Crypto Exchange Bankrupt: Lessons from Mt. Gox to FTX

When a crypto exchange goes bankrupt, the bitcoin you keep there is usually no longer yours: it becomes part of the bankruptcy estate, withdrawals are frozen, and as a creditor you wait years for a share of it. Mt. Gox customers waited more than ten years; FTX customers got dollars at 2022 prices. Only one thing protects you: bitcoin whose keys you hold yourself.

Key takeaways

• On an exchange you don't own bitcoin, you own the exchange's promise to pay it out to you.
• Almost every major collapse followed one of three patterns: a hack, misuse of customer money, or lending out customer coins.
• Bankruptcy proceedings often value claims in dollars at the price on the day of the collapse. If bitcoin rises afterwards, you lose that gain.
• MiCA (EU) and Swiss bankruptcy law now separate customer coins from the exchange's own assets better than before. That is not a guarantee.
• The rule for long-term holders: an exchange for buying, your own wallet for keeping.

Why an exchange collapse hits you directly

When you buy bitcoin on an exchange and leave it there, your account shows a number. The coins themselves sit in the exchange's wallets, mixed with those of all its other customers. Legally you have a claim against the exchange, not a specific bitcoin.

As long as the exchange is solvent, you notice none of this. Only when many customers want to withdraw at once does it become clear whether the coins are really there. In the collapses in this article, they weren't.

The big exchange collapses at a glance

The figures come from court and government records linked below under "Sources".

Mt. Gox: ten years of waiting for a fifth

In 2013, Mt. Gox was the world's most important bitcoin exchange. In February 2014 it stopped withdrawals and filed for bankruptcy. About 850’000 BTC were missing, roughly 750’000 of them belonging to customers. Thieves had drained the wallets over years without the bookkeeping noticing.

Later, 200’000 BTC turned up again in an old wallet. The 2023 repayment plan covers about 142’000 BTC, less than a fifth of the customer coins. The first repayments came in July 2024, more than ten years after the collapse. In October 2026 the trustee postponed the deadline for outstanding payments for the fourth time, to 31 October 2027.

One detail matters for you: in the original bankruptcy proceedings, claims would have been fixed in yen at 2014 prices. Only the switch to a rehabilitation proceeding in 2018 made it possible to pay out bitcoin instead of yen.

What you learn from it

An exchange can lose coins without noticing itself. An account balance is no proof that the coins exist.

Bitfinex: everyone pays for one hack

In August 2016, attackers stole 119’756 BTC from Bitfinex. The exchange spread the loss across all customers: every account was cut by 36%, even if its own coins weren't affected. As compensation, customers received replacement tokens, which Bitfinex bought back by April 2017.

The thieves were arrested in New York in 2022, and US authorities seized about 94’000 BTC.

What you learn from it

On an exchange you share the risk of every other customer. A hack that doesn't touch your coins can still cost you money.

QuadrigaCX: one person, all the keys

In December 2018, Gerald Cotten, founder of Canada's largest exchange, died. Supposedly only he held the keys to the customer funds. When the wallets were opened, they were empty.

In 2020 the Ontario securities regulator reached a different conclusion than "lost keys": Cotten had used customer money through fake accounts for his own speculation and his lifestyle. About 76’000 customers lost about 169 million Canadian dollars combined.

What you learn from it

A platform controlled by a single person has no controls. From the outside it can still look reputable.

Celsius: interest on bitcoin that didn't exist

Celsius wasn't a classic exchange but a platform that promised interest on deposited bitcoin. To pay it, it lent the coins on and made risky bets. In June 2022 Celsius stopped all withdrawals, and in July it filed for bankruptcy in the US.

In 2023 the court ruled that the coins in the interest accounts belonged to the company, not to the customers. That was in the terms of use, which most people had never read. Founder Alex Mashinsky was sentenced to twelve years in prison in 2025.

What you learn from it

Whoever pays you interest on bitcoin is lending out your coins. You trade ownership for a claim. Before any bitcoin loan, check who holds your collateral and whether they may lend it on.

FTX: the collapse in dollars

In 2022, FTX was seen as one of the most reputable exchanges, with stadium advertising and prominent investors. In early November 2022 it came out that its sister company Alameda Research consisted largely of FTX's own token, FTT. Customers withdrew billions within days, and on 11 November 2022 FTX filed for bankruptcy.

About $8 billion of customer money was missing. Founder Sam Bankman-Fried was sentenced to 25 years in prison in 2024. The trustees recovered so much that by July 2026 customers had received about 105% of their claims, small claims up to 120%.

That sounds good, but it isn't: claims were valued in dollars at the price on the day of the bankruptcy. One bitcoin counted as about $16’900.

Worked example: 1 BTC on FTX

You held exactly 1 BTC on FTX in November 2022.

• Your claim: about $16’900 (price on the day of the bankruptcy)
• Paid out by July 2026 (105%): about $17’700, roughly €16’000 or CHF 14’800
• Value of 1 BTC today: €65’023 or CHF 60’029
• You are short about €49’000 or CHF 45’200. Measured in bitcoin, you got back about a quarter.

As of 12 November 2026, bitcoin price from OKX; the payout is converted at today's dollar exchange rate.

Had you held the same bitcoin in your own wallet, you would still have it.

Three patterns behind every crypto exchange collapse

The names change, the causes hardly do:

1. Poor key management. Coins get stolen because too much sits in online wallets or nobody checks whether the holdings add up (Mt. Gox, Bitfinex).
2. Customer money is misused. The company speculates, funds sister companies or the founders' lifestyle (QuadrigaCX, FTX).
3. Customer coins are lent out. In exchange for interest, the coins go to third parties. If a borrower defaults, the money is gone (Celsius and many other lenders in 2022).

On top of that comes a rule of bankruptcy law: if your claim in the proceedings is in dollars or euros, you don't get the price rise that follows. For long-term holders in particular, that is the biggest loss.

What is different today: MiCA and Swiss law

Since the end of 2024 the EU's MiCA regulation applies, and since July 2026 without transition periods. Providers that hold bitcoin for customers need a licence and must keep customer coins legally separate from their own assets. If the provider goes bankrupt, these coins are not part of the bankruptcy estate (Art. 75 MiCA). That applies to Germany and Austria. What else MiCA does and doesn't cover for you is explained in the article MiCA and bitcoin.

In Switzerland, crypto assets held in custody can be segregated from the bankruptcy estate since August 2021 (Art. 242a SchKG, the Swiss Debt Enforcement and Bankruptcy Act). The condition: the provider has committed to keep them available for you at all times, and they are assigned to you.

That is real progress compared with Mt. Gox or FTX. But it only helps you if the provider follows the rules and the coins are actually there. Even the best law doesn't protect you against theft, fraud and long proceedings. This is an overview, not legal advice.

There is no deposit insurance for bitcoin like the one for bank accounts (€100’000 in the EU, CHF 100’000 in Switzerland).

How to protect yourself from the next crypto exchange collapse

1. Use an exchange only for buying. Don't leave bitcoin on the exchange. Many savings plans can send every purchase automatically to your own address.
2. Start with a small test withdrawal. Check that withdrawing to your wallet works before you move larger amounts.
3. Check the licence. In the EU, every licensed provider is listed in ESMA's MiCA register; in Switzerland, FINMA shows who is authorised.
4. No interest on bitcoin. Whoever promises a yield on your coins lends them out. That is exactly the Celsius risk.
5. Read proof of reserves correctly. Evidence of the exchange's holdings is better than none. But it only shows one moment in time and usually not all liabilities.
6. Take warning signs seriously. Delayed withdrawals, "temporarily paused" withdrawals, the exchange's own token as collateral or unusually high interest: withdraw while you still can.

Which kind of custody suits your amount is shown in the complete custody guide. How to set up your first own wallet and keep the seed safe is taught step by step in the academy, stage 2: understand and secure. All articles on wallets, seeds and custody are in the Security and custody category.

Self-custody: your protection against an exchange collapse

Bitcoin was built so that you don't have to trust a third party. In the whitepaper, Satoshi Nakamoto describes a system in which payments work without a trusted third party. Leaving your coins on an exchange puts that middleman back in.

Self-custody has its own risks: if you lose your seed and wallet, nobody can help you. But those risks are yours to manage; the risk of someone else's company is not.

A good moment for the decision is now, not during the next collapse. Write it into your goal, for example under "What I never do": Never leave more bitcoin on an exchange than I buy this week.

How many bitcoin sit with exchanges, ETFs and companies today is shown in the overview of bitcoin treasuries. How we calculate prices and data is in the methodology.