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Q&A: Ex-Mt.Gox exec Thomas Glucksmann-Smith shares the perils of the fintech frontier

By NexChange
FinTech

For every success on a new frontier there is also a horror story. For many Bitcoin users that horror was Mt. Gox, the Japanese Bitcoin exchange that went from handling 70% of all bitcoin transactions in early 2013 to losing $473 million of the cryptocurrency a year later.

Thomas Glucksmann-Smith had a front row seat on the collapse. He joined the company a year before it closed and become the media’s go-to guy as the Mt.Gox crisis unfolded in its final months.

Investigations are still ongoing. Only last week Mt. Gox’s former CEO Mark Karpeles, AKA MagicalTux, was arrested anew in Japan on more embezzlement charges. Glucksmann-Smith shares a few thoughts with NexChange about his time with the startup and the legacy it has left for cryptocurrencies.

Q: How big was the Bitcoin phenomenon when you joined?

A: Bitcoin was something I learned about three weeks before I joined Mt.Gox. There was already an established global community of Bitcoin enthusiasts and traders when I joined but it was mainly limited to the hardcore libertarians, software engineers, and other niches groups. But after a couple of months, there was constant news from mainstream media about Bitcoin and its popularity gathered momentum quickly. A whole dialogue started around what Bitcoin was and what was going on, and at the time Mt.Gox was the biggest player so there was a lot of attention on the firm.

Q: How did the public react to Mt. Gox in the early days?

A: When you’re the first firm involved in a new type of innovation to get so big, you’re bound to be in the cross-hairs of banks, regulators, and the media. When the Bitcoin craze begun to take off, Mt. Gox’s customer base and trading activity grew at a ludicrous speed and we made serious money from trading fees. This naturally caught the attention of regulators and banks around the world who were still in the early stages of trying to understand the cryptocurrency.

Q; How do you feel about publicity Mt. Gox recieved?
A: The media attention given to Mt.Gox was a double-edged sword. It helped the company to grow its customer base so much, in so little time that it couldn’t keep pace. It also hindered the company’s image when things started to turn sour. A lack of communication on what was happening internally resulted in copious amounts of misinformation which was heavily reported on and circulated. As a result, the public, banks, regulators, and most importantly our customers turned against us. So when things really went south it was difficult for the company to reach out to its clients for support.
Q: What do you think Mt. Gox’s legacy will be?
A: If there had been clearer and more regular information about what was really going on, I doubt that the perception of Mt.Gox would have been the same. Of course there were some questionable management decisions taken by Mark, but there were a lot of other challenges that if the public had known about would have put the ‘collapse’ into perspective. There is no doubt that Mt. Gox’s rise and fall has set the stage for more serious players who have since sought to balance the share of trading activity, continue discussions with banks and regulators, boost merchant acceptance, innovate payment solutions, and sort out the PR problem. Many cryptocurrency platforms are now run by former finance professionals rather than just by ex-hackers.

Q: Where do you think the future of Bitcoin is headed?

A: The infrastructure behind Bitcoin is likely to have the most impact. Blockchain, as unsexy as it is, will probably be Bitcoin’s main influence on the financial industry in the near future. Further down the line, projects such as Ethereum, a decentralized platform that runs smart contracts that is inspired by Bitcoin, may eventually have greater impact on how business is conducted.

Glucksmann-Smith is currently managing consultant of La Porte Asia Consulting, a start-up marketing strategy firm focussed on connecting established fintech disruptors with new market opportunities in Asia. 

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