Mt. Gox creditors prepare for Bitcoin repayments

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Following a court’s decision in June, a group of creditors of the defunct Mt. Gox cryptocurrency exchange has started preparing to claim for Bitcoin repayments.

On Thursday, lawyers representing some Mt. Gox creditors published an updated proposal for the process to move the exchange into civil rehabilitation. In its updated proposal, the group said they made the revisions based on comments “on the previous version of the basic policy from a large number of creditors.”

On June 29, the lawyers released an initial basic policy for the rehabilitation. The policy stated that it would be “appropriate” to repay creditors who deposited Bitcoin Cash (BCH) and BTC with Mt. Gox in the same cryptocurrencies. The lawyers also further asserted, “We are of the opinion that most of the assets, including approximately 166,000 BTC and 168,000 of BCH and other derivatives currently held by Mt. Gox, should be paid to creditors at the time of the first payment.”

In its latest update, the lawyers noted, “We think it desirable that the cash be sent to the accounts of the exchanges, as chosen by the creditors.”

Based on latest data from CoinDesk’s price index, those assets could be worth over $1.3 billion. If the rehabilitation plan can be approved, the revised policy states that the first payments to creditors are expected to start in May or June 2019. Since the prices of cryptocurrencies could fluctuate significantly causing security risks to arise, the revised proposal stated that cryptocurrencies other than BTC and BCH held by Mt. Gox should be liquidated into cash and paid to creditors.

Tokyo-based Mt. Gox was once the world’s largest exchange platform for Bitcoin until it filed for bankruptcy in 2014, claiming it had lost 850,000 of its Bitcoins, which are worth more than $450 million at the time, to hackers.The theft left the crypto exchange insolvent, resulting in its filing for criminal bankruptcy.

Under criminal bankruptcy, Mt. Gox’s creditors would be paid in fiat currency at the exchange rate in 2014, estimated at $480 per coin. It would have also meant that Mt. Gox ex-CEO Mark Karpeles would have been left with the remaining proceeds, which would have reached hundreds of millions of dollars given that the price of BTC has already appreciated in the last four years. Karpeles, however, already went on record to say he doesn’t want the money.

Mt. Gox’s trustee was holding 202,195 Bitcoins and then liquidated over 30,000 of them into cash in March 2018. Mt. Gox will no longer need to liquidate any BCH or BTC assets as the court has now approved the civil rehabilitation petition. The rehabilitation trustee, Nobuaki Kobayashi, said in July that a new system for creditors to file proof to claim repayments should be released in August.