Mt. Gox, the infamous cryptocurrency exchange that collapsed in 2014, has announced that it will extend the deadline for its civil rehabilitation plan to March 31, 2024. The plan, which was supposed to be finalized by October 15, 2023, outlines how the remaining assets of the exchange will be distributed to the creditors who lost their funds in the hack. The exchange lost about 850,000 bitcoins, worth about $450 million at the time, due to hacking and mismanagement. Since then, some of the bitcoins have been recovered, and the price of bitcoin has skyrocketed, making the remaining assets worth billions of dollars.
According to a notice posted on the Mt. Gox website, the reason for the delay is the ongoing legal disputes between the exchange and some of its creditors, as well as the complexity of the asset allocation process. The notice states that “there are still many creditors who have not agreed to the proposed rehabilitation plan” and that “there are a large number of assets that are difficult to evaluate.”
However, the notice also suggests that some payments might still be made before the end of 2024, depending on the progress of the court proceedings and the approval of the rehabilitation trustee. The notice says that “the rehabilitation trustee is considering making possible interim payments before the rehabilitation plan becomes effective” and that “the rehabilitation trustee will make an announcement on the website as soon as a specific date is decided.”
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One of the main challenges is the ongoing lawsuit filed by CoinLab, a former partner of Mt. Gox, that claims $16 billion in damages from the exchange. CoinLab alleges that Mt. Gox breached their contract to provide bitcoin services in North America. The lawsuit has been widely criticized by the creditors and the bitcoin community as a greedy and frivolous attempt to take advantage of the situation. CoinLab has appealed the court’s decision to approve the repayment plan and has also filed a motion to freeze Mt. Gox’s assets in the US.
Another challenge is the technical difficulty of distributing the bitcoins to thousands of creditors around the world. The repayment plan requires each creditor to submit a claim form and provide a valid bitcoin address to receive their share of the assets. However, some creditors may have lost their access to their original Mt. Gox accounts or may have difficulty verifying their identity or providing a secure bitcoin address. Moreover, some creditors may prefer to receive cash instead of bitcoins, which would require converting the bitcoins at a fair market price and transferring the funds through various banking channels.
A third challenge is the volatility of the bitcoin market and the potential impact of a large-scale sell-off by the creditors. The repayment plan is based on the assumption that the price of bitcoin will remain stable or increase until the distribution is completed. However, if the price of bitcoin drops significantly, the value of the assets may not be enough to cover all the claims. Furthermore, if many creditors decide to sell their bitcoins as soon as they receive them, it could cause a downward pressure on the market and affect other investors.
The Mt. Gox saga has been one of the longest and most controversial in the history of cryptocurrency. The exchange, which was once the largest in the world, suffered a massive hack in 2014 that resulted in the loss of 850,000 bitcoins, worth about $450 million at the time. The exchange filed for bankruptcy shortly after, leaving thousands of creditors in limbo.
Since then, several attempts have been made to recover and redistribute the remaining assets of the exchange, which include about 150,000 bitcoins and some fiat currencies. However, the process has been plagued by legal battles, technical challenges and regulatory hurdles.
The latest extension of the deadline is likely to frustrate many creditors who have been waiting for years to receive their funds. Some have even opted to sell their claims to third-party buyers at a discount, rather than wait for the uncertain outcome of the civil rehabilitation plan.
On the other hand, some creditors might see this as an opportunity to increase their potential payouts, as the value of bitcoin has risen significantly since 2014. According to a report by CoinDesk, some creditors have filed petitions to change their claims from fiat to bitcoin, arguing that they should receive their original number of bitcoins rather than their equivalent value in fiat at the time of the hack.
It is hard to predict whether Mt. Gox will fulfil its repayment plans by the end of 2021. The plan faces many legal, technical and financial hurdles that could delay or prevent its execution. The creditors of Mt. Gox have been patient and hopeful for a long time, but they may have to wait even longer to see their money back.
The final decision on how the assets will be distributed rests with the Tokyo District Court, which oversees the civil rehabilitation proceedings. The court will review and approve or reject the proposed plan once it is submitted by the rehabilitation trustee. Until then, creditors will have to wait patiently for any updates from Mt. Gox.