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Mt Gox court administrator may start selling bitcoin to pay company customers


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The judicial administrator of the Japanese exchange Mt Gox presented last Tuesday (24) a draft recovery plan for the company so that creditors who suffered from the collapse in 2014 of a hack of 850,000 Bitcoins, can have their assets back .

According to information from Coindesk, lawyer Nobuaki Kobayashi responsible for managing the company said that creditors who placed orders for both fiat currencies like dollar and yen or cryptocurrencies will not fail to receive what is due. The project is yet to be filed and approved by the Tokyo District Court.

Mt Gox recovery plan

According to the recovery plan, whoever had bitcoin (BTC) and bitcoin cash (BCH) will receive these assets in their original form at informed wallet addresses of both exchanges and companies that are guarding these designated portfolios. The money will be received through bank transfers.

People who had other cryptocurrencies or other assets on MT. Gox other than Bitcoin or Bitcoin Cash, however, will go through another process to receive:

"All other assets, such as cryptocurrencies, except BTC and BCH, will be settled in cash as far as possible," says the document.

In addition, there is another detail. Cryptocurrency lenders will not be the first to receive. According to Kobayashi, "fiat money claims allowed in recovery procedures will have priority in payment, to guarantee the interests of such fiat money claims".

The document also makes it clear that the claimed foreign currencies will be converted into yen at “the conversion rate on the day before the date of the order to start recovery procedures (from MT Gox)”.

According to the draft recovery plan, the distribution of credits in currencies, even if part of them are in dollars and in yen from the same creditor, this will be “calculated based on the total sum of all claims in fiat currency, including the amounts claims in yen and amounts in foreign currency ”.

From Bitcoins to Money

The administrator mentioned in the document that he intends to allow BTC / BCH creditors to request cash payments, if desired. But there is still no certainty of that.

“Consequently, a sufficient amount of money must be guaranteed as a distribution source for claims in fiat currency and BTC / BCH claims for which payment in cash is requested. For reasons that include this, the fiduciary agent may, with the court's permission, sell all or part of the BTC / BCH that constitutes the debtor's equity, “says the plan.

Kobayashi, however, warned that the policy is "not to buy additional BTC / BCH", as existing shares in BTC / BCH may not be sufficient as a source for all claims on these assets.

Pending plan

The plan to proceed is pending approval by the Tokyo District Court. In October of last year, that court had extended the deadline for a company recovery plan to March 31, 2020.

If approved, this project could also resolve the legacy issue of how to deal with cryptocurrencies that are held by the administrator as a result of rigid forks from the Bitcoin and Bitcoin Cash networks.

The point, however, is that from the creation of the Bitcoin fork a new blockchain has been separated from the original chain and all of the holder's digital assets have been duplicated on the new network.

Uncertain amount of cryptocurrencies

It was not disclosed in the document how much of the encrypted assets other than BTC and BCH the administrator has in his custody. Its balance sheet indicated that it had around 141,686 BTC and 142,846 BCH in March 2019.

At that time, Kobayashi had approved orders for 802,521 BTC, 792,296 BCH and $ 38,165,664 in cash, revealing a financing gap. The total amount of assets that the administrator holds is also unclear at this stage.

The lack of clarity, however, is related to the hard fork that took place in November 2018 and divided the Bitcoin Cash network to create Bitcoin SV (BSV).

The amount of 142,846 BCH that existed in MT Gox gave rise to an equal amount of BSV held by the administrator – an amount currently worth US $ 24 million. A bitcoin fork in bitcoin cash in 2017, therefore, also brought in about 200,000 BCH (now worth $ 45.6 million).

During the first half of 2018, Kobayashi liquidated around 60,000 of the BTC and BCH following the rise of these market assets in 2017. He sold about $ 400 million in bitcoin and bitcoin cash between September 2017 and February 2018.

Mt Gox case

Mt Gox was the Japanese bitcoin exchange that was once the world's largest, but ended up collapsing after allegations of fraud and mismanagement in early 2014. Hundreds of millions of dollars in bitcoin – at current prices – were lost , although, ultimately, 202,000 Bitcoins were held as assets, in the custody of a fiduciary agent.

After that, however, the Japanese company went bankrupt. And since then, she has been at the center of a lawsuit, including a $ 75 million claim from CoinLab. Prosecutors in Japan later accused Mark Karpeles, CEO of MT Gox, of being responsible for the problem.

In 2017, Karpeles even suggested an Mt Gox ICO to bring the company back to life, at a price of US $ 245 million. The entrepreneur's idea was to recapitalize through a sale of shares or Initial Coin Offerings. This, however, did not succeed.

The result was that in June 2018, the Tokyo District Court complied with the petition to exchange the bankruptcy process for the company's recovery procedure, allowing creditors to be repaid in their original crypto holding companies, rather than the fiduciary amount. at the time of the collapse.

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