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cryptocurrency December 13, 2017

December 13, 2017 6:01 PM

Creditors to MtGox are petitioning a Tokyo court to re-examine the status of the exchange in an effort to obtain payouts and stop disgraced former chief executive officer Mark Karpeles from profiting as a result of the scandal.

In a new development of the MtGox case, four major creditors recently filed a petition that would have the exchange moved from bankruptcy to civil rehabilitation.

If the petition succeeds, it would cause the exchange‘s assets to be fully and proportionally distributed between claimants. Since the 2011 hacking incident, 202,185 bitcoin have been discovered to still be in the company’s coffers. Because bitcoin has surged in value, the assets controlled by MtGox far outweigh its liabilities, and removing it from bankruptcy could bring a windfall for claimants.

The previously court-ordered liquidation valued the loss felt by 25,000 depositors at a rate of $440 per bitcoin; the price of 1 bitcoin at time of press is nearly $17,000. If the current legal scenario plays out, MtGox, which Karpeles owns 90 percent of, would be able to meet its liabilities at the previously ruled rate by selling a portion of the bitcoin it controls. Afterward, Karpeles would receive a lion’s share of excess profit consisting of approximately 173,000 remaining bitcoin, worth close to $2 billion. Should Karpeles receive that $2 billion, it is expected that he will become the subject of civil lawsuits from plaintiffs seeking to recoup their losses on the exchange.

The scandal surrounding MtGox is the stuff of an investor’s nightmare. In 2010 a humble electronic exchange, originally designed for users to trade Magic: The Gathering cards like equities, was transformed by its creator, programmer Jeb Mcaleb, into the iconic bitcoin exchange.

MtGox was sold to Mark Karpeles in March of 2011 after Mcaleb went on to other projects, which include Ripple and Stellar. On June 19, 2011, there was a breech of the exchange‘s security and a hacker (or hackers) stole 850,000 bitcoin. To date, it remains as an unsolved crime, but charges have been brought against Alexander Vinnik, who is believed to be associated with laundering assets from the heist.

Karpeles was also indicted on counts of embezzlement due to the transfer of 341 million yen ($3 million) between September and December 2013 from a MtGox account, which held customer funds, to an account with his name on it. Karpeles did not deny the transfer took place, but plead not guilty to embezzlement.

Over the course of the investigation, it was discovered that the contentious 202,185 bitcoin were not stolen by the hacker(s). Time will tell how the Japanese court will handle the remaining liquidation of MtGox assets.

Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine. He is a full time staff writer for ETHNews and holds value in Ether.

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Source: ETHNews

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