How Failure Can Be Profitable: The Head of Mt. Gox May Receive Billions Post-Bankruptcy

None of the people associated with the Bitcoin industry could ever forget the infamous, well-publicized, and unfortunate fall of Mt. Gox, which at one point was the world’s largest Bitcoin exchange.

Let’s recall the situation. In 2014, the company shut down, blaming hackers for stealing a large chunk of its customers’ Bitcoins. If that was not all, the head of the company, Mark Karpeles, was then accused of mismanagement and charged with alleged embezzlement. The legal proceedings are still going on even after 3 years, and it now seems that Karpeles might actually get to capitalize on the failure of the company by around $1 billion, according to the company’s filings for bankruptcy at the time and how Japan’s law will treat them now.

When the company had filed for bankruptcy back in April 2014, Japan’s bankruptcy codes posed a requirement for its liabilities to be registered at market values.

One Bitcoin, back then, was worth roughly $500. However, its price has now climbed to around $19,000.

In addition to the coins that were reported earlier, the company had recovered some of the allegedly hacked cryptocurrency, and still holds 202,195 Bitcoins that now have the worth of around $1.5 billion.

The fairness of the payout is being questioned

An argument was put forth by Krapeles’ lawyer stating that those market gains primarily pertained to the collapsed Bitcoin exchange and not to the users who lost them years ago.

However, according to calculations by reputable organizations, if Mt. Gox’s remaining Bitcoin holdings are auctioned at the current prices while paying back creditors at the prices from April 2014, then the move could leave a surplus of $977 million.

It was further reported that Karpeles’ holding company, Tibanne, which has ownership of around 88% of Mt. Gox, would essentially cause Karpeles to pocket a large portion of those gains.

It is now being challenged

To no one’s surprise, this payout is not something to be easily digested by the stakeholders that had been affected by the company’s bankruptcy in 2014, which has resulted in a group of them filing a petition to prevent the inflated payout to Karpeles.

As per reports, the stakeholders seek to drive Gox out of bankruptcy and into a process of civil rehabilitation.

The effort, if successful, would affect the proceedings of the payout as a whole. The stakeholders argue that the liabilities held by Mt. Gox can be paid off easily with its existing bitcoins, even after the action of returning what the stakeholders claim is owed to them due to the cryptocurrency’s current price.

The Japanese court that is currently looking into Gox’s bankruptcy is now going through the claim. It is yet to be seen how the judgment would unfold. Now we wait to see if they will allow Karpeles to walk away with the massive profit.

By | 2017-12-18T23:37:47+00:00 December 18th, 2017|Cryptocurrency News|0 Comments

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