Fortress has reduced its offer to buy up Bitcoin claims of Mt. Gox victims ๐จ This article is 5 years old...
Fortress has reduced its offer to buy up Bitcoin claims of Mt. Gox victims
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Updated: Dec. 20, 2019 at 8:23 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
New York-based investment firm Fortress Investment Group has issued a new letter to creditors of the long-collapsed exchange Mt. Gox, proposing to purchase Bitcoin claims at a lower price than previously offered.
In July, Fortress offered to purchase claims at $900 per BTC, double the bankruptcy value of Bitcoin at the time of the Mt. Gox collapse. This offer has now been dropped to about $778, according to a letter sent to creditors, seen by Bloomberg.
Fortress justified its move to reduce the offer, claiming recent lawsuits against Tokyo-based Mt. Gox may โdelay and diluteโ creditor payouts from the caseโs ongoing civil rehabilitation.
A brief history of Mt. Gox
Mt. Gox filed for bankruptcy protection in February 2014 shortly after halting withdrawals and shuttering its website, admitting it had lost roughly 750,000 BTC of customer deposits along with 100,000 of its own, worth about $480 million at the time. A Tokyo cybersecurity firm would later state that the Bitcoin, over the years leading up to Mt. Goxโs collapse, had been periodically stolen from the exchangeโs hot wallets.
For years creditors rejected the terms of compensation outlined by Mt. Goxโs legal representatives, who proposed each BTC claimed would be paid out in USD at $483, the price of Bitcoin at the time of the exchangeโs collapse. This arrangement would foot creditors with a large loss on their BTC holdings, owing to the coinโs dramatic increase in price over the years following 2014.
More scandalously, bankruptcy trustees had arranged that after settling its debts the firm would pay out its remaining Bitcoin holdings โ worth several billion dollars โ almost entirely to Mt. Gox CEO Mark Karpeles, who had presided over the collapse of Mt. Gox.
Dilute and delay?
In June 2018, after several yearsโ worth of petitions and crowdfunded legal defenses, the creditors had a partial victory. The Tokyo District Court ruled to move the Mt. Gox case to civil rehabilitation, which meant all of Mt. Gox’s remaining Bitcoin holdings were to be distributed to investors โ in the form of Bitcoin.
Prior to the ruling, the exchangeโs trustee Nobuaki Kobayashi had already liquidated tens of thousands of Mt. Goxโs BTC, for his efforts becoming known as the โTokyo Whale.โ After selling $230 million worth in 2018, the now-defunct exchange was left with 137,891 BTC and 137,981 BCH.
Notwithstanding any legal action depleting the reserves of Mt. Gox, the rehabilitation proceedings are expected to dispense to each claimant $440 per Bitcoin in USD plus damages, plus a pro-rata share of Mt. Goxโs remaining BTC and BCH.
For a claim of one Bitcoin, a Mt. Gox creditor would receive $1,755 in cash, BTC, and BCH โ more than double the Fortress offer. As for the “delay,” Fortress may have a point. Multiple “rehabilitation plans” have been submitted to the Tokyo District Court, and payouts will not begin until 2020 at the earliest.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Mt. Gox
Mt Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan that was launched in July 2010.