Mark Karpeles, Co-Founder and ex-CEO of the defunct crypto exchange Mt. Gox, recently announced his return to the world of cryptocurrencies with a fresh start-up called UNGOX. This clever christening indicates the undoing of his crypto exchange’s failure and his attempt to protect investor interest. “Following Mt. Gox’s bankruptcy, ‘goxed’ (sometimes written goxxed) has become a synonym of losing cryptocurrencies due to faulty Bitcoin exchange or wallet that screwed up,” said Mark in an interview with Forkast where he announced his latest endeavour.
After a series of unfortunate events turned his life upside down for over five years, Karpeles is now making his way back with UNGOX, which is poised to address the problems everyday investors would face while investing in crypto. According to Karpeles’s interview statements, UNGOX will position itself as a rating agency for crypto firms and evaluate four aspects of every entity: technology deployed, transparency maintained, people, and legal context.
This comes after his long legal battle with the Japanese judiciary, from which he emerged victoriously in 2019. But cut back to July 2010, and Mt. Gox had just commenced operations, quickly becoming the largest crypto exchange of its time. However, it was forced to shut down in February 2014 after a massive hack rendered it bankrupt. At its peak, it managed 80 percent of the global Bitcoin trading volume and held 850,000 BTC that went missing after the hack. Fortunately, 200,000 BTC worth ~$6 billion were retrieved by Karpeles later on and are likely to be used to return investors’ funds.
Despite all the security protocols of blockchain technology, the crypto industry remains vulnerable to hacks and cyber theft. The latest one in a long series of cyberattacks is the Axie Infinity fiasco on March 23, 2022, wherein hackers siphoned off $615 million worth of cryptocurrency from the online game’s platform. It is one of the largest attacks ever observed in the world of crypto.
“After the Mt. Gox bankruptcy, I have been following the developments in the crypto space, and I have seen some exchanges taking steps to prevent a second Mt. Gox. For instance, by implementing transparency reports. Despite this, the trend died down very quickly, and today’s situation for many exchanges is very similar to what led to Mt. Gox’s bankruptcy,” Karpeles told Forkast. But that’s not the end of the line for UNGOX — there are other problems that the platform will try to address.
The price movements of Bitcoin have started becoming increasingly correlated with the S&P 500 index. According to Arcane Research, the correlation between the two stands at 0.49, the highest observed since October 2020. A score of +1 means completely correlated and -1 means non-correlated.
Moreover, the crypto markets are bleeding yet again, with Bitcoin and Ether down by 5.5 percent each over the last 24 hours. At the time of writing, Bitcoin was trading at $39,923.44 and Ether at $3,004.63. Both cryptocurrencies have shed 14.5 percent over the last week, as per CoinMarketCap data. According to Arthur Hayes, founder and former CEO of BitMEX, not enough money is flowing into the crypto markets as Feds are trying to combat record-high inflation levels. He believes a sharp fall in NASDAQ 100 will trigger a “coming crypto carnage” in Q2 2022.
The broader market has also collapsed, with the market capitalisation of all cryptocurrencies nosediving to $1.85 trillion from $2.2 trillion a week ago. Amid such uncertain times, wouldn’t it be nice to have somebody point out the safest places in the crypto world to park your money? That’s precisely where Karpeles’s UNGOX comes in.
UNGOX will deep-dive into currently active crypto businesses for thorough scrutiny and will be launched in Q3 2022. It will assign a score for each service provided by the organisation under evaluation, thus making it easier for investors to understand if a project meets all requirements. You can think of it as a sibling to the credit scoring system. Karpeles also revealed that UNGOX would follow a subscription model wherein basic data will be freely available, and paid subscribers will be provided with detailed reports and important notifications.
“There are many things that can be seen with the right knowledge and experience, but most people do not look closely enough or lack the experience to recognize red flags,” said Karpeles to Forkast in the interview. “We will also be asking for cooperation and confirming accounting information, management, and procedure. If a company cooperates, it will allow us to more accurately score them based on the information they provide, such as security policies,” he added.
Another interesting revelation is that if you were a Mt. Gox user, you now become entitled to a “MtGox NFT”, which unlocks all premium services of UNGOX such that you do not get “goxxed” yet again. These NFTs will be airdropped to all those who register with the requisite details of their Mt. Gox accounts. However, since the exchange had over 1 million unique users, the allocation of NFTs after feeding in all details will take a while to complete. Further information about the airdrop is awaited as we wait and watch the developments unfold.
(Edited by : Shloka Badkar)