Former Mt. Gox partner CoinLab struck a deal with Mt. Gox bankruptcy trustee Nobuaki Kobayashi on Jan. 15.
The CoinLab arrangement enables creditors to claim up to 90% of the Bitcoin tied up in the defunct exchange’s bankruptcy, according to Bloomberg.
CoinLab to the rescue
Creditors who accept the deal will receive early payments rather than waiting for several court cases associated with the bankruptcy to conclude.
According to CoinLab, the agreement is not binding to creditors who reject it. If they reject it, they will have to wait until those cases are adjudicated, CoinLab says.
Mt. Gox was a Japanese cryptocurrency exchange and at one point, was the world’s biggest. Entrepreneurs Peter Vessness and Mike Koss established CoinLab in 2011 to help the exchange find investors in the United States.
A long, drawn-out journey
In 2014, the exchange abruptly closed as investigations revealed it had lost over 850,000 bitcoins belonging to its customers. Shortly after, it filed for bankruptcy, leaving those customers uncertain about whether they would be able to recover any of their bitcoins.
Mt. Gox attributed the loss to a series of breaches, which the exchange’s customers and the cryptocurrency community deemed suspicious.
Japanese authorities later charged the exchange’s former CEO, Mark Karpelès, with embezzlement. They accused him of accessing the exchange’s computer system to falsify data on its outstanding balance to cover up the hacks.
In the six years since the exchange’s closure, Japanese authorities recovered much of the missing bitcoins with the help of several cryptocurrency analytics firms.
None of those bitcoins found their way to Mt. Gox customers, owing to the numerous investigations and court cases that took place.
The Mt. Gox millionaires
The CoinLab agreement brings hope of an end for Mt. Gox customers. For some, the recovery will bring the windfall of a lifetime.
On the day Mt. Gox filed for bankruptcy, bitcoin was trading at $489. That puts the lost bitcoins’ value at just over $415 million.
Bitcoin skyrocketed to over $37,000 following a bout of institutional investment in 2020. The value of the lost (now recovered) bitcoins is now $31.5 billion.
Many of those former Mt. Gox customers became nominal millionaires over the six years their bitcoins have been held in custody.
Although many in the community are pleased the infamous exchange will finally be made to compensate its former customers, they worry that the compensation could trigger a huge sell-off caused by the customers whose lives might change.
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