Mt. Gox
lorecryptography
The Tokyo exchange that handled most of the world's bitcoin trades until 850,000 of them vanished in 2014.
Born as Magic: The Gathering Online eXchange, Mt. Gox grew into the dominant bitcoin exchange before collapsing into bankruptcy in February 2014, reporting about 850,000 bitcoins missing, most of them customers'; roughly 200,000 were later found in an old wallet. Investigations pointed to years of gradual theft from its hot wallets rather than one dramatic heist. It remains crypto's canonical custody lesson, compressed into four words: not your keys, not your coins.
Mt. Gox handled a large majority of global Bitcoin trading before collapsing in 2014 with hundreds of thousands of coins missing. The failure was operational rather than cryptographic: the blockchain worked exactly as designed while the exchange sitting on top of it did not.
The specifics are a catalogue of ordinary engineering failure. The company had begun as a trading site for a collectible card game, its accounting could not reconcile holdings, security practice around the wallets was poor, and losses appear to have accumulated over years without detection. None of that required a flaw in the protocol; it required a business handling other people's assets without the controls that handling other people's assets demands.
The lesson generalizes past cryptocurrency and is the reason the phrase not your keys, not your coins exists. A system can be trustless at the protocol layer and entirely trust-dependent at the layer where humans actually interact with it, and the custodian is where the risk concentrates regardless of what the underlying technology guarantees. Every subsequent exchange failure has followed the same shape, which suggests the lesson is harder to act on than to state.