Civil Rehabilitation for Mt. Gox Commences
Japanese officials on June 22 announced that the now defunct cryptocurrency exchange Mt. Gox has formally commenced with civil rehabilitation proceedings and Attorney Nobuaki Kobayashi is to act as the trustee for this process.
Civil rehabilitation is a Japanese bankruptcy law which allows non-monetary claims to remain intact (which is the opposite of a normal bankruptcy proceeding where all assets – monetary or non-monetary are converted into money and used to pay of the company’s debts). This means that the remaining Bitcoins will no longer to be converted to fiat currencies and that creditors can now be paid in BTC.
A Little History
In late 2013, Mt. Gox was the victim of a massive hack attack, the second biggest of all time. The exchange was forced to declare bankruptcy in 2014 and the Japanese government appointed Kobayashi as Trustee to handle Mt. Gox’s bankruptcy proceedings.
As Trustee of the bankruptcy proceedings, Kobayashi has been responsible for disposing of the crypto exchange’s Bitcoin reserves. Beginning quarter 4 of 2017, the Trustee had to sell of large sums of Bitcoins. According to many, these sell offs had a detrimental effect on the price of BTC. Each time there was a transaction, it was noted that the price of Bitcoin dropped.
Current Status
With the commencement of the civil rehabilitation proceedings, the bankruptcy proceedings will now be stopped, which includes stopping the sale of the remaining Bitcoins. Those seeking to get back their funds could get compensation sometime in 2019, once the civil rehabilitation process is underway.
According to the document submitted by Kobayashi, the proposed rehabilitation plans is based on the valuation of BTC from the start of the civil rehabilitation process.
What this means is that creditors will receive their remaining compensation in Bitcoin on a pro rata basis. Basically, claimants could ending up getting more than the $440 per BTC rate (which was the token price of the cryptocurrency when the hack took place).
The valuation at which BTC should be paid back to creditors has long since been a source of contention for the community, especially considering how the price of Bitcoin has skyrocketed since 2014. And if creditors are going to be paid according to current valuations of the crypto, this would be a big win for them.
Kobayashi also wrote that he would submit a report on the status of Mt. Gox’s remaining assets at the scheduled creditors’ meeting on September 26 in Tokyo. Claimants would then have until October 22, 2018 to submit their proof of claims as well as file for rehabilitation.