The now defunct exchange, Mt. Gox, has formally entered civil rehabilitation proceedings, as announced on June 22nd to reimburse those who lost their Bitcoin in the massive hack.
Mt. Gox has released a statement with documentation to confirm the move, which will see attorney Nobuaki Kobayashi act as civil rehabilitation trustee. This brought a wave of relief to all cryptocurrency traders who were fearing the mass selloffs would start again, causing the market to nosedive.
Kobayashi was criticized after selling hundreds of thousands of Bitcoin reserves starting in Q4 of 2017 in an effort to reimburse Mt. Gox users who were effected by the exchange’s mass hack in 2013. The sell-offs appear to have had a significant effect on markets, sending Bitcoin prices tanking immediately following each transaction, which Kobayashi performed on major exchanges.
The funds could have been sold off in a way that didn’t have as large of an effect on the market by selling them at a slower pace, not in giant waves. An example of how you should do it comes from the founder of Litecoin, Charlie Lee, who unloaded all of his LTC without causing too much of a change in the coin price.
“The power and authority to administer and dispose of MTGOX’s assets is still vested exclusively in me, and I will implement the civil rehabilitation proceedings, including the administration of MTGOX’s assets and the investigation of claims, subject to the Tokyo District Court’s supervision,” Kobayashi wrote in the new documentation.
However, due to the bankruptcy proceedings now being halted as part of the civil rehabilitation, Kobayashi will not sell any further bitcoins, with users set to receive compensation in BTC instead of fiat currency as originally intended.
“…In the civil 2 rehabilitation proceedings in this matter, claims seeking a refund of Bitcoins (“Bitcoin Claims”) will also not be converted into monetary claims after the commencement of the civil rehabilitation proceedings,” Kobayashi continues.
Reacting to the news, a group of claimants who had established Mt. Gox Creditors lobby group out of dissatisfaction with progress considered it a mixed blessing.
“…Enormous assets, which were to be distributed to Mt. Gox’s shareholders under the bankruptcy proceedings, will be returned to creditors of Mt.Gox in civil rehabilitation proceedings. This is the creditors’ victory,” a statement from the group reads.
“…However, this victory has not been realized yet. The victory will come to creditors when Mt. Gox makes payment to creditors and creditors actually receive such payment.”
Mt. Gox became infamous in the crypto industry after suffering a hack, followed by a collapse in 2014, resulting in the loss of $473 million worth of customers’ money – the single largest loss of funds in the history of crypto until this year’s $534 million Coincheck hack.