In 2014, Mt Gox exchange handled an estimated 70% of the total Bitcoin supply until a security breach led to the loss and/or theft of approximately 850,000 BTC, worth $450 million at the time and billions today.
The exchange filed for bankruptcy, leaving creditors in the lurch ever since, but a new plan for (partial) repayment has now been outlined for those still owed money from the disaster.
Posted on Wednesday on the mtgox-creditors.com website, the ‘Revised Basic Policy for Preparing a Rehabilitation Plan’ outlines a number of changes due to the feedback received from the creditors so far. The plan aims to ensure that the creditors aren’t cheated out of their payments, that the payments are made in a timely fashion and the desired currency, and also lays down the law when it comes to who should and should not get paid in the bankruptcy proceedings.
The Plan
1: The rehabilitation plan should be simple and the implementation should have a high degree of certainty.
This point really ought to go without saying, but given the four-year battle the creditors have fought so far, it’s no wonder that their level of trust in the rehab process is so low. First and foremost among the creditors’ wishes is simply that theybe dealt with in a straightforward manner.
2: No distribution will be made to shareholders.
This is an interesting one, and it remains to be seen whether they’ll get their wish. Because Mt Gox simply can’t afford to pay back the full amount, especially given the inflation of BTC over the last four years, creditors feel like they should be completely prioritized over the shareholders, and it’s easy to see why.
Shareholders arguably have a measure of control over how the company is run, who’s in charge, and what policies are in place. Other creditors who were simply using the exchange as customers do not, and as such should be reimbursed first.
3: Claims for return of bitcoins (BTC) will be repaid in BCH.
This is for simplicity and efficiency, avoiding bank transfer fees and allowing creditors to receive payment in the same currency they lost. The proposal also suggests that any altcoins (coins other than BTC or BCH) held by the trustee be liquidated for transfer.
4: The full payment to the monetary creditors will be made.
The full payment, in this case, refers to the degree which has been approved in the bankruptcy proceedings.
5: First payment to creditors will be made promptly after the approval and confirmation of the rehabilitation plan.
Again, this is a straightforward wish that is nevertheless important to make absolutely clear – the creditors have waited long enough, and they want to be paid as soon as possible.
6: If there are any residual assets, or new assets found, additional payment will be made.
This rule also stipulated that an additional investigation for lost BTC will be implemented, and in both cases is probably a precautionary measure to prevent creditors from being cheated in the event of more BTC being ‘discovered’ by the trustee after the payments have already been finalized.
7: No sponsors will be selected in principle except where it is apparent that such a selection would be advantageous to creditors.
Here the creditors oppose the appointment of a sponsor company to support and promote Mt Gox during the proceedings. While not a legal requirement, this is a common practice in Japan – however, the creditors feel that a potential proxy fight over which company gets to sponsor the failed exchange would only delay the payments to creditors and should be avoided.
8: The introduction of systems which allow creditors to obtain their trading records.
As the proposal says, for creditors, the accessibility to their trading record is indispensable for the approval or disapproval of civil rehabilitation plan.
In July, the rehabilitation trustee Nobuaki Kobayashi said that a new system for creditors to file proof for claiming repayments is due for release in August, at which time the creditors may finally begin to see some of their money returned to them at last.
Featured image from Shutterstock.
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