According to Bloomberg, the contract between the debt trustees of Mt. Gox and MGIFLP, a subsidiary of Fortress Investment Company, would allow creditors to claim up to 90% of the exchange’s remaining bitcoin.
CoinLab, which reported the agreement, customers are not bound to accept the early payout and should wait for the litigation against the former exchange to end. CoinLab said the lawsuit is likely to proceed.
A Years Long Legal Standoff
Mt. Gox, founded in Japan, was an important early bitcoin exchange that filed for bankruptcy in 2014 after revealing that it had lost 850,000 bitcoins, of which 750,000 belonged to its clients.
Creditors have been battling through seven years of legal standoffs for some sort of compensation.
At press time, it was not known how much bitcoins were left for creditors to demand.
If a large amount of the missing bitcoin were to reach the economy, the scarcity of the leading cryptocurrency and its valuation may be affected.
Until court proceedings are settled, borrowers looking to reclaim Bitcoin spent on the Japanese platform Mt. Gox in 2014 have a chance to get their crypto assets back.
What is Mt. Gox?
Mt. Gox was once the largest Bitcoin exchange in the world, located in Japan, before it collapsed in early 2014 after losing around 850,000 Bitcoins belonging to thousands of clients. Since then, all of those digital coins have been identified, and the trustee is trying to compensate creditors. Over the last seven years, the mechanism has become bogged deep with litigation.
Mt. Gox stopped trade in February 2014, closed its platform and exchange operation and applied for shareholder insolvency protection. The firm started liquidation proceedings in April 2014.
Mt. Gox confirmed that nearly 850,000 bitcoins belonging to consumers and the business were missing and potentially stolen, an amount estimated at the time at more than $450 million. While 200,000 bitcoins have been “found” since then, the explanations for the loss were originally unclear-theft, fraud, mismanagement, or a mixture of these.
Data provided by Tokyo protection firm WizSec in April 2015 led them to believe that “most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot cryptocurrency wallet over time, beginning in late 2011.”
Unhappy Mt. Gox Customers
On 17 February 2014, the firm released another press release indicating the measures it believed it was taking to resolve security problems, with all Mt. Gox withdrawals already stopped and rival exchanges back in full operation.
In an email interview with the Wall Street Journal, CEO Mark Karpelès declined to comment on increasing consumer questions regarding the financial state of the exchange The median waiting period was between one and three months, and 21% of the survey respondents stayed three months or more or more.
Two bitcoin enthusiasts proceeded to demonstrate outside the building that holds Tokyo’s Mt. Gox headquarters. Mt. Gox relocated its headquarters to another site in Shibuya, citing “security concerns”. Mt. Gox’s cited Bitcoin rates fell to below 20% of other exchanges’ prices, showing the market’s estimation of the unlikelihood of Mt. Gox paying its customers.
Mt. Gox CEO Mark Karpelès resigned from the Bitcoin Foundation board on 23 February 2014. All messages on his Twitter handle were deleted on the same day.
Mt. Gox stopped all trade on 24 February 2014, and hours later the website went down, restoring a blank page. A leaked suspected internal crisis management paper reported that after destroying 744,408 bitcoins in a fraud that went undetected for years, the firm was insolvent.