Mt. Gox Begins Civil Rehabilitation Process to Reimburse Thousands of Creditors
CryptoBit News Today2 min read
The Japan-based exchange has kicked off its civil rehabilitation process, giving the roughly 24,000 creditors who lost funds a chance to eventually reclaim their investments and even see returns.
The bankruptcy estate, managed by independent trustee Nobuaki Kobayashi, is overseeing the reimbursement process. While awaiting reimbursement, still, many of the victims want criminal charges to be levied against Mt. However, according to Japanese bankruptcy law, the claims will be valued at April 2014 Bitcoin prices, yielding around $400 million in total.
An email that later surfaced in court revealed that Karpeles learned shortly after buying the exchange that an earlier hack had created an 80,000 BTC hole on its balance sheet.
The Mt. Gox Progenitor and Its Uneven Record
Origins of the website reflect the fantasy game "Magic: The Gathering. Founder Jed McCaleb, who later created the Ripple protocol, established the website to allow the game's fans to trade cards like stocks. He promptly abandoned the endeavor, and moved to other projects, later re-launching the site to create one of the first Bitcoin exchanges.
Shortly after McCaleb launched the service, Karpeles, a French developer, purchased the platform, entering the cryptocurrency arena.
At the time, the loss was around $60,000 worth.
Mt. Gox suffered another major breach in June 2011 when intruders entered the system through a compromised computer allegedly belonging to an auditor, selling coins on the platform for one cent and taking about 2,000 coins. These events made Karpeles somewhat paranoid about the threat of hacking and contributed to his decision to shift most of the exchange's Bitcoin into cold storage.
Catastrophes Strike, Gox Falls
Meanwhile, Bitcoin began to gain traction, winning the sympathies of the rapidly expanding community.
Mt. Gox grew to become the world's largest cryptocurrency exchange, handling nearly 90 percent of global Bitcoin trading at its peak. Gox's online deposit addresses suffered a compromise as early as September 2011, when an attacker stole the associated private keys. Mt. Gox was drained of almost all its Bitcoin reserves before its 2014 collapse.
Gox's bankruptcy trustee has sold sizeable chunks of cryptocurrency over the last few months, which is stoking concerns that it might be driving Bitcoin's price down.
