7 February 2014 — MtGox halted all BTC withdrawals from the exchange, citing a transaction malleability bug in the core Bitcoin software. When withdrawals had still not resumed after 2 weeks, users began to suspect that MtGox may not be able to pay its customers. This lack of confidence resulted in the price dropping to below 20% of that on other exchanges.

24 February 2014 — MtGox suspended all trading, then went offline completely, returning a blank page. News outlets reported on a leaked “crisis strategy draft” plan, which declared MtGox’s insolvency after losing 744,408 BTC of customer funds (valued at over $2 billion USD at today’s prices) as well as 100,000 of its own bitcoins.

28 February 2014 — Blaming hackers and technical issues for the missing BTC, MtGox filed for bankruptcy protection in Tokyo, and in the US two weeks later, to halt legal action resulting from allegations of fraud.

20 March 2014 — In a statement on its website, MtGox reported that it had found 200,000 BTC in an old wallet, bringing the total number of missing bitcoins down to approximately 650,000 BTC.

19 April 2015 — WizSec, a group of individuals who have been investigating the MtGox mystery for several years, released a detailed analysis of their findings so far. This report cleared up a number of questions about the nature of the coins’ disappearance, but didn’t appear to provide any leads on a potential perpetrator.

1 August 2015 — Mark Karpelès was arrested by Japanese police on suspicion of having falsified data about MtGox’s outstanding balance on its computer system. He was later indicted for embezzlement and data manipulation, based on allegations of manually manipulating trades on MtGox prior to the activities of the Willy Bot.

July 2017 — Karpelès appeared in court to face the charges pressed against him in 2015. In an ongoing trial beginning on 11 July, he publicly admitted responsibility for running Willy, but claimed the bot was established to save the company from insolvency rather than for his personal enrichment. Despite his suspicious activities, there is no solid evidence to suggest that Karpelès was responsible for (or intentionally complicit in) the theft of the 650,000 bitcoins.

25 July 2017 — BTC-e, a well-known Russian-based exchange with ties to illegal activities, announced via twitter that it was undertaking “unplanned maintenance” in its data center. Several subsequent tweets reiterated this as an explanation for the site being down. However, it was later revealed that FBI staff had raided the exchange’s data center and seized all of its equipment, servers (which held all databases) and purses. The site was shut down and the domain seized, marking the first time the US government has attacked a foreign exchange on foreign soil.

26 July 2017 — Alexander Vinnik, a 38-year-old Russian national, was arrested by US authorities in Greece and charged with 17 counts of money laundering and 2 counts of engaging in unlawful monetary transactions (which could see him facing up to 55 years in prison). Vinnik is alleged to have laundered $4 billion in cash through BTC-e since 2011, and users of the exchange quickly connected his identity with one of BTC-e’s leaders known as “Alexander”.

WizSec released a report stating that “Vinnik is [their] chief suspect for involvement in the MtGox theft (or the laundering of the proceeds thereof).” They had previously identified Vinnik as “WME”, the owner of the wallets into which the stolen MtGox bitcoins had been transferred. Approximately 300,000 of these coins were laundered or sold off on BTC-e, and some were moved straight into internal storage rather than customer deposit addresses, strengthening the claim that Vinnik is somehow involved with BTC-e.

Movement of missing MtGox bitcoins and other stolen coins (source)

The same investigation by WizSec revealed that these wallets controlled by Vinnik were also used to launder coins stolen from Bitcoinica, Bitfloor and several other exchanges in 2011 and 2012. WizSec concluded that Vinnik is responsible for, at the very least, laundering the missing MtGox coins. Whether or not he is responsible for the thefts themselves remains to be established.

As these developments unfolded, the US government unsealed a 21-count indictment against BTC-e and levied a $110 million USD fine against the exchange for its alleged violations. The allegations against BTC-e include that it functioned as a clearinghouse for funds sourced from “computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings.”

31 July 2017 — BTC-e published an update in Russian on the Bitcointalk forum, confirming that the FBI had indeed seized their equipment, and claiming that Vinnik was neither the head nor an employee of BTC-e at any time. It has also promised to restore customer funds if the exchange is not back up before the end of August, stating that it will “evaluate and publish information about how much money fell into the hands of the FBI and what amount of funds is available for return.” At this time, various users noted that large amounts of BTC and ETH have been transferred out of addresses believed to be owned by BTC-e, suggesting either that they have been seized by authorities or moved for safeguarding by the exchange.

4 August 2017 — In another post on the Bitcointalk forum, BTC-e stated: “We were able to access our databases and wallets, at the moment we are evaluating data and balances on [coins], this information will be made public by the end of next week.”

9 August 2017 — BTC-e revealed that it now controls only 55% of customer funds, with the remainder having been confiscated. The exchange plans to work with an unnamed group of investors to relaunch the site under a new name. Further, it plans to issue a new token (BTE) to cover the shortfall, which it will then buy back from the market over time (similar to the method used by Bitfinex after it was hacked in 2016).

[UPDATE] 14 August 2017 — BTC-e announced that its new token will in fact be called BTCT, and that the exchange will offer free trading of these tokens, allowing users to trade them “at any price, but no more than their face value.” The translated post elaborates: “For example, you had 1 BTC. You will receive 0.55 BTC and 0.45 BTCT. 0.55 BTC you can withdraw immediately. The remaining 0.45 BTCT you can either exchange for BTC at the market rate, or wait for their exchange at face value.”

[UPDATE] 30 August 2017 — In a new update, BTC-e outlined how its relaunch will occur over 3 stages. 1) Before September 15, user data will be transferred to a new company “in full compliance with… European legislation in this field”. 2) The previously-mentioned unnamed investment firm will restructure BTC-e’s digital assets and begin an accounting of the user data. 3) This firm will then “audit and register personal data in accordance with AML laws and KYC identification procedures”.

[UPDATE] 31 August 2017 — BTC-e relaunched its website under the domain btc-e.nz (accessible only in some parts of the world, and notably excluding the US). At the time, funds were still inaccessible, with functionality limited to checking user balances and posting in the trollbox.

The new BTC-e website (btc-e.nz) as at 31 August 2017

[UPDATE] 1 September 2017 — BTC-e announced that withdrawals would be possible starting on 2 September. Users could withdraw 55% of their original balance, with the remaining 45% being allocated to users in the form of BTCT tokens.

[UPDATE] 15 September 2017 — A new site with the same design and layout at BTC-e was launched, called WEX. While the site claims not to have worked with BTC-e, all customer accounts have been ported to the new site, and the btc-e.nz URL routes to the WEX site, suggesting a connection of some kind.

[UPDATE] 15 November 2017 — The hearing surrounding Alexander Vinnik’s extradition to the United States for the charge of money laundering (which he is appealing) was postponed by Greece’s Supreme Court until December 6. Russia is also seeking his extradition on lesser charges, namely a fraud of 667,000 rubles.