Stablecoins & Mt. Gox echoes

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Dan McArdle - October 17, 2018

Veterans of 2014's crypto-winter remember vividly when a certain pseudonymous troll spilled the beans on MtGox's insolvency, and caused the market to tank overnight. [TBI Note: My bad.]

For many of us, though, it wasn’t much of a surprise. With Gox, the writing had been on the wall for months. The exchange had a history of hacks, service outages, and other snafus, and when price quotes began to widen between Gox and other major exchanges from late 2013 to early 2014, some analysts started to sound alarm bells.

MtGox price (pink) vs Winkdex (blue), Oct 13 - Mar 14. (Source: Winklevosscapital)

It was getting more difficult for customers to withdraw funds, and service complaints intensified. There were increasing concerns about MtGox’s solvency, and Gox quotes continued to widen from the rest of the market. To add insult to injury, many believed a rogue trading bot at MtGox “Willy” had manipulated prices and inflated the 2013 bitcoin bubble (to MtGox’s benefit). That was apparently confirmed by MtGox CEOMark Karpeles in his trial last year.