The Slow as Molasses Murky, Muddy and Messy Mt. Gox Saga Continues as New Details Emerge


As many of our readers are probably well aware of, the 2011 Mt Gox security breach saw hackers make their way with more than 850,000 BTC. To put things into context, at the time of writing this article, this incident is still officially the biggest cryptocurrency hack of all time.

And even though some 200k odd tokens from the lost coin-pool have since been recovered, the closure of the Japanese exchange has left 24,000 odd creditors waiting around for a refund.

A Deeper Look at the Issue

2019 marks the completion of eight years since Mt. Gox was hacked. In this regard, it should be pointed out that there still exists no future roadmap as to how creditors will receive their lost assets or what a payout agreement could possibly look like.

Additionally, some of our regular readers may recall that a post issued on Reddit earlier this year claimed that a former Mt Gox business partner had filed for a 1.7 trillion Japanese yen claim against the now defunct exchange — which was substantially more than the initial claim of $75 million that was filed in 2013.

Confirmed: Coinlab has submitted a $16bn claim. from mtgoxinsolvency

Key Specifics to Bear in Mind

  • A host of industry experts believe that Nobuaki Kobayashi, the trustee currently responsible for managing Mt. Gox’s remaining assets, could have had a part to play in the 2018 market crash.
  • As per various reports, nearly $700 Million worth of BTC/BCH was dumped into the market last year (by June 2018).

If that wasn't enough, it is also interesting to note that at the time, the San Francisco Federal Reserve released a statement saying:

“The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. It is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset.”

Additional Details about the Mt. Gox Issue

Earlier this year (February to be exact), many industry insiders were claiming that talks were talks going on amongst certain individuals so as to resurrect Mt. Gox once again.

The project was called GoxRising and as per the official company website, the goals of the movement were as follows:

  • To keep creditors informed.
  • To support rapid creditor payouts.
  • To maximize distribution to creditors.
  • To revive the exchange.

In relation to this development, independent crypto entrepreneur Brock Pierce said that the aim of the GoxRising exercise was to “restore the losses incurred by creditors' of the 2011 hacking incident”.

However, as soon as Pierce made this announcement, ex-Mt. Gox CEO Mark Karpeles said that the plans were not only unfeasible but also not realistic in nature:

“As to distributing assets faster than the trustee, I haven't heard at this point anything that would make this possible from Gox Rising [sic]. The published plans seem to imply reviving Mt. Gox and creating a lot of complex legal structures, which may take time to happen.”

Recent Developments That Are Quite Striking

  • On Feb. 28, Karpeles’ request to stay in the USA was denied. This decision was made by US federal authorities in light of a lawsuit that was initiated against him in relation to the infamous Mt Gox scandal.
  • Similarly, last month a Tokyo District Court found Karpeles guilty of record tampering. However, with that being said, he was acquitted of all charges related to embezzlement.
  • According to the findings of the Tokyo Court, the former Mt. Gox CEO had conflated his personal assets with those of the exchange as a result of which he was found guilty of trying to cover the company's losses at the time of the hacking scandal.
  • As things stand, Karpeles is currently set to serve a two-and-a-half-year suspended jail sentence owing to all of the above stated criminal charges.

Final Take

In closing out this piece, it should be mentioned that Karpeles has decided to appeal in court against the judgement passed against him. In relation to the matter, he was recently quoted as saying:

“I believe appealing to the judgment is appropriate so that I can be judged again in full consideration of all the facts.”

Last but not least, we should also point out that Mt. Gox’s primary trustee Kobayashi recently released a statement that he had finished processing a number of rehabilitation claims that had submitted to him. As a result of this, the remunerations due would be doled out (to eligible creditors’) in the near future:

“In a few days, the Rehabilitation Trustee will make the results of approval or disapproval of Exchange-Related Rehabilitation Claims available to Users who filed their Exchange-Related Rehabilitation Claims”

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