Bitcoin Magazine: Recalling the Bitcoin Exchange Failure That Was Much Bigger Than FTX
The cryptocurrency market attracted millions of new investors during the last bull run. Many parked their capital in centralized exchanges, similar to exchanges where investors hold other assets like stocks or bonds.
Some of those exchanges faced liquidity problems during last year’s outflows. And FTX, one of the largest of them, appears to have been the peak of the crisis… for now. However, it’s not the only exchange to have failed.
Nor is it the largest in terms of impacting the crypto space as a whole. Nine years have now passed since crypto exchange Mt. Gox imploded. The exchange was handling as much as 70 percent of all global bitcoin trades at the time.
The platform experienced a series of hacks and management problems, leading to its collapse in February 2014.
At the time, customers lost over 800,000 bitcoin – a massive amount considering there will only ever be 21 million.
As a percentage of the crypto market, there will likely be now bigger failure than the Mt. Gox collapse. However, the issues were fundamentally the same as the FTX collapse. Investors put too much trust into a centralized institution.
Cryptocurrencies were designed to be decentralized. And the collapse of lending and staking platforms over the past year has driven the point home – in many cases painfully.