Mt. Gox, the infamous cryptocurrency exchange that was hacked in 2014 and lost 850,000 bitcoins, has announced that it will start repaying its creditors using PayPal. The announcement was made on the official website of the exchange, where users can log in and claim their refunds.
According to the website, Mt. Gox has obtained approval from the Tokyo District Court to use PayPal as a payment method for the civil rehabilitation proceedings. The exchange said that PayPal was chosen because it is “fast, secure and convenient” and that it will cover the fees for the transactions.
The exchange also said that it has recovered about 200,000 bitcoins from various sources, including its own wallets, third-party services and law enforcement agencies. The remaining 650,000 bitcoins are still missing and presumed stolen by hackers.
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The repayment process will be based on the balance of each user’s account as of February 2014, when the exchange suspended its operations. The exchange will use the exchange rate of $483 per bitcoin, which was the average price at the time of the hack.
Users who want to claim their refunds will have to provide their PayPal email address and verify their identity using a photo ID and a selfie. The exchange said that it will process the claims within 10 business days and that users can expect to receive their funds within 24 hours after approval.
The announcement comes as a surprise to many in the crypto community, who have been waiting for years for Mt. Gox to resolve its legal issues and return their funds. Some users have expressed skepticism and distrust about the PayPal option, while others have welcomed it as a sign of progress and hope.
Mt. Gox was once the largest and most popular bitcoin exchange in the world, handling over 70% of all bitcoin transactions at its peak. However, in February 2014, the exchange revealed that it had been hacked and lost almost all of its bitcoins, worth about $450 million at the time. The hack triggered a massive sell-off in the crypto market and a loss of confidence in the security and reliability of bitcoin exchanges.
Since then, Mt. Gox has been involved in a complex and lengthy legal process, involving multiple lawsuits, investigations and bankruptcy proceedings. The exchange has been under the supervision of a court-appointed trustee, Nobuaki Kobayashi, who has been selling some of the recovered bitcoins to pay off the creditors.
The PayPal option is part of the civil rehabilitation plan that was approved by the court in December 2020. The plan allows creditors to choose between receiving cash or bitcoins as their repayment. However, due to the limited amount of bitcoins available, most creditors will only receive a fraction of their original claim.
The plan also stipulates that any remaining bitcoins after the repayment will be returned to Mt. Gox’s shareholders, mainly its former CEO Mark Karpeles. This has sparked controversy and criticism from some creditors, who argue that Karpeles should not benefit from the hack and that he should be held accountable for his role in the exchange’s collapse.
Karpeles has maintained his innocence and claimed that he was not involved in or aware of the hack. He has also said that he does not want to receive any bitcoins from Mt. Gox and that he will donate them to a foundation that will support the development of bitcoin.
The PayPal option is expected to be available until March 31, 2024, after which any unclaimed funds will be forfeited. Users who have not yet filed their claims or who prefer other payment methods can still do so through the online system or by contacting Kobayashi’s office.
FTX plans to pay back customers crypto but at the price they were when they went bankrupt
FTX, one of the leading cryptocurrency exchanges, has announced that it will reimburse its customers who lost their funds due to the recent insolvency of a third-party custodian. The exchange said that it will use its own reserves to pay back the affected users, but with a catch: the compensation will be based on the market value of the crypto assets at the time of the bankruptcy, not the current price.
This means that some customers may receive less than what they had originally deposited, while others may receive more. For example, if a customer had 10 bitcoins (BTC) in their FTX account when the custodian went bankrupt, and the price of BTC was $50,000 at that time, they will receive $500,000 worth of FTX tokens (FTT) as compensation.
However, if the price of BTC is now $60,000, they will miss out on the $100,000 difference. Conversely, if the price of BTC is now $40,000, they will gain an extra $100,000.
FTX said that this method of compensation is fair and transparent, as it reflects the actual value of the assets at the time of the loss. The exchange also said that it will cover any legal fees and expenses incurred by the customers in relation to the bankruptcy case.
FTX CEO Sam Bankman-Fried said that he regrets the inconvenience and frustration caused by the custodian’s insolvency, and that he hopes to restore trust and confidence in the crypto industry.
“We are deeply sorry for what happened to our customers who trusted us with their funds. We take full responsibility for this incident, and we will do everything in our power to make it right. We believe that paying back our customers based on the market value of their crypto at the time of the bankruptcy is the most fair and transparent way to handle this situation.
We also want to assure our customers that we have taken steps to prevent this from happening again, and that we are working with regulators and law enforcement to hold the custodian accountable for its actions.” Bankman-Fried said in a blog post.
The exchange did not disclose the name of the custodian or the amount of funds that were affected by the insolvency. However, some sources claim that the custodian was Crypto Capital, a Panama-based company that has been accused of fraud and money laundering by several authorities.
FTX is not the first exchange to face such a situation. In 2019, QuadrigaCX, a Canadian crypto exchange, went bankrupt after its founder died and took the private keys to the exchange’s wallets with him. The exchange owed its customers over $190 million in crypto and fiat currencies, but could not access them.
FTX’s decision to pay back its customers at the original value of their deposits is commendable and shows that the exchange cares about its users and their funds. It also sets a positive example for other exchanges that may face similar issues in the future.
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