The fate of hundreds of millions of dollars tied up in the controversial Mt Gox exchange bankruptcy have taken another twist for investors with frozen accounts.
The cryptocurrency exchange went bust in 2014 after $473 million of Bitcoin went missing in an online heist orchestrated by a team of hackers.
The hack was the largest in the cryptocurrency sector until another exchange, Coincheck, was taken down by online criminals in January 2018.
Mt Gox– which was a leading Japanese exchange – was forced into immediate bankruptcy and rows have rumbled on since about the fate of hundreds of millions of dollars of Bitcoin held in frozen electronic wallets owned by customers.
A legal challenge was started to move the bankruptcy from the criminal courts to civil courts by a group of investors.
Investors win in court
If the digital currency held in the wallets stayed under criminal jurisdiction, Mt Gox would likely have compensated them at 2014 Bitcoin exchange rates, with the company retaining any profits. These would have been substantial as Bitcoin has increased hugely in value since the hack.
Under civil rules, compensation would be paid at the current Bitcoin value, moving the profits from the company to investors.
An undisclosed amount of Bitcoin and Bitcoin Cash held by the exchange were sold between December 2017 and February 2018
After lengthy legal proceedings, a statement was posted on the Mt Gox web site confirming the investors had won their case and Mt Gox assets would be valued and distributed under civil rules in Japan.
The courts appointed lawyer Nobuaki Kobayashi to consider compensation claims.
Compensation queries unanswered
A creditor’s meeting is slated for September 26 in the Tokyo District Court. The deadline for filing a claim is October 22, with claims going for review by February 7, 2019.
A rehabilitation plan for the exchange will be released on February 14.
Kobayashi has declined to comment about further sales of Mt Gox Bitcoin and if compensation will be paid in digital currency or in cash.
“Matters such as the method and timing of payment in the civil rehabilitation proceedings will be determined in the rehabilitation plan established in the civil rehabilitation proceedings. Therefore, please understand that specific answers cannot be given at this time,” said the statement.