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Mt. Gox was a Tokyo-based cryptocurrency exchange launched in 2010 and became a leading Bitcoin exchange by 2014. By early 2014, in the early days of Bitcoin, Mt. Gox was handling almost 70% of all Bitcoin transactions.
The Hack & Collapse of Mt. Gox
In February 2014, Mt. Gox suffered a major hack and Mt. Gox decided to abruptly shut down all of its operations. Mt. Gox confirmed that it lost hundreds of thousands of Bitcoin due to hacking and security vulnerabilities.
There were conflicting reports about the number of BTC lost in the hack, and an estimated 850,000 - 950,000 BTC were stolen from Mt. Gox (worth $450 million). It was later reported that Mt. Gox recovered around 140,000 BTC. The current worth of the recovered BTC is around $8 billion.
Bankruptcy & Rehabilitation Plan
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Mt. Gox filed for bankruptcy in 2014 which was followed by lengthy legal battles. An agreement of the Rehabilitation Plan was reached with the creditors in late 2021, which potentially paved the way for compensation.
Source: CNBC
Repayments via Trustee
A Japanese attorney, Nobuaki Kobayashi, was appointed as trustee to oversee the Rehabilitation Plan. In the initial phase of rehabilitation, creditors were paid small amounts in fiat currency, namely Japanese Yen, through platforms like PayPal.
Repayments Begin
July 5th, 2024, was the fateful day when the creditors started getting fruit of their decade-long patience. A plan was devised to ensure the swift and effective process of refund when Mt. Gox reached agreement with designated Cryptocurrency Exchanges to transfer the amount to the creditors. The exchanges involved in the refund are Kraken, Bistamp, BitGo, Bitbank and SBI VC trade.
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In an official statement, following conditions were put forward to the potential creditors by Mt. Gox:
- Repayments will only be in the form of Bitcoin (BTC) and Bitcoin Cash (BCH).
- Creditors will be notified via email to confirm their identity and to provide details of their valid wallets.
- Creditors agree to subscribe to the Agency Receipt Agreement by the designated Cryptocurrency Exchange.
According to the former CEO of Mt. Gox, Mark Karpeles, it may take up to 60-90 days for BTC/BCH refund to be transferred to the wallets of the creditors. He went on to clarify that these are the “worst-case figures” and refund would be transferred sooner than this.
What Does It Mean For Crypto Space?
The tale of Mt. Gox is not without lessons. Not only does it highlight the importance of robust security measures but it also raises the concerns and impacts of such hacks on the crypto space.
More importantly, this saga sets a precedent for the matters associated with digital asset recovery and paves way for cryptocurrency insolvencies. Repayments in the BTC/BCH would positively impact the confidence of investors in the cryptocurrencies and the exchanges conveying an overall message of transparency and reliability.
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