Mt. Gox, the cryptocurrency exchange platform popular for its hack, is back in the limelight due to its rehabilitation plan.
The Bitcoin exchange platform has announced the commencement of civil rehabilitation claim filing. Creditors can file for the claims either online or offline. The deadline to apply for filing for the proof of claims is 22nd October 2018.
The exchange platform was one of the biggest Bitcoin [BTC] exchange platform. It was handling over 70% of the world’s BTC transactions. However, Mt. Gox filed for bankruptcy in 2014 as they lost a tremendous amount of Bitcoin because of a hack. The hack took place due to a technical vulnerability. The exchange platform lost almost 7% of the Bitcoin which was worth around $475 million.
The Bitcoin exchange platform had stated that they lost 750,000 BTC of their customers and 100,000 BTC, which belonged to the exchange. This led to a massive roar in the cryptocurrency market. Before the declaration of bankruptcy, the exchange platform had stated that they were undergoing maintenance. With the given reason, the exchange platform had shut down its operations including the withdrawal service for more than a month.
This resulted in a lot of unrest amongst the traders and investors, with two investors protesting outside their headquarters. After which, the exchange platform was forced to shift their office and declare bankruptcy. Additionally, it led to a huge uproar in the market with Bitcoin [BTC]’s price taking the downhill.
Soon after this, Mark Karpeles, the CEO of Mt. Gox, discovered cold wallets which had a massive amount of Bitcoin. These BTCs were to be used to pay back the creditors who underwent a loss because of the hack. However, during an AMA on Reddit, Mark announced that most of the Bitcoin would end up with the shareholders of the company.
The reason for this was Japan’s bankruptcy law. According to the law, the creditors would be paid back in Japanese Yen and the remaining Bitcoin would be given to the shareholders.
Since the value of Bitcoin is higher than its value in 2014, almost 160,000 Bitcoin and Bitcoin Cash would go to the shareholders. The sale of a part of these cryptocurrencies is hailed to be one of the main reasons for the crash of Bitcoin in December 2017 and March 2018.
The revelation of these facts by Mark led to the creditors filing for a civil rehabilitation, allowing creditors to be paid in cryptocurrency rather than Japanese Yen. In addition, all the Bitcoin [BTC] and Bitcoin Cash [BCH] which were distributed to the shareholders would be taken back and distributed amongst the creditors.
After the filing, the Tokyo District Court ordered for the commencement of the rehabilitation plan and is required to be presented to the court by February 2019. The basic policy for the rehabilitation states that the plan should be simple and that the first payment has to be completed soon after the approval of the rehabilitation plan. It states that the implementation plan should be ‘highly certain and realistic’.
The plan also underlines that all the assets have to be distributed amongst the creditors and should not be given to the shareholders. In addition, the payment has to be made in Bitcoin and Bitcoin Cash and preferably be transferred to the creditors’ accounts.
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