Through its analysis, the firm’s analysts concluded that FTX accounted for a much smaller proportion of the global crypto industry compared to the size and contribution of Mt. Gox at the time and under the same circumstances. The researchers concluded that the sector would recover stronger than ever after the FTX debacle.
Chainalysis’ research lead Eric Jardine started work on comparing the two incidents in a Nov. 23 Twitter thread. He started this by initially examining the two companies’ market share that collapsed and found out that Mt. Gox accounted for about 46% of all exchange inflows in the year that led up to the firm’s collapse in 2014. The same figure for FTX was at an average of 13%. FTX was in operation from 2019 till it collapsed in November 2022.
According to Jardine, at the time of the collapse of Mt. Gox in 2014, centralized exchanges (CEXes) were the only players in the game. In contrast, by late 2022, decentralized exchanges (DEXes) such as Uniswap and Curve had control of almost 50% of all the exchange inflows.
On the other hand, Jardine mentions that FTX was gradually gaining market share while Mt. Gox’s was steadily declining and that business trajectories are worth considering.
“Mt. Gox was becoming one exchange among many during a period of growth for the category, taking a smaller share of a bigger pie. FTX, on the other hand, was taking a bigger share of a shrinking pie, beating out other exchanges even as its raw tx volume declined,” Jardine added.
Even so, Jardine concluded that Mt. Gox was a “linchpin of the CEX category at a time when CEXes dominated,” making it a more important part of the crypto ecosystem at its demise than FTX.
Jardine then examines the recovery of the crypto industry following the fall of Mt. Gox, discovering that while on-chain transaction volume was stagnant for a year or so, activity quickly picked up.
After losing 850,000 Bitcoin in a hack, Mt. Gox suspended trading, closed its website, and filed for bankruptcy protection in February 2014.
Their funds are yet to be received by those customers who had deposited funds on the exchange. However, the Mt. Gox Trustee announced on Oct. 6 that creditors have until Jan. 10, 2023, to choose a repayment method for the 150,000 BTC allegedly in their possession.
Although there are other factors, such as Sam Bankman-large Fried’s public presence, Jardine believes that the “comparison should give the industry optimism” because when it comes down to market fundamentals,
“There’s no reason to think the industry can’t bounce back from this, stronger than ever,” says Jardine.