Bitcoin’s (BTC) price has been affected in the past by several issues such as the hack that the cryptocurrency platform Mt. Gox experienced back in 2014. The exchange’s civil rehabilitation proceedings started back on March 20, 2019.
At that time, the Tokyo District Court informed the current situation of the legal process. Now, Mt. Gox affected users could start receiving a portion of the Bitcoins they held when the hacked occurred.
Mt. Gox Users Could Receive Their BTC Back
Mt. Gox is planning to return a portion of the Bitcoins held by all users. In a recent email that is dated April 22, 2019, and that was sent to all Mt. Gox users, the exchange says that the “self-approved rehabilitation claim” is now active after the withdrawal of objections that creditors made.
The email reads as follows:
“As a result, the approval of your self-approved rehabilitation claim has become effective, and you no longer need to file an application for the claim assessment. Even if you have received a PDF form of the application from the Rehabilitation Trustee, you do not have to submit the application.”
That means that users that held Bitcoin on the exchange when it went offline would be receiving some of these funds back. This will also benefit users that did not file any claim in their name. At the moment, there is no information about the number of funds that are going to be given to users and investors.
It is worth mentioning that there is also no specific date for it to happen. As a redditor mentioned, this does not mean that it will be happening soon.”
Mt. Gox was one of the biggest hacks in history. The exchange handled over 70% of the Bitcoin trading volume back in 2013. However, in 2014 the platform declared bankrupt. At that time, the company lost 7% of all the Bitcoins in circulation. Since that moment, the exchange has been making an effort to pay back creditors after multiple lawsuits.
The Unusual Tale of Mt. Gox's $16 Billion Claim – Part of a Strategic Block of Rehab Proceedings While Taking Advantage of Bitcoin's All Time High
Mt Gox has become embroiled in a new controversy surrounding its ongoing rehabilitation proceedings as the founder and key administrator for Mt. Gox Legal, Andy Pag hits the headlines for declaring an end to Rehab Proceedings.
BONUS – WBD096 – Why I have given up on Mt. Gox with @andybutshorter.
A follow-up with Andy Pag who was part of my Mt. Gox series, we discuss:
– Why he has stepped down from Mt. Gox Legal
– Why he has sold his claim
– Delays because of the Coinlab claimhttps://t.co/Xl9B3pdtk3 pic.twitter.com/ToZ65rl39I
— Dr. Peter McCormack (@PeterMcCormack) April 14, 2019
With news reports going so far as to declare that Pag has officially called it quits on these civil proceedings, the truth is murkier than just being in the hands of Mt. Gox Legal. Both according to contemporary news reports, as well as Pag himself, citing the pressing matters that emerged while he was attending a creditors meeting in Japan.
While attending one of the Trustees Meetings, it was decided by both Pag and the board, among them, Nobuaki Kobayashi, announcing that any traction in the Rehab proceedings would be arrested until the new case with CoinLab is addressed.
This is where things get interesting: CoinLab had since made a claim that it was owed approximately $16 billion as it follows through with potential bankruptcy proceedings. This would effectively place a significantly long pause over Rehab, according to Pag, who argues that such a case would take anywhere from 12 to 24 months to resolve.
For the moment, these claims are undergoing a process of re-assessment, meaning that Nabuaki Kobayashi will be personally going through these claims in order to ascertain its credibility. And should this not be picked up and consequently rejected, then CoinLab would be able to take this to a judge and proceed with bankruptcy hearings.
It's this process that provides a painful pause to hopes of a rehabilitation proceeding taking place in April, as it becomes matter of claim-based tennis between the three parties, as Pag goes on to explain:
“CoinLab makes a submission to the judge saying, ‘well this is why we should have our claim accepted’ and the Trustee looks at that over a period of time. The trustee then replies ‘well, this is why its absolutely rubbish and they shouldn’t have it’ and then CoinLab gets it […] it goes backward and forwards until everybody is satisfied and the judge makes a ruling”
A Settlement Turned to Painful Process
For members of both CoinLabs and Mt.Gox, this is actually the continuation of past disagreements regarding financial claims. For Pag, this claim had initially been agreed to back in 2013, which officially meant that CoinLab would be the franchise for Mt. Gox within the United States.
Before the collapse of the cryptocurrency exchange, this agreement between the two fell to pieces, as CoinLab took up legal action against Mt. Gox. In 2014, when this lawsuit was officially filed, this came to a total settlement claim of approximately $75 million, Pag argued:
“That lawsuit has mutated into a claim in the bankruptcy process. So back in 2014, CoinLab put in a 75 million dollar claim against Mt Gox. So, along with all the people that lost money on the exchange they were also saying to the Trustee, ‘you need to give us 75 million because that’s what this contract was worth’.”
But how on earth does 75 million suddenly become $16 billion now? Interest rates over time? Hardly. With the announcement by Mt Gox that the bankruptcy settlements weren't settled between itself and CoinLabs, it became a civil rehabilitation case, meaning that all previously filed paperwork had to be submitted again.
This is where we see CoinLabs suddenly spike from its previous claim of $75 million up to $16 billion. It's not just spectators to this case that see the lunacy of these mathematics, as Pag points out:
“Between 2014 and last year their claims had somehow grown from 75 million to 16 billion dollars. So, they are claiming $16 billion. there’s in my eyes no earthly reason how you can calculate the damages of this and come up with a number $16 billion […] it doesn’t make sense.”
There is some speculation coming forward as to why this claim has suddenly risen, with some arguing that this was a deliberate strategy by CoinLabs in order to derail civil rehabilitation proceedings which, if proven to be true, would have been unfortunately successful.
But even if that were the case, what would CoinLabs stand to gain? If 75 million was just about believable, does its team really have any hopes of obtaining billions?
If it's passed along in the same way as conventional bankruptcy hearings, as were previously mentioned, it could very well lead to a bigger payout, should they prove successful. One of the things that does make it more likely is the fact that MT. Gox legal have been unable to obtain information that would prove crucial to reaching an agreement.
A former administrator for CoinLabs points out that the team had requested that documentation be sealed, meaning that Mt.Gox would not be able to see any of this information, holding up the proceedings even more.
“[…] we’ve got no way of really judging what stage this is at, what merits the legal arguments that are being made, are being submitted. we’re completely in the dark. there’s a really really frustrating process. […] we’ve made a request to a lawyer that they unseal those papers but actually we don’t have any standing really to do that […]”
So, this gets us onto the other critical question –
CoinLabs $16 billion Claim Could be Both a Blocking Strategy and way to Take Advantage of BTC's All Time High Valuation
There is no way on earth that the CoinLabs team pulled that $16 billion amount out of thin air, and Pag is sure of this too.
So there's every possibility that this is a strategy set up to not only delay proceedings, but also capitalize on some financial gains in the process thanks to re-submission requirements.
“the number $16 billion coincides with $20,000, the all-time high for Bitcoin price, multiplied by 800,000 Bitcoin, which is the total amount of Bitcoin being claimed by creditors [..] or they happen to have chosen a number that matches exactly the amount the best case claim that all creditors put together could have.”
The combination of having sealed case files, along with claiming what would amount to be the absolute maximum in financial claims shows that there's some serious strategic thinking coming from the CoinLabs team. This allegation is especially true when considering the weight of claims made, and how that has an impact upon court proceedings.
Pag goes on to discuss the kind of ‘voting power' that a $16 billion claim gives the company compared to its previous $75 million. While this puts CoinLabs in a strong position, Pag points out that it makes a mockery of the whole process to an agonizing degree.
“[…] until the trustee is in a position where you can say this is actually what CoinLab’s claim is worth […] even if you give [CoinLab] 50% of the voting rights they still have eight times more voting power then everybody else combined. So, it makes a mockery of the process and its groundless to a halt.”