The Mt. Gox trustee has announced the final stage of reimbursement for the exchange’s investors. What does this mean for Bitcoin?
A plan to compensate investors affected by the hacking of now-closed cryptocurrency exchange Mt. Gox has received new guidance from a Japanese court. According to Nobuyaki Kobayashi, a trustee in the platform’s case, the payout scheme originally submitted to the Tokyo District Court is now “in the final stages of approval”. The procedure to confirm the compensation plan in Japan’s judicial system is one of the latest steps in a long process that began with a 2018 petition to compensate creditors of the exchange, which shut down back in early 2014. As a reminder, the collapse of Mt. Gox was one of the most famous events in the early history of cryptocurrency, so to understand the importance of the news, we’ll refresh your memory a bit with a general chronology of events.
The history and downfall of Mt. Gox
In 2007, Jed McCaleb purchased the domain mtgox.com to create a trading platform (an exchange) dedicated to virtual cards from Magic: The Gathering. It was from it that the name of the future crypto-exchange was taken. Three years later, McCaleb was interested in the possibility of reforming Mt. Gox into a major bitcoin-to-currency exchange platform. However, the programmer did not fully develop it and sold Mt. Gox to French developer Mark Karpeles a year later.
Mt. Gox founder Jed McCaleb
The first major crisis happened a few months after Mt. Gox fell into Karpeles’ hands. It was reported at the time that unknown hackers had allegedly gained access to user accounts and brought down the BTC price from $17 to a few cents in a matter of minutes. The price collapse was only observed on Mt. Gox, while the Bitcoin protocol and other platforms in existence at the time were not affected.
Bitcoin collapse
Generally, between 2011 and 2013, hacking, fraudulent operations and other negative news became almost the norm for Mt. Gox. But that didn’t stop the fact that by 2013, under Karpeles’ leadership, the crypto-exchange had become the largest in the world and handled about 70 per cent of all Bitcoin trading.
On 4 February 2014, news outlet Coindesk conducted a survey to determine how many users had ever had problems with withdrawals and other transactions on the platform. At the same time, more than 3,000 posts accumulated on the BitcoinTalk forum with traders complaining about problems accessing their coins.
Three days later, Mt. Gox suspends trading and freezes accounts without any explanation.
Former Mt. Gox owner Mark Karpeles
The exchange is releasing an official statement only ten days later. It talks about the restoration of work, financial compensation to the victims and a program to eliminate all negative consequences of the hacking attacks. However, by the end of the month Mark Karpeles leaves the Bitcoin Foundation organization, and then admits that Mt. Gox lost more than 850 thousand BTC in a series of hacks. That’s about $51 billion at the cryptocurrency’s current exchange rate.
Read also: Mt. Gox CEO responsible for setting investors up. Bitcoin.com founder's opinion.
Mt. Gox has since been shut down for good. Karpeles himself became a defendant in the 2014 trial in the Mt. Gox investor lawsuit. The prosecution alleged that Mark was involved in the theft of funds and allegedly engaged in illegal manipulation of user accounts. However, Karpeles still continues to deny his guilt.
How do I get my money back from Mt. Gox?
During the exchange’s litigation, its remaining assets were placed under external management, and Japanese lawyer Nobuaki Kobayashi was appointed as the liquidation manager for the debt to investors. Kobayashi has now announced that plans to recover the funds are “in the final stages of consideration”, reports Cointelegraph.
Mt. Gox trustee Nobuyaki Kobayashi
He said he was aware of the “details, specific timelines, procedures and amounts” of payments to creditors who have made claims under the approved plan. It is not yet clear whether the payments will be made in bitcoin or in regular currency. That said, the announcement says creditors may be required to register their bank account details on the website to receive the rewards, or they will “face difficulties”.
Mt. Gox customer protest
What’s the bottom line? The next round of payouts is estimated to be at least $8.5 billion. As noted above, the methods of reimbursement have not yet been disclosed, meaning this event could result in either a rise or a severe fall in the price of Bitcoin. For example, investors could immediately sell their BTC received, which would affect the market situation. Although given what is happening in the niche, it is possible that many of them will decide to hold on to the cryptocurrency.
We believe that it is too early to declare the prospect of Bitcoin collapse due to what is happening. Still, Mt.Gox investors themselves are not interested in that, because their fortunes depend on the BTC exchange rate. In addition, there are enough people willing to buy the first cryptocurrency today at $60,000 - after all, it is also the national currency of El Salvador. As a result, there's a pretty good chance that coin payouts will generally be imperceptible to the market.
What do you think about that? Share your opinion in our millionaires cryptochat. There we will discuss other developments related to the blockchain and decentralisation industry.
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