What happened to the Bitcoin exchange Mt. Gox in 2014?

Detailed explanation

Mt. Gox was a centralised Bitcoin exchange. In 2014, it stopped trading and filed for insolvency after large bitcoin holdings were found to be missing. The card therefore addresses the failure of a service provider and the risk of letting a centralised provider hold your funds.

A balance displayed by an exchange is not the same as an amount controlled by your own private keys. If the provider controls the keys, availability also depends on whether it can actually meet its obligations. A technical Bitcoin transaction should be distinguished from an entry in an internal customer system.

The collapse of an exchange is also not the same as the collapse of the Bitcoin network. Network rules can continue to function even when a company does not pay out customer funds. The case therefore illustrates counterparty risk without implying that other forms of custody are universally safe.