Victims of the Mt. Gox debacle have become accustomed to delays, but as we reported last April, there were hints that a “rehabilitation plan”, as it is called, was in the process of finalization. Payments would surely commence sometime within this year. The trustee, unfortunately, could not comply by the October 31 deadline date and was given another delay, this one extending until March 31 of 2020.
As we reported in April:
For those of you unfamiliar with the Mt. Gox saga, it was the largest crypto exchange in the system in its early days. Based in Tokyo, it suddenly became the prime target for what has been called the largest crypto hack in history. Here is a brief recap: “The Mt. Gox hack in 2011 was the biggest bitcoin hack the world has seen, with 850,000 BTC (worth about $460 million at the time) stolen. The embattled exchange subsequently collapsed three years later, with 24,000 creditors out of pocket.
Nobuaki Kobayashi, trustee for the defunct cryptocurrency exchange, announced the delay and the following:
It is not possible at this moment to make appropriate provisions in a rehabilitation plan on modifications of the rights of the rehabilitation claims, repayment methods, and appropriate measures for the undetermined rehabilitation claims. It is not practically possible to have meaningful discussions with relevant parties about repayment methods.
Kobayashi’s attempted “rehabilitation plan” has been plagued from the start due to a lack of timely information on victims and the ability to communicate plans of assistance. The trustee has openly asked for victims to file the barest of necessities to establish their claims and has even gone out of his way to automatically enroll users, who failed to respond to his earlier missives. This effort was hampered by outdated information and poor recordkeeping from more than five years past.
The various press renderings have also made the facts related to actual amounts lost and when a bit confusing. The trustee also took it upon himself to liquidate some 200,000 BTC over roughly a year that were found in locked wallets, the “nest egg” that will cover court costs and the eventual distributions to victims. We believe that 850,000 BTC disappeared from 2011 to 2014, but 200,000 were recovered and sold for about $1.7 billion, give or take a few million on either side.
The trustee also made a controversial decision early on that “pooled” BTC would be distributed equally amongst victims, not according to whose wallets were pilfered. There are also pending lawsuits that muddy the water, as well. One suit from CoinLab, a U.S.-based startup, was originally filed for $75 million. It has now upped its claim to $1.6 billion, perhaps, because the value of lost BTC in today’s terms would be $7 to $8 billion.
Until the distribution rolls have been validated and lawsuits resolved, it appears that the 24,000 victims of the Mt. Gox compromise will have to wait a little while longer. At best, the average payout may be somewhere north of $60,000, but when is the question.