MtGox went under in 2014, after handling 70% of the world’s Bitcoin transactions at that time, due to a major security breach which lost $450 million worth of investor funds. The 850,000 BTC would go on to be worth billions.
Mt Gox has gone offline taking all our Bitcoin with it. I have lost quite a lot of my money today 🙁
— Dan Bull 🍐 (@itsDanBull) February 25, 2014
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As Rehabilitation Trustee, Nobuaki Kobayashi was placed in charge of the funds following the failure of former CEO Mark Karpeles to safely operate the exchange.
Karpeles has been accused of embezzlement and fraud, and spent almost a year in a Japanese prison, although it is unclear to what extent the security breach was malicious. Karpeles was found not guilty on charges of stealing MtGox funds earlier this month, and received a suspended sentence for his guilty verdict of producing illegal records.
He may still face class action lawsuits in the US.
The case has also been tied to former BTCe operator Alexander Vinnik, who reportedly received some of the missing/stolen MtGox funds.
Vinnik has connections to organized crime and former Soviet paramilitary groups operating in Russia and Ukraine, and shell companies mentioned in the Panama papers. Vinnik recently survived an assassination attempt in Greek prison while facing extradition to France.
BTCe shut down following accusations of large-scale money laundering of over $4 billion and what appeared to be an exit scam under Vinnik’s leadership.
you friends with mtgox?
— # (@TruckerAsh) July 25, 2017
$623 Million for MtGox Payback
The amount secured by the trustee was initially pegged at approximately $624 million and has decreased since the first creditors meeting under the Civil Rehabilitation Proceedings on September 26, 2018.
Now secured, the current amount will be placed in a trust, safeguarding it from bankruptcy proceedings.
MTGOX Co., Ltd (classed as the “Rehabilitation Debtor” in proceedings) now holds 141,686.35371099 BTC and 42,846.35166254 BCH. Investigations are still underway to find any additional holdings that may be stored by MtGox.
The funds will be distributed to the people who lost money in the massive breach, although it’s not possible to compensate them for the full amount that was lost.
The Tokyo District Court halted bankruptcy proceedings for MtGox after a petition on June 22, 2018, was filed by creditors to commence civil rehabilitation proceedings. The bankruptcy was put on hold to ensure that at least some funds will be repaid.
A proposal to outline the timeline and terms of the civil rehabilitation process is due on April 26.
About The Author
Conor is a blockchain and cryptocurrency journalist from Ireland and founder of The Written Craft content service. A firm advocate of decentralization through blockchain technology, he’s also an off-grid enthusiast and really fun at parties too.Other stories written by Conor: https://www.ccn.com/author/conor-maloney/Follow him on Twitter @iWriteCrypto to hear him roar.