Cryptocurrency Exchange Mt. Gox Continues Delaying Repayments, Extends Deadline to 2024
Summary:
Mt. Gox, a once-popular cryptocurrency exchange, has made its investors wait for over a decade now for the return of funds lost in a 2014 security breach. Repeated promises of reimbursements have not seen fruition, leading to numerous repayments postponements over the years. The latest rescheduling extends the repayment deadline till October 2024, marking the 11th year of financial redress wait for the defunct exchange's investors. Recent years have seen multiple extension requests justified by requirements for additional examination, with the latest due to a failure in creditors providing their repayment information. Despite inquiries, Mt. Gox has yet to comment or confirm its commitment to eventual fund reimbursements.
In 2014, Mt. Gox, a popular cryptocurrency exchange, suffered a monumental security breach, leading to the loss of 850,000 Bitcoins invested by its users. This prompted a seemingly endless 10-year journey towards restitution and reimbursement of these lost funds. Despite several promises to repay its users over the ensuing years, Mt. Gox seemingly continued to delay repayments, having barred withdrawals from its platform since February 25, 2014.
Further adding to the woes of its consumers, Mt. Gox has pushed its repayment deadline forward by a year, now set for October 31, 2024. This pushes the wait for financial redress into an 11th year for the exchange’s investors. The aftermath of the 2014 Bitcoin hack - during which time, the average price for Bitcoin was $420 - saw documents leak confirming the exchange's insolvency following the security breach that saw a hot wallet leak wipe out its cold storage.
The situation worsened when the exchange, handling 70% of all circulating Bitcoin at the time, declared bankruptcy after nearly half a million dollars in losses. This led to a wave of lawsuits from anxious investors fearing that Mt. Gox had no intention to return their funds – especially given the lack of a reimbursement scheme and its subsequent social media and website disappearance.
During the bankruptcy proceedings that followed, Mt. Gox CEO Mark Karpelès faced arrest by Japanese authorities on suspicion of fraudulently manipulating the computer system to bolster his account. Amid these proceedings, the exchange’s bankruptcy trustee, Nobuaki Kobayashi, asked users to claim their missing Bitcoin. Users were hopeful that approximately 20% of their funds would be returned, considering Bitcoin's market price decline at the time.
However, only $91 million were eventually marked for distribution to claimants in 2016 - the year cold wallet cryptocurrency storage started gaining popularity. This triggered a mass reimbursement demand exceeding $2.4 trillion, in spite of losses only amounting to around $500,000. Karpelès, having served two arrests in 2015 under embezzlement allegations, was released the following year after paying a nearly $100,000 bail.
A year later, talks of reimbursement had taken a back seat due to ongoing legal proceedings against Karpelès, who was under investigation for fund misappropriation. Karpelès even announced an initial coin offering (ICO) to raise $245 million to 'resurrect' Mt. Gox, a plan he later abandoned due to potential legal complications.
In a general recovery of the cryptocurrency market in 2018, Mt. Gox made policy amendments regarding rehabilitation plans, confirming they were unable to return all deposited Bitcoin. This decision led to their plan to allocate all assets, comprising around 166,000 BTC, 168,000 BCH, and other derivatives towards creditor payments. However, negotiations failed to agree on a resolution that met both legal and creditor needs.
Over the following years, it was primarily deadline extensions and delays for the rehabilitation plan. Attempts to buy out creditor claims from private equity firm Fortress proved fruitless. The Tokyo court continuously granted Mt. Gox extensions due to additional examination requirements, prolonging the settlement date.
When Bitcoin hit an all-time high of $69,000 in 2021, creditors approved a rehabilitation plan. The excitement persisted in 2022 as investors registered repayment method details. This caused speculation regarding the potential release of 150,000 BTC, possibly leading to a significant market event. The deadline for creditors to register for repayment was extended to January 2023.
2023 saw this deadline pushed back twice. On April 7, trustee Kobayashi stated that creditors hadn't provided their repayment information on time, so the repayment deadline was moved to October 2024. Despite a Cointelegraph inquiry, Mt. Gox remained silent about its commitment to repay user funds. Kobayashi confirmed that the Tokyo District Court authorized the extension of various repayment deadlines in a letter dated Sept. 21.
Published At
9/21/2023 9:57:35 AM
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