One of Bitcoin’s major historic moments in its relatively young timeline occurred in 2014, when the then-major cryptocurrency exchange platform, Mt. Gox, filed for bankruptcy. At the time of bankruptcy, the firm’s Japan-based creditors demanded to have their funds restored to Japan yen. However, since Mt. Gox’s bankruptcy, Bitcoin has increased by 17-fold. Mark Karpeles, the former CEO of Mt. Gox is expected to pocket most of the profits after the bankruptcy has been finalized.
Earlier this year, Karpeles was summoned to court where he pleaded not guilty to several charges including money laundering and embezzlement. Karpeles was charged after an incident where the exchange lost one million Bitcoins. At the time of bankruptcy, one million bitcoins equated to $400 million USD.
However, since the firm filed for bankruptcy, the price of Bitcoin has grown significantly. Since 2014, the price has gone from $400 to over $7,000. However, in the course of the investigation, 200,000 of the one million lost Bitcoins were recovered. Shortly after, Karpeles was instructed to accredit the newly recovered Bitcoins to Mt. Gox’s creditors. In a bizarre twist of fate, however, policy dictates that the creditors should be reimbursed according to the value of the Bitcoin price in 2014, and not the current Bitcoin price.
During an interview with CNN, a Mt. Gox creditor, Paul Wasensteiner stated that all affected Mt. Gox creditors were not informed that they could only lay claims with a maximum value of $480. In addition, creditors also had no idea that the claims would be settled based on the 2014 Bitcoin value.
Affected creditors immediately voiced their concerns via official and social media channels. In addition, many creditors pointed out that Karpeles could end up pocketing most of the recovered Bitcoins that he was directly responsible for losing in the first place. The 200,000 recovered Bitcoins currently equate to $1.3 billion. After the outstanding creditors have received their claims, it is likely that Karpeles will walk away with the remaining $859 million.
General bankruptcy policy proceedings dictate that once the creditor payout has been concluded, Karpeles will lay claim to the remaining balance.
During an interview with WSJ, another creditor, Kolin Burges, expressed how unfair this system was towards the former firm’s creditors. Burges personally owned 311 Bitcoins at Mt. Gox and believed it was unjust that Karpeles will walk away with the vast majority of the recovered Bitcoins. That means that whereas Burges’s 311 Bitcoins would be worth over $2.1 million today, he will receive less than $130,000 for his lost cryptocurrency.
However, Karpeles seemed to think that this is not a noteworthy problem. According to the former CEO, if the recovered Bitcoin were to be sold, he did not think they would reach a high enough value to render the matter more important. So far, Karpeles has vehemently denied all allegations of stealing users’ funds.
Technically, Karpeles’ current company, Tibanne, still owns 88% of Mt. Gox. This means that once the proceedings are final, Mt. Gox, will remain with a profit of $977 million. Of the remaining profit, 88% will go directly to Karpeles, which means that Karpeles will pocket $859 million of user’s lost funds.
Earlier this year, Karpeles was summoned to court where he pleaded not guilty to several charges including money laundering and embezzlement. Karpeles was charged after an incident where the exchange lost one million Bitcoins. At the time of bankruptcy, one million bitcoins equated to $400 million USD.
However, since the firm filed for bankruptcy, the price of Bitcoin has grown significantly. Since 2014, the price has gone from $400 to over $7,000. However, in the course of the investigation, 200,000 of the one million lost Bitcoins were recovered. Shortly after, Karpeles was instructed to accredit the newly recovered Bitcoins to Mt. Gox’s creditors. In a bizarre twist of fate, however, policy dictates that the creditors should be reimbursed according to the value of the Bitcoin price in 2014, and not the current Bitcoin price.
During an interview with CNN, a Mt. Gox creditor, Paul Wasensteiner stated that all affected Mt. Gox creditors were not informed that they could only lay claims with a maximum value of $480. In addition, creditors also had no idea that the claims would be settled based on the 2014 Bitcoin value.
Affected creditors immediately voiced their concerns via official and social media channels. In addition, many creditors pointed out that Karpeles could end up pocketing most of the recovered Bitcoins that he was directly responsible for losing in the first place. The 200,000 recovered Bitcoins currently equate to $1.3 billion. After the outstanding creditors have received their claims, it is likely that Karpeles will walk away with the remaining $859 million.
General bankruptcy policy proceedings dictate that once the creditor payout has been concluded, Karpeles will lay claim to the remaining balance.
During an interview with WSJ, another creditor, Kolin Burges, expressed how unfair this system was towards the former firm’s creditors. Burges personally owned 311 Bitcoins at Mt. Gox and believed it was unjust that Karpeles will walk away with the vast majority of the recovered Bitcoins. That means that whereas Burges’s 311 Bitcoins would be worth over $2.1 million today, he will receive less than $130,000 for his lost cryptocurrency.
However, Karpeles seemed to think that this is not a noteworthy problem. According to the former CEO, if the recovered Bitcoin were to be sold, he did not think they would reach a high enough value to render the matter more important. So far, Karpeles has vehemently denied all allegations of stealing users’ funds.
Technically, Karpeles’ current company, Tibanne, still owns 88% of Mt. Gox. This means that once the proceedings are final, Mt. Gox, will remain with a profit of $977 million. Of the remaining profit, 88% will go directly to Karpeles, which means that Karpeles will pocket $859 million of user’s lost funds.