The Tokyo District Court has ordered Mt Gox to compensate the victims of its infamous 2014 hack, effectively stalling the impending bankruptcy of the stock market.
The ruling, posted on Mt Gox’s website on June 22, may result in the closing of a November 2017 petition seeking compensation – filed by the creditors of the now-defunct Mt Gox exchange.
It is crucial that the victims are compensated under the Civil Rehabilitation Act – not after bankruptcy.
Related Story: Tokyo Whale Prepares 8,000 BTC Dump As Crypto Bloodbath Continues
If reimbursed under a Japanese bankruptcy proceeding, victims would only be compensated in the form of a fiat equivalent of “non-monetary” claims based on the value at the time of the bankruptcy proceedings. Based on the Mt Gox filing in 2014, that would translate into a payout of around $ 483 per bitcoin. As of June 27, 2018, one Bitcoin is worth $ 6,127.
While belated, the deadlocked repayment can be financial in favor of the creditors. A Twitter user pointed out:
Mt Gox customers are finally being paid back – in Bitcoin.
Many or most of the customers would likely have traded their Bitcoin a few years ago. That’s why they should thank MtGox for spending their bitcoin on them!
– Ragnar Lifthrasir @ (@Ragnarly) June 23, 2018
Instead, civil rehabilitation procedures are not reimbursed with the corresponding fiat value, but rather paid out with the originally lost asset. This would entitle hack victims to claim their lost bitcoins and benefit from the three-digit percentage increase the coin has seen since the hack.
The move could quell some of the flames engulfing the Mt Gox bankruptcy drama.
Despite the loss of 850,000 BTC in the 2014 hack, the remaining holdings of Mt Gox may have conveniently paid off creditors in full – 137,891 BTC was in the exchange’s cold store at the time of going to press. However, under Japanese bankruptcy law, most of the Tokyo-based company’s assets would have been distributed among shareholders.
Was the Tokyo whale stranded?
Attorney Nobuaki Kobayashi, who previously oversaw Mt Gox’s bankruptcy proceedings, is now acting as the stock exchange’s civil rehabilitation trustee. Kobayashi, known as the “Tokyo Whale”, has been repeatedly criticized for allegedly devaluing Bitcoin when he liquidated thousands of Mt Gox bitcoins on exchanges.
However, Kobayashi has steadfastly claimed that the sales did not affect price action. The announcement reminds users of this obvious truth:
“As with the December 2017 to February 2018 sales, Bitcoin and Bitcoin Cash were sold in a manner that had no impact on the market price and not through normal sale on an exchange, after consulting with cryptocurrency transaction experts.”
While some have interpreted the verdict as a red light for Kobayashi to sell more assets, the legal document did not provide that evidence. In fact, Kobayashi underscores his continued authority in the announcement:
“The authority and authority to administer and dispose of MTGOX’s assets remains solely with me. I will conduct the civil rehabilitation process, including managing MTGOX’s assets and investigating claims, under the supervision of the Tokyo District Court.”
Those who lost Bitcoin to the hack will have to file claims by October 2018. However, no official schedule for payments has been established.
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