Mt. Gox Collapse: How 2014's Biggest Crypto Hack Reshaped Bitcoin Forever

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Mt. Gox, once handling roughly 70% of global Bitcoin trades, filed for bankruptcy protection in Japan in February 2014 after revealing the loss of approximately 850,000 bitcoins belonging to customers and the exchange. The Tokyo-based platform, originally founded as a trading card exchange and acquired by French developer Mark Karpelès in 2011, had been systematically drained through exploitation of a Bitcoin protocol flaw known as transaction malleability. Attackers manipulated transaction IDs before blockchain confirmation, tricking Mt. Gox's accounting systems into reprocessing withdrawals and paying out funds twice. The breach also exposed severe operational failures, including excessive funds stored in internet-connected hot wallets, weak internal audits, and outdated infrastructure. Despite triggering an immediate Bitcoin price crash and widespread industry skepticism, the disaster ultimately forced the crypto sector to overhaul security standards, risk management practices, and engagement with financial regulators.

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