Clients Mt. Gox could get a lot more than they lost

Last week, a court ruled that creditors of the failed Mt. Gox are entitled to compensation for losses in bitcoin, and not in fiat, equivalent to the value of bitcoin at that time. The difference could potentially be hundreds of millions of dollars, depending on what the price of bitcoin will be in the coming months.

Remember: Tokyo Exchange Mt. Gox began bankruptcy proceedings in 2014 after then-CEO Mark Karpeles said the exchange had lost 850,000 of its customers' bitcoins, worth about $414 million, in a hacker attack. 

It was later discovered that Karpeles withdrew 200,000 bitcoins from the exchange, which were not stolen during the attack. The rest of the bitcoins were most likely converted to fiat and probably lost forever. The US Department of Justice said in July that another suspect, Alexander Vinnik, had been arrested for money laundering and that he was involved in the hacking of the Mt. Gox.

Last week, the Tokyo District Court stopped the bankruptcy proceedings of the Mt. Gox and began the rehabilitation process. This means that creditors, as they had hoped, will be able to recover in the actual assets of the Mt. exchange. Gox (eg bitcoin), rather than in fiat funds that were due to them in 2014.

The exchange's creditors were due to receive about 45 billion yen ($414 million) when the attack occurred. But the value of 166,344 bitcoin and 168,177 bitcoin cash held by the Mt. Goxis now worth more than $1.2 billion as of March 2018.

Karpeles, who was arrested in 2015 and held in prison for nearly a year on charges of embezzlement, electronic data manipulation and breach of trust and is still facing legal proceedings, said he is glad creditors will receive the exchange's digital assets as part of the rehabilitation process. If the exchange were to be declared bankrupt, it would trigger a wave of lawsuits against Karpeles.

Several things still need to happen for the exchange's former clients to receive their jackpot. The size of the windfall will depend on the duration of the latest bitcoin bear market. Creditors have until October to submit evidence of claims for reimbursement, and the proposal plan must be submitted by February 14, 2019. Some of the clients sold their claims to third parties who decided to speculate on the outcome and are therefore no longer entitled to a refund.

Forgotten passwords can also be a barrier: some creditors have forgotten or deleted the credentials needed to make a claim.

According to qz.com