• Fall of FTX, a crypto empire, resulted in $8 billion of fraud to investors, customers and employees.
• In 2014 the world’s largest bitcoin exchange, Mt. Gox, went bankrupt due to hacks and mismanagement.
• Attackers had exploited Mt. Gox’s infrastructure through transaction malleability which led to the failure of the exchange.
Fall of FTX
The fall of FTX, a crypto empire that defrauded investors, customers and employees to the tune of $8 billion, rattled the ecosystem with many worrying whether it would survive or not.
Mt. Gox Bankruptcy
In 2014 the world’s largest bitcoin exchange, Mt. Gox went bankrupt following a series of hacks and mismanagement issues resulting in customers losing over 800,000 bitcoin. The Tokyo-based platform was originally used for trading “Magic: The Gathering” game cards before being sold by its owner Mark Karpelès who beefed up its code to handle an increased volume of transactions and orders.
It came to light that attackers had been exploiting Mt. Gox’s infrastructure multiple times over several years through transaction malleability- altering parts of transactions data leading the exchange to believe withdrawals had not happened so they sent requested funds multiple times leading to its failure in February 2014 when it went offline for good after suspending trading earlier that month.
Bitcoin Protocol Faulty?
When receiving a withdrawal request from users on their database, Mt Gox would observe Bitcoin blockchain for a confirmation but because it is only final once transaction gets confirmed on blockchain attackers were able to alter parts causing ID alteration resulting in unsuccessful withdrawal from database according which lead them issue press release blaming Bitcoin protocol itself as faulty in watching mechanism before going offline permanently for good later that month .
The fall of both FTX (2020) and MtGox (2014) demonstrate how vulnerable cryptocurrency exchanges are when adequate security measures are not taken seriously by those managing them — resulting in immense losses for users investing their funds into these platforms