Crypto Analyst Warns XRP Holders to Learn a Useful Lesson from Mt Gox

Citing the Mt. Gox collapse, a crypto commentator has urged XRP holders to take control of their assets instead of leaving them on centralized exchanges. 

This warning came from Alpha Lions Academy founder Edoardo Farina, whose recent commentary sought to remind investors how risky it can be to trust third parties with their crypto assets.

Mt Gox Downfall Sends a Warning to XRP Holders

Farina pointed to Mt. Gox’s downfall in 2014 as a lesson in what can go wrong when users don’t hold their own crypto. At the time of the crash, around 850,000 Bitcoins disappeared, most of them belonging to customers. 

While the exchange claimed technical issues, Farina suggested that what happened was likely an inside job that left customers with nothing but a fraction of what they were owed.

Instead of getting their BTC back, most users received repayments in U.S. dollars based on Bitcoin’s 2014 price of about $400 per coin. This was a bitter pill to swallow, especially since Bitcoin’s value later shot up past $20,000 and eventually over $60,000. 

According to Farina, those who had kept their crypto on Mt. Gox missed out on that growth, while the exchange’s trustees held on to billions worth of Bitcoin.

Farina’s main point was that keeping assets on exchanges means giving up control. His commentary essentially implies that XRP holders today risk repeating the same mistake if they don’t move their coins into self-custody wallets. 

A Massive Drop in Returns

While Farina’s message holds weight, some of his claims were slightly off. For instance, not all Mt. Gox creditors received payments in cash. Some did receive Bitcoin and Bitcoin Cash during the eventual repayment process, which began in late 2023 and continued through 2024. 

These repayments were part of a civil rehabilitation plan, and by July 2024, the trustees had returned about 142,000 BTC and other assets to creditors. Still, the overall recovery was only partial. 

Reports suggest that users got back roughly 15% of their original Bitcoin holdings. For context, an investor who lost 100 BTC might have received just 15 BTC in return.

Though the amount was small, Bitcoin’s price had climbed to around $63,000 by that point, so the recovered coins were still worth a significant sum. However, many creditors, especially those who were repaid in fiat, lost out big, since their compensation reflected Bitcoin’s much lower value back in 2014.

XRP Investors Should Prioritize Self Custody

Farina’s warning also comes on the heels of other major exchange failures, including the collapse of FTX in 2022, which led to losses totaling around $8 billion. In addition, customers lost about $190 million in the scandal involving QuadrigaCX, a Canadian exchange.

Notably, these events show how centralized platforms carry real risks, and XRP holders need to take steps to protect themselves. It is better to leverage tools like Xaman (formerly Xumm) for software storage, or better yet, hardware wallets like Ledger that store private keys offline.