By Darren Parkin
Almost a decade on from losing their investments, customers of collapsed crypto exchange Mt. Gox could see some of their funds returned by the end of the year.
Mt. Gox was a Tokyo-based exchange which launched in 2010 – only a year after the original cryptocurrency, Bitcoin, was created. By 2014 it was handling almost three-quarters of global Bitcoin transactions.
However, a whirlwind of revelations about its role in the loss of hundreds of millions of US dollars in Bitcoin saw operations shut down in February 2014. Trading was suspended, the website and exchange were closed, and Mt. Gox filed for bankruptcy protection from creditors.
More than 200,000 Bitcoin have been found since liquidation proceedings began in April 2014, but many more remain unaccounted for.
At the time, company chiefs said nearly 750,000 Bitcoin held by customers disappeared along with 100,000 of Mt. Gox’s own holdings, amounting to more than seven per cent of Bitcoin in circulation in 2014 when a single Bitcoin was worth around $62. Today BTC is changing hands for more than $22,000. In November 2021, Bitcoin reached an all-time high of $67,566.
Nine years ago, Mt. Gox blamed hackers and mounted a search for the lost digital assets, saying “The company believes there is a high possibility that the Bitcoins were stolen”.
Evidence presented a year later by Japanese cyber security experts WizSec firmly pointed to the fact that “most or all of the missing Bitcoin were stolen straight out of the Mt. Gox hot cryptocurrency wallet over time, beginning in late 2011”.
On March 14 2019, Mt. Gox’s CEO – French entrepreneur Mark Karpelès – was found guilty by the Tokyo District Court of falsifying data to inflate Mt. Gox’s holdings by $33.5 million. He was acquitted on several other charges – including aggravated breach of trust and embezzlement – based on the court’s belief that Karpelès had acted without ill intent.
He was sentenced to 30 months in prison, suspended for four years, meaning he will serve no time behind bars for his role in the Mt. Gox scandal if he can make it to this coming Tuesday without committing any additional offences.
Even more immediate than Tuesday for the customers who lost out almost a decade ago, should have been a significant way-marker in their attempted recovery of losses – the deadline to select repayment options. It had been scheduled for tomorrow.
However, ‘rehabilitation creditors’ dramatically pushed the March 10 deadline back to Thursday April 6 in the early hours of this morning.
Nobuaki Kobayashi, the appointed ‘Rehabilitation Trustee’, has also shifted the repayment dates to start processing from October 31 2023.
The new deadline could be the last chance for those caught up in the world’s first major crypto scandal to recuperate some losses – losses that, in many of their minds, could have gone on to create great fortunes. Had they kept hold of their Bitcoin with Mt. Gox until 2021 it would have increased in value by more than a thousand times.
Many market analysts now fear a serious market correction triggered by liquidations at the end of this year when repayments begin to trickle through.
However, a report from UBS strategist Ivan Kachkovski recently tempered fears that the return of dormant crypto could wreak havoc with the price of Bitcoin.
“It’s certainly difficult to estimate the extent to which the market has been pricing massive sales coming from Mt Gox,” wrote Kachkovski.
“However, we think such news could have been an additional factor for – what we believe could be mainly retail-led – BTC’s surprising resilience of late.”
Fears were also allayed this morning when an insider at the largest creditor of the failed exchange – the Mt Gox Investment Fund – revealed the organisation would be holding the returned Bitcoin and not selling.
The post Mt. Gox customers will have to wait until November before any lost Bitcoin funds are returned appeared first on CityAM.
