Andy Pag may have been right. The lobbyist fighting for creditors in the Mt. Gox debacle relinquished his position as the head of Mt. Gox Legal at the beginning of this month, asserting that creditors won’t see any relief for at least another two years. He blamed the delays on CoinLab, one of the creditors behind the cryptocurrency exchange, and its demands to receive restitution before everyone else. The company has established several requirements that, if approved, could see creditors never able to recuperate anything.
According to WizSec, a crypto security outfit, CoinLab wants $15 billion in damages over the failure of the exchange. In addition, it is demanding another $1.12 billion be paid each year as long as the case continues to find a resolution in court. The $15-billion figure is reportedly two and a half times that of all other claims put together.
The claims are, if nothing else, highly irrational. The remaining funds in Mt. Gox, according to its trustee, Nobuaki Kobayashi, are customer funds and are not owned by any custodial entity such as CoinLab. In addition, there is no justification for an amount as high as what CoinLab is claiming.
WizSec adds, “Basically, if you had bitcoin in MtGox [sic] you’ve already lost 80%+ of your money, and now CoinLab is doing their best to finish the job.” CoinLab is trying to seek restitution for lost revenue sharing income, damages, damages from delays from lack of payments from damages and damages due to delays that are still to come.
CoinLab and Mt. Gox had entered into an agreement to work the North American crypto market. However, from the start, there were issues, as CoinLab didn’t have the necessary licenses. WizSec points out, “The contract was probably rendered invalid and/or CoinLab breached it by not being legally compliant in all U.S. states, thus failing to fulfill the whole point of the agreement and their claims of calculations are ‘absolute nonsense.’”
CoinLab is applying new math in order to justify its claims. It points out that the original agreement was to cover ten years, plus included another five years of revenue sharing. This means that it is owed a total of 15 years’ worth of revenue on 25% of Bitcoin Core’s (BTC) global trade volume.” What it fails to take into account is that the initial contract did not stipulate guaranteed income should the exchange fail.
Some creditors have already received payouts from Mt. Gox, but they were the lucky ones. More payments were scheduled to be released this year, but these are now going to be delayed because of the ongoing litigation. The earliest the next round of payments would be made is 2020, but creditors don’t need to get their hopes up. CoinLab isn’t willing to let the issue go and is going to keep playing childish games until nothing is left to distribute.
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