%) plus ~26% in delay damages.
Small-sum credits (claims ≤ ¥200,000) receive 100% of their 2018 valuation, regardless of claim size.
Example:
A ¥300k claim:
¥200k at 100% + 21% of remaining ¥100k = ¥221k (~73.6%).
A ¥3 million claim:
¥200k at 100% + 21% of the remaining ¥2.8 million = ¥788k, which is ~19.6% of the total claim
This means smaller claims can see higher payout percentages, even nearing 100%. Repayment is split between Bitcoin/BCH and cash based on the revival plan terms; not everyone gets 21% in crypto. The allocation depends on your choice and small-sum factors.
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What do Mt. Gox refunds mean for my taxes?
As proceedings were ongoing for so long, investors generally weren’t able to claim losses in relation to Mt. Gox in most countries, as there was still the possibility of a refund or partial refund.
As it’s a partial refund for most investors, those who have yet to declare losses from Mt. Gox, as the proceedings have been ongoing for so long, can finally realize the remaining loss, as they’ll have the figures to figure out how much they’re out of pocket. The formula looks like this:
Your refund - your total original investment = your loss
Koinly can help with Mt. Gox taxes…
Koinly can help you figure out your crypto taxes, including any Mt. Gox refunds. We have a dedicated article on how to deal with Mt. Gox payouts and Chapter 11 reimbursements.
