Bitcoin History Part 17: That Time Mt. Gox Destroyed 2,609 BTC

Technically speaking, it’s impossible to destroy bitcoins. But it is possible to send coins to an unspendable address, rendering them redundant to all intents and purposes. In October 2011, that’s exactly what Mark Karpeles did when he consigned 2,609 BTC to eternal oblivion due to a scripting error.

Also read: Bitcoin History Part 16: The First Mt. Gox Hack

How to Destroy One Week’s Profits in One Click

In the last installment of Bitcoin History, Mt. Gox had just suffered its first hack in summer 2011. Less than four months later, its hapless CEO Mark Karpeles was to suffer another embarrassing episode when he wiped out a week’s takings for the bitcoin exchange. Compared to other losses Gox was to endure, this one was a drop in the ocean, and has thus been largely lost to history. The incident deserves revisiting, however, as it provides a cautionary tale on the dangers of meddling with the Bitcoin client, and a lesson in how to destroy coins.

Most of the bitcoin community learned of the event, like so many incidents from the early days, on the Bitcointalk forum where, on October 29, 2011, user genjix started a thread titled “someone fucked up and lost a lot of money.” By way of explanation, they posted the following code:

Bitcoin History Part 17: That Time Mt. Gox Destroyed 2,609 BTC

Few readers had any idea what was wrong from looking at the code, but genjix was on hand to explain. The standard transaction script, which in this case read “76a90088ac,” should have had “14” in place of the “00,” “which in scripting language means push 0 bytes,” genjix observed. “It’s a tx which has been sent to nothing. Obviously someone was hacking at bitcoin or making a custom version and messed up – although I have no idea what it was doing with so much money.”

The answer to that latter question didn’t take long to arrive from Internet Relay Chat, where on the Mt. Gox IRC, Karpeles, aka Magical Tux, confessed to being the one who’d created the faulty transaction script and…

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