Mark Karpeles, the CEO of the Bitcoin exchange Mt. Gox, was spending many of his days in early 2014 turning the ground floor of his Tokyo office into the Bitcoin Café, a real-world showcase for Bitcoin.Mark was working out the details of the café, down to the programmable LED lighting on the ceiling, recipes for the pastries that would be served, and a point-of-sale system he had been designing. It was almost ready to open, with wine on the shelves and light blue Bitcoin Café mugs next to the register.As he puttered around the café, Mark did not look like a man responsible for a financial company that was in the throes of an existential crisis.***For most of January, the price of a Bitcoin on Mt. Gox had been almost $100 higher than on any other exchange, due to the difficulty that Mt. Gox was having in transferring withdrawals to customers outside Japan.Then, something even more worrisome started happening: a growing number of Mt. Gox customers reported that they had requested withdrawals of Bitcoin and never gotten the coins.The 30 or so Mt. Gox employees knew little about what was going wrong. When Mark wasn't working on the café, he was in his office, behind a locked door on the eighth floor, far from the second- and fourth-floor offices where most of his staff was located. They were as surprised as customers when Mark decided, on Friday, February 7, to shut off all withdrawals from Mt. Gox.
Mark would later say that during this time he was spending his daylight hours at the office and his nights at his apartment, alone with his cat Tibanne, furiously working his way through hundreds of pieces of paper containing the private keys to Mt. Gox's Bitcoin wallets.He had driven around in his car and collected the papers from the three locations in Tokyo where he had stored them (he had kept the keys on paper so they would not be vulnerable to hackers). Once he was back in his apartment with the QR codes, he began scanning in the private keys one at a time with his computer's webcam. A combination of fear and sickness slowly overtook him as each one of the wallets he scanned in showed up on his computer screen as empty.
A combination of fear and sickness slowly overtook him as each one of the wallets he scanned in showed up on his computer screen as empty.
This is an excerpt from Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires, a new book by New York Times reporter Nathaniel Popper. Reprinted courtesy of Harper, an imprint of HarperCollins Publishers.