Mt. Gox Saga Unfolds: The Exchange Moves Toward Settling Creditors’ Accounts

click here to see original post

Photo: Pixabay

Mt. Gox, long-defunct Bitcoin exchange based in Japan, is on the news again, as new reports regarding its civil rehabilitation proceedings have emerged. On March 20, Mt. Gox‘s trustee Nobuaki Kobayashi (known as Tokyo Whale) has announced that Mt. Gox is finally moving toward settling creditors’ accounts in cryptocurrency or cash.

Looking Back to the Roots

Until 2014, Mt. Gox was the largest cryptocurrency exchange in the world, handling approximately 70 percent of all Bitcoin transactions. In February that year, the exchange filed for bankruptcy after it had lost 850,000 coins estimated at about USD 500 million and announced that $27 million was stolen from its bank’s accounts.

In April 2014, a Japanese court issued an order to start bankruptcy proceedings and Mt Gox was set to be liquidated. In July 2015, the Tokyo Metropolitan Police arrested Mark Karpeles, the CEO of the Mt.Gox, alleging that he manipulated the Mt Gox’s computer system to increase the balance in an account. It was revealed that only 1% of all the missing 7,000 bitcoins were stolen by hackers. The investigation continued.

By May 2016, creditors of Mt. Gox claimed they had lost $2.4 trillion when Mt. Gox went bankrupt, which they asked to be paid to them. The Japanese trustee overseeing the bankruptcy said that only $91 million in assets had been tracked down to distribute to claimants, despite Mt. Gox had asserted it had more than $500 million in assets.

In 2018, Mt. Gox entered civil rehabilitation to provide more leeway in how creditors can be compensated. In compliance with the court’s rule, they got an opportunity to regain their funds directly in cryptocurrency.

In February this year, an outstanding entrepreneur Brock Pierce arrived with a recovery Gox Rising plan to help the victims of the Mt. Gox hack and stated that Mt. Gox creditors should receive 100 percent of whatever they’re owed.

The story went on, as new details have been revealed. After a year in a Japanese prison, Mark Karpeles was found guilty of tampering with financial records, however, he received a suspended two and a half years jail sentence.

Will Creditors Receive a Compensation?

According to the trustee’s report, the exchange held a total of 141686.35371099 BTC, as of March 18, 2019, valued at over $573 million. Bitcoin Cash under the exchange’s control made up 42846.35166254 BCH, valued at over $6 million.

As the exchange‘s trustee said, there was no plan to revive Mt. Gox – only to distribute assets (such as cash or cryptocurrency) to creditors if the bankruptcy plans allow it.

Further, the trustee said he would declare the results of his decisions on the claims and creditors would be notified by various means. Currently, Nobuaki Kobayashi is also investigating the possible existence of additional Bitcoin held by the Rehabilitation Debtor.

The report states:

“Users who have filed their Exchange-Related Rehabilitation Claims using the online filling system (the “System”) can check the results of approval or disapproval of their filed claims online by logging into the System.”

It continues:

“The Rehabilitation Trustee will email Users who filed their Exchange-Related Rehabilitation Claims using the supplementary online method or offline method at their contact email addresses, informing them of the results of the approval or disapproval of their filed Exchange-Related Rehabilitation Claims.”

Those who did not file claims will still have their claims acknowledged by the trustee in line with the Civil Rehabilitation Act of Japan:

“The Rehabilitation Trustee has approved Exchange-Related Rehabilitation Claims that have been acknowledged based on balances in the MTGOX Bitcoin exchange database, including those that Users have not duly filed.”

In the next few days, the trustee’s decision will be known. Now it is only clear that if the debt is repaid in cryptos, creditors will have to create new accounts to receive their funds.

Share !