But on the inside, according to some who were there, Mt. Gox was a messy combination of poor management, neglect, and raw inexperience. Last week, after a leaked corporate document said that hackers had raided the Mt. Gox exchange, Karpeles confirmed that a huge portion of the money controlled by the company was gone. We had weaknesses in our system, and our bitcoins vanished.
We’ve caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened,” Karpeles said, speaking at a Tokyo press conference called to announce the company’s bankruptcy. Bitcoin promises to give a bank account to anyone with a mobile phone, no ID required. But it’s also a technology that was pushed forward by a community of people who were unprepared or unwilling to deal with even the basics of everyday business. The 28-year-old Karpeles was born in France, but after spending some time in Israel, he settled down in Japan.
There he got married, posted cat videos and became a father. In 2011, he acquired the Mt. 2007 with the idea of turning it into a trading site for the wildly popular Magic: The Gathering game cards. The idea was simple: he’d provide a single place to connect bitcoin buyers and sellers.
Karpeles soon set about rewriting the site’s back-end software, eventually turning it into the world’s most popular bitcoin exchange. A June 2011 hack took the site offline for several days, and according to bitcoin enthusiasts Jesse Powell and Roger Ver, who helped the company respond to the hack, Karpeles was strangely nonchalant about the crisis. Gox eventually made good on their obligations, earning a reputation as honest players in the bitcoin community. 1,200 at its peak, Karpeles, as Mt. Gox’s largest stake holder, appeared to become an extremely wealthy man.
But beneath it all, some say, Mt. Gox was a disaster in waiting. Last year, a Tokyo-based software developer sat down in Gox’s first-floor meeting room to talk about working for the company. I thought it was going to be really awesome,” says the developer, who also spoke on condition of anonymity.
Soon, however, there were some serious red flags. This meant that any coder could accidentally overwrite a colleague’s code if they happened to be working on the same file. The unfinished site of the Bitcoin Cafe. By the fall of 2013, Mt. Gox’s business was also a mess.
5 million from the company’s U. But Karpeles was obsessed with a new project: The Bitcoin Cafe. Inspired by a French bistro, it would be a stylish hang-out located in the same building as the Mt. Gox offices, a very-new-looking building of metal and glass within walking distance of Tokyo’s largest train station.
1 million on the cafe venture, renovating Mt. Gox’s office building to Karepeles’ specifications. At a time when Gox’s business was falling apart, this insider says, the project was a major distraction. Then, in February, the company’s fortunes took another turn. Gox stopped paying out customers in bitcoins, citing a flaw in the digital currency, and after days of silence from the company, protesters turned up outside its offices, asking whether it was insolvent. Gox document that hit the web last week, hackers had been skimming money from the company for years. 460 million at Friday’s bitcoin exchange rates.