Bitcoin

Mt. Gox Plans to Return Bitcoins Back to the Creditors

The creditors of the defunct bitcoin exchange Mt. Gox, recently updated their civil rehabilitation plan, according to their statement on the website.

Last year, a petition was filed against Mt. Gox with the Tokyo District Court, for the commencement of a civil rehabilitation plan by some of the creditors of Mt. Gox. This petition was heard by the court and an order of the commencement of civil rehabilitation was issued by the Tokyo District Court on June 22, 2018. The creditors are supposed to file a proof of claim report, addressing their amount of bitcoin lost and the Civil Rehabilitation Trustee, in compliance with the District court to look into the proof of claim and would have the authority to accept or reject it, according to the rehabilitation plan.

The Incident

Back in 2014, Mt Gox, the famous exchange based in Japan, used to be the biggest exchange in the world, which handled almost 70% of the transactions of bitcoin worldwide, but shockingly, this company went bankrupt by the end of February.

What made the biggest exchange in the world lose all its assets? An enormous hacking. Losing almost 850,000 bitcoins, which were valued at roughly $475 million at that time, the former biggest exchange also holds the record of being a victim of one of the biggest theft of bitcoin in the history of cryptocurrency. While 200,000 of the bitcoins were later restored, the price of the lost bitcoins still make up to be almost around $4 billion as of press time. “We had weaknesses in our system, and our bitcoins vanished. We’ve caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened,” Karpeles said, speaking at a Tokyo press conference called to announce the company’s bankruptcy. This would be the second time the exchange was hacked. In June 2011, attackers lifted the equivalent of $8.75 million.

This major incident brought a drought to Mt. Gox and they eventually filed for bankruptcy, ceasing all trading and exchange operations. This wasn’t the only dark time the company had to face, the CEO Mark Karpeles was also arrested and was convicted with charges of embezzlement of £1.7m worth of bitcoin. It was alleged that the CEO transferred money from Mt. Gox’s bank account to another account where it was mainly spent on buying licenses for 3D-rendering software. Some of the money was also allegedly used on an “expensive custom-built bed.” Anyways, after the petition was looked into, a civil rehabilitation plan was agreed to serve as a framework to give back the creditors their money.

Sucess of the petition

Shin Fujuoka, a well known attorney who petitioned the court for civil rehabilitation on behalf of a creditor said: “Enormous assets…will be returned to creditors of Mt. Gox”. He also added that the success of the petition is “the creditors’ victory.”

Under the original bankruptcy plan, the creditors were supposed to receive the monetary amount equivalent to the value of their Bitcoins at the time of Mt. Gox’s collapse. With the company ruling out of bankruptcy, and entering into the civil rehabilitation proceedings, they would have to pay the creditors in accordance with the price of bitcoin.

The CEO said in an interview with fortune said:

I hope entering civil rehabilitation will be for the best of everyone. As I said previously I am not expecting any kind of profit from this and only hope everyone will be repaid as much as possible as soon as possible.

He continued,

Creditors worked hard for the purpose of seeing civil rehabilitation happen and I will continue to help as much as I can.

The plan presented by the creditors was approved and to their shock, their money is expected to be returned in a short span of time.

Other hacking incidents

Not only has Mt Gox lost huge amounts but other exchanges and businesses have also been victims of such attacks in the past year. According to the cyber security companies like Kaspersky labs and Carbon black, a total of about $1.2 billion was stolen in cryptocurrency. Japan has been prone to more attacks, another cyber attack shook Japan when hackers broke into Coincheck (another exchange) and stole a lesser known currency NEM. According to the statement made by Coincheck, a total of $530 million worth of digital money was stolen. Although the huge amount of money was stolen, the exchange claimed that they knew where the money went and were positive that once they trace the money down, they would return it back to the owners.

Individual security precautions

Not only are exchanges victimized by these hackers, but ransomware and malware is also becoming common for businesses and individual investors. The investors are advised that for their own security, the money should be kept in either cold storage or in a secure crypto bank startup like Goldilock.

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