Breaking: Court Moves Mt Gox Case to Civil Rehabilitation, Creditors to Be Paid in BTC

  • The Tokyo District Court has moved Mt Gox's case from criminal bankruptcy to civil rehabilitation.
  • This means creditors won't be paid in JPY, but in BTC.
  • The trustee, who still holds over 137,000 BTC, likely won't trigger another sell-off until mid-2019 when creditors get paid.

The Tokyo District Court has reportedly moved the infamous Mt Gox case out of criminal bankruptcy into civil rehabilitation, meaning creditors will likely be paid in BTC in mid-2019, and that the exchange’s trustee won’t likely sell funds anytime soon.

According to a document published on Mt Gox’s website, the process is set to start early next year, and is mostly good for the cryptocurrency ecosystem. Mt Gox was notably a dominant cryptocurrency exchange that collapsed in 2014 amid claims of insolvency and security breaches.

At the time, hundreds of millions of dollars worth of BTC were lost, which saw the cryptocurrency’s price to crash. Recovery efforts managed to find 200,000 BTC, which were then held by the exchange’s trustee, Nobuaki Kobayashi.

Had the cryptocurrency exchange’s case remained in criminal bankruptcy, creditors would have been paid back in fiat currency, equivalent to bitcoin’s exchange rate at the time Mt Gox went down – less than $500 per coin.

Since 2014, bitcoin has appreciated to over $6,100. The exchange’s former CEO Mark Karpeles, who was charged with embezzlement and data manipulation, would’ve received most of the remaining proceeds.

Karpeles, as CryptoGlobe covered, has stated he doesn’t want said funds, which amount to about $1 billion. At the time, he said he never expected to received anything from the bankruptcy, and that it is an "aberration" that it was a possibility, adding that he believes it is his responsibility to make sure it doesn't happen.

Given that the case was moved to civil rehabilitation, Kobayashi is set not to sell any more bitcoin until creditors are reimbursed next year. As for cryptocurrencies created through bitcoin’s various forks – including BCH, BTG, and BCD – the document states:

At present, nothing has been determined regarding the sale of Bitcoin and cryptocurrencies split from Bitcoin (collectively, “Bitcoin, etc.”) in the future.

Mt Gox

How creditors will be reimbursed isn’t yet clear, and will likely be determined in subsequent legal proceedings. Mt Gox’s creditors will be required to refile proof of claim forms by October 22, 2018. This applies to all creditors, even those who didn’t manage to participate in the proceedings last time.

Currently, walletsassociated with Mt Gox still hold 137,890 BTC, worth nearly $880 million, along with these airdropped tokens. As Bloomberg reporter Yuji Nakamura puts its, a distribution of these funds could trigger a major sell-off next year.

CryptoGlobe had previously covered that the trustee’s last crypto sell-off, of over 35,00 BTC and 34,000 BCH, didn’t influence the market, according to him. At the time, he said the cryptocurrencies weren’t sold through an exchange, but “in a manner that would avoid affecting the market price, while ensuring the security of the transaction to the extent possible.”

Bitcoin Taproot BIP Could Be A Privacy Game-Changer

Colin Muller

BIP-Taproot, perhaps one of the most important Bitcoin Improvement Proposals (BIP) ever has been officially released for public scrutiny and deliberation. At risk of being overshadowed by Bitcoin’s (BTC) recent positive price action and the hot-off-the-press Binance hack drama, the news of BIP-Taproot is quite significant. 

This is because, if the upgrades to Bitcoin’s code are realized along the lines of BIP-Taproot, both privacy and efficiency of transactions of the Bitcoin network will be significantly improved and inaugurate an altogether new era for the leading crypto.

Why All The Fuss?

The general thrust of BIP-Taproot as that it is designed to replace the current, clumsy scripting system of Bitcoin, called “pay to script hash” (P2SH).

Believe it or not, Bitcoin actually has some capability as a smart contract platform, albeit a rudimentary one (with nowhere near the scripting capability of newer cryptos like Ethereum).

In Bitcoin, this scripting system can be used to describe specific conditions by which a transaction will be executed - like multi-signature (“multisig”) transactions. A Bitcoin transaction can even be programmed to accept several different types of trigger conditions, with only one of them needing to be hit for the transaction to execute.

This is all well and good, but the main problem with the current system is that such scripted or advanced Bitcoin transactions are publically legible: anyone can see that complex P2SH transactions are being employed rather than simpler ones, and such information can be used to glean identifying information.

Without getting too far into the technicals (of which there are many in this BIP), the upshot of the entire upgrade, should it be implemented as planned, is that all the different kinds of Bitcoin transactions possible will become opaque and look identical. What’s more, this new opacity extends even into grouped transactions which can be obfuscated by Schnorr signatures.

As CryptoGlobe discussed in a March article, Schnorr signatures are a huge improvement over Bitcoin’s current signature regime. One of the most exciting use cases for Schnorr signatures is the possibility of invisibly conducting multi-user CoinJoin transactions, whereby multiple users can batch transactions together so as to hide the transactions’ details. After BIP-Taproot, CoinJoined transactions could be made to look like any other transaction, greatly increasing the prospects for Bitcoin privacy.

Tall Order

Pieter Wuille, the author of the BIP and one of Bitcoin’s most central developers, warned that “combining all these ideas in a single proposal would be an extensive change, be hard to review, and likely miss new discoveries that otherwise could have been made along the way.”

But by way of justification, he adds that “separating them all into independent proposals would reduce the efficiency and privacy gains to be had, and complicate analysis of their interactions.”