A looming deadline for trustee of infamous Bitcoin exchange Mt. Gox, once the world’s largest crypto trading venue, to file a civil rehabilitation plan has been pushed to the next spring. Nobuaki Kobayashi had notified the Tokyo District Court about the step taken.
After years of legal struggles, the victims of the Mt Gox hack were allowed to file a claim for a refund of their investments until October 29. But in a press release dated October 28, the court-appointed trustee in Mt. Gox’s bankruptcy said he wants to extend the deadline until March 31, 2020, due to a large number of disapproved claims. In the next few weeks, the trustee said he would declare the results of his decisions on the claims and creditors will be notified by various means.
He further explains: “A large amount of rehabilitation claims that the Rehabilitation Trustee fully or partially disapproved remains undetermined for being subject to claim assessment procedures and appeals against a decision on a petition for claim assessment. It is not possible at this moment to make appropriate provisions in a rehabilitation plan on modifications of the rights of the rehabilitation claims, repayment methods, and appropriate measures for the undetermined rehabilitation claims, and, accordingly, it is not practically possible to have meaningful discussions with relevant parties about repayment methods. Therefore it is not possible to submit a rehabilitation plan by October 28, 2019.”
The civil rehabilitation is not used to resuscitate Mt. Gox business but rather as a more flexible form of bankruptcy. It also allows the trustee to create his own plan instead of following a rigid set of steps under the bankruptcy proceedings. And most importantly, the bitcoin claims will be able to be revalued – hopefully in bitcoin this time.
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Against interests of the shareholders
Mt. Gox went offline in 2014 in the single biggest setback in the history of Bitcoin after 850,000 bitcoins were stolen in a hacking attack. Under suspicious circumstances, the Japanese exchange claimed it had lost track of about 750,000 bitcoins belonging to customers and another 100,000 of its own, but later said it had found 200,000 bitcoins.
Those assets, currently valued at over $1 billion, were supposed to be distributed to shareholders as part of the liquidation. This is because the value of creditors’ claims is calculated in the exchange rate between Bitcoin and the Japanese yen on the bankruptcy date in April 2014, instead of current rates.
However, the rehabilitation ruling isn’t in the financial interest of the shareholders. Mt.Gox has two shareholders, Tibanne and Jed McCaleb. The Tokyo-based exchange is 88 percent owned by Tibanne, of which Karpelès is the sole owner. The remaining 12 percent are held by Mt. Gox’s original creator Jed McCaleb, a San Francisco-based programmer who currently works with Stellar.
Earlier in 2018, the trustee sold nearly $400 million worth of Bitcoin and Bitcoin cash to generate proceeds to pay back creditors. At the time, cryptocurrency traders blamed the sale of Mt. Gox’s holdings for negatively impacting Bitcoin’s price.