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.”

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BitMEX’s Arthur Hayes Battles Nouriel Roubini at ‘Tangle in Taipei’ Debate

The highly anticipated ‘Tangle in Taipei’ debate on Bitcoin and cryptocurrency between “the entrepreneur,” Arthur Hayes, and “the academic,” Nouriel Roubini, took place on Tuesday morning (UTC+8) at day two of Asia Blockchain Summit. Here’s how it went down.

Prior to the commencement of the debate – which was moderated by Andrew Neil of Press Holdings – a live Slido poll had Hayes as a 73 percent chance of reigning supreme. Little surprise, it would seem, given the composition of the major blockchain conference’s attendees.

Opening Statements

Roubini, a well-known economist and skeptic on cryptocurrency and blockchain technology, came out swinging against BitMEX – the “sick and rotten” industry’s top cryptoasset derivatives trading platform – lambasting its lack of know-your-customer (KYC) and anti-money laundering (AML) requirements.

BitMEX has ascended to prominence by “making money off of people going into financial ruin,” Roubini remarked; citing the Twitter account 'REKT', the bio of which reads: “Bitmex liquidation bot. Immortalising those that have blown their margins. Not affiliated with @BitMexdotcom”

Hayes’ used his opening statement to rebut Roubinis critque of BitMEX's high leverage, emphasising the innate propensity one has to engage in speculation saying that “human beings love to speculate." He noted that in regulated markets investment products can be even more volatile than bitcoin, citing the XIV exchange-traded note (ETN) which plummeted 80% one evening in early 2018.

Ranting Roubini Takes Aim at ‘Dangerous’ Bitcoin

The various arguments put forward by Roubini – the professor of economics at NYU’s Stern School of Business – were exactly as anyone familiar with the industry would expect.

Reasons why he believes cryptocurrencies like bitcoin “are the biggest fallacies of this era” include problems surrounding immutability, decentralization, privacy, and scalability. Indeed, he feels as though more tangible, value-adding innovation is coming via the fintech space with innovations in big data, AI and IOT. When asked about the future for bitcoin and cryptocurrenices Roubini was sure that the bitcoin price will "go asymptotically to zero."

“Blockchain is the most hyped technology in history and is no better than a spreadsheet.”

Nouriel Roubini

Hayes Highlights the Need for Bitcoin

What is so special about cryptocurrencies like bitcoin? According to Hayes, it’s because of its ability to provide the everyday person with “a choice;” something he deems increasingly important amid a world where “physical cash [is being] stripped away.”

Hayes noted that a political activist in Hong Kong, for example, may find bitcoin particulary useful. This arguement echoes the work of bitcoin analysts Hasu and Su Zhu in their excellent blog post titled 'Bitcoin is a hedge against the cashless society.'

Other arguments expressed by the BitMEX co-founder in favor of Bitcoin related to network security, decentralization, and self-custody. Hayes agreed with Roubini that bitcoin does not yet compete with centralised payment systems on speed but said he believed scalability will come in time. Looking five years on he thought bitcoin will become a trillion dollar industry that will continue to change the way humans transact value.

So, Who Won? Roubini or Hayes?

Neither! That is, when measuring against each participant’s vote allocation at the time the debate started.

Indeed, as the ‘Tangle in Taipei’ progressed, as did moderator Neil’s proportion of total votes, from 2 percent at the time the trio walked on stage with Survivor’s Eye of the Tiger blaring, of course, to 34 percent by the close of polling; a parabolic surge akin to…well…cryptocurrencies.