Mt Gox to pay user claims with bitcoin, cease selloffs

Posted: 25 June 2018 2:25 pm

The clouds are clearing from Mt Gox, and claimants now have a path of action.

Mt Gox was initially created as an online marketplace for Magic: The Gathering playing cards. That's how it got its name – MTG online exchange. At no point did anyone imagine it would be involved in a legally unprecedented multi-billion dollar bankruptcy proceeding. Yet, here it is.

On 22 June 2018, the case took another shift, with the Tokyo District Court laying down a new time line and agreeing to commence civil rehabilitation proceedings.

The main takeaway for affected Mt Gox users is that there's now a deadline and set procedure for claiming your losses, and that they might be paid in bitcoin. The deadline for filing a claim is 22 October 2018. Even if someone has already filed a claim in the bankruptcy proceedings, they will have to re-file a claim for these civil rehabilitation proceedings.

The main takeaway for the markets as a whole is that the Mt Gox sales will probably be put on hold until 2019, which should help quell some of the market's fears and perhaps lend bitcoin prices a bit more support.

Mt Gox civil rehabilitation proceedings

One of the significant shifts is that the case will now proceed as a civil rehabilitation proceeding rather than a bankruptcy case. This might essentially be thought of as a managed compensation plan rather than a straightforward liquidation of assets to compensate creditors.

The main implication of this is that claimants get together and agree on a reimbursement system with the trustee, and that claims will likely be paid in bitcoin rather than converted into yen the way it would have been under bankruptcy proceedings. Creditors get voting rights on the distribution plan, with voting power weighed by one's "share" of bitcoin holdings. This hasn't been finalised yet, but there's little reason to expect that any Mt Gox claims won't be paid in cryptocurrency.

There is no separate claiming process for Bitcoin Cash or other forks. Instead, it's just been automatically rolled into the same bitcoin claiming process.

The deadline for claiming funds is 22 October, and it's expected that they'll be paid out in early 2019. How much bitcoin will be worth by then is anyone's guess.

Claims should not be made yet, until the exact procedures are sorted out and posted on the Mt Gox website. The Mt Gox site will be getting updated with the official procedures, claiming steps and other instructions going forwards.

For a while it was thought that the Mt Gox trustee crashed the crypto markets with mass bitcoin and Bitcoin Cash sell-offs, but the recent update reiterates that "Bitcoin and Bitcoin Cash were sold in a manner that had no effect on market price and not by ordinary sale on an exchange, while ensuring the security of the transaction to the extent possible."

The clarity is good news for Mt Gox users awaiting compensation, but anyone hoping that it will help boost bitcoin prices might end up disappointed.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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