Mark Karpelès, a French businessman from Dijon, bought crypto exchange Mt.Gox in 2011. “Even then, my enemies were mainly from Russia,” he recalls. He became part of the largest bank robbery in history.
What does someone do who loses $14.5 billion in a day? How does a person deal with it? Sam Bankman-Fried sits at his computer, gaming and tweeting nonsense at the same time, seemingly failing to grasp the magnitude of the situation or the value of money.
His crypto exchange FTX, until recently the second largest in the world, had to file for bankruptcy. At the beginning of the year, the 30-year-old was considered the next Mark Zuckerberg. Sam Bankman-Fried, or SBF as he is known, has graced the covers of magazines.
Stars like Tom Brady or Gisele Bundchen promoted his platform. He himself lobbied through Washington, ate with politicians who no longer wanted anything to do with him. Now that his successor is saying things like: “Never in my career have I experienced such complete failure.”
What exactly happened will be clarified in hearings over the coming months. SBF apparently sent money back and forth between its two companies, pouring real money into made-up currencies and slipping $1 billion into itself. One thing is certain: a good million of his customers lost their money.
The value of all cryptocurrencies, including the first, Bitcoin, was estimated at three trillion dollars in 2021, and in 2022 it will be just 800 billion. SBF is certainly not solely responsible for this, in uncertain times people do not like to bet on highly volatile assets.
But he made it worse by further shaking already shaky confidence in digital currencies. Also: If a crypto exchange collapses, then often the next one and the next one too.
A domino effect is created. This is one of these exchanges. And it’s about what is probably the biggest bank robbery of all time, which we trace again in the FOCUS podcast “Missing Magic Money” narrated by Thilo Mischke (can be heard on all common platforms).
The fall of Mt.Gox was the last major crash before the FTX debacle that shook the crypto world in this way, and it was arguably the biggest heist in history. To this day it is not clear where the 850,000 missing bitcoins went.
But first things first: The name Mt.Gox is an acronym of Magic the Gathering Online Exchange, as it was originally a trading platform for playing cards. Founded by a young man named Jed McCaleb.
The concept didn’t really work, however, and McCaleb converted the site into a crypto exchange in 2010. At that time one of the first ever and quickly the largest in the world.
In 2011 he sold Mt.Gox to Mark Karpelès, a French businessman from Dijon who had just emigrated to Tokyo at the time. 80,000 Bitcoins, which had been stolen in an earlier hack, were already missing when the company was taken over.
McCaleb came up with the idea of covering up the inconsistencies with an automated bot that counted money against coins. An illegal market manipulation that was exposed at some point and earned him a suspended sentence.
But at least for a while everything went well, he was able to keep up appearances, the 80,000 missing coins wasn’t too much of a problem. The platform grew rapidly but was also constantly attacked by hackers. “Even then, my enemies were mainly from Russia,” Karpelès recalls.
But every safety precaution was in vain anyway. Because the robbery that would break his neck, probably the biggest bank robbery in history, had happened long ago. Hackers had already gained access in 2011 and steadily siphoned off smaller amounts.
When exactly McCaleb knew what, there was much speculation. He only claims to have seen it in February 2014, when customers were frantically trying to get their coins. But the wallets, i.e. the digital accounts, were empty.
Shortly after the drama and the protests that followed, Mark Karpelès sat down at the computer and checked all the digital wallets again, opening one after the other. And there they were: 200,000 bitcoins.
The find, as incidental as spring cleaning, not only caused a flood of jokes on the Internet and legal all sorts of things, but also fueled hope among the people who were robbed.
The find made Mark Karpelès appear incompetent at the time, but also suspicious. Many believed he robbed the stock exchange himself. Until, after years of detective work, it became clear where the coins ended up: with Alexander Vinnik.
The Russian businessman was lying with his family on a Greek beach when the handcuffs clicked in 2017. The accusation: He is said to have washed the majority of the bitcoins from the Mt.Gox robbery via his crypto platform BTC-e.
BTC-e worked very similar to Mt.Gox. With one crucial difference: on BTC-e you didn’t have to register with your real name or present any papers.
Accordingly, criminals in particular did their business there. Even though Vinnik didn’t rob Mt.Gox himself, he certainly knows who did it. Funds from all sorts of criminal activities converged on BTC-e.
Even the Russian hackers who manipulated the US election campaign in 2016 probably bought their bitcoins there. After Vinnik’s arrest, BTC-e was shut down and disappeared. Where is the database today?
A trail leads to the Russian oligarch Konstantin Malofejew, who pursues his own political interests. He financed the separatists in eastern Ukraine and dreams of turning Russia back into a Tsarist empire.
His contacts extend to Germany, Alexander Gauland visited him in Saint Petersburg. Over the years, various criminals with ties to the Russian elite have made use of the Mt. Gox treasure. Nobody knows what was paid for with it.
13 years after crypto started to change the world, to democratize money flows, to overcome an unfair banking system, to make everything more efficient, smarter, better, little has come true. Sure, the potential is there.
But in the end it’s all about control and power. And Sam Bankman-Fried, who presented himself as a philanthropist, didn’t give the impression until the end that he realized what a sum 14 billion is, as if it were all play money, as if everything wasn’t real.
Just the massive impact he suddenly had, the Forbes covers and dinners in Washington, they must have felt real.