On August 2, the creditors of Mt.Gox cryptocurrency exchange announced a revised basic policy for civil rehabilitation proceedings which started in June 2018. The revision is intended to reflect the creditors’ opinions about the previous plan announced on June 29.
Mt.Gox lost about 850,000 BTC belonging to customers (valued at roughly USD 450 million at that time) and filed for bankruptcy protection in 2014. About 200,000 BTC remained at the time of the bankruptcy, and protracted bankruptcy proceedings have been ongoing to distribute the remaining BTC.
The deadline for submitting a civil rehabilitation plan was set at February 14, 2019, which is several months behind the standard schedule. Therefore, the revised policy stated: “The rehabilitation plan should be simple and the implementation thereof should have a high degree of certainty” in order to prevent a further delay in the rehabilitation process.
The policy also stated: “No distribution will be made to shareholders” and “In general, we consider it appropriate to make payments in BTC and BCH instead of cash to creditors who had been depositing BTC with Mt.Gox.” It presented the view that the BTC and BCH should be sent to the creditors’ existing cryptocurrency exchange accounts or to accounts of exchanges where creditors can open accounts easily.
The creditors are said to be requesting that Mt.Gox repay most of the assets, including 166,000 BTC, 168,000 BCH, and other derivatives currently held by Mt.Gox, to creditors at the scheduled time of the first payment in May or June 2019, which is immediately after approval of the rehabilitation plan.
Mt.Gox lost a large amount of BTC as a result of hacking caused by illegal access in 2014 and was in the process of bankruptcy proceedings. However, on June 22, the Tokyo District Court ordered Mt.Gox to stop the bankruptcy proceedings and commence civil rehabilitation proceedings.
There are signs that Mt.Gox sold BTC and BCH several times to repay creditors. However, the civil rehabilitation trustee is no longer able to sell or buy BTC due to the change to rehabilitation proceedings. Although Mt.Gox is said to have sold a large amount of BTC and BCH in a way that would avoid affecting the market price, media reported that the sale coincided with a time when BTC prices declined. Future sales of BTC will be halted.
In the bankruptcy proceedings, Mt.Gox was planning to repay creditors by converting BTC into cash at the rate as of the time of the bankruptcy. The change to civil rehabilitation proceedings enables Mt.Gox to repay creditors in BTC. When Mt.Gox filed for bankruptcy protection, 1 BTC was worth about USD 483, but it is now worth about USD 6,500. It is entirely understandable that creditors would prefer to receive payments in BTC.
The 11th creditors meeting will be held at the Tokyo District Court from 1:30 pm (JST) (4:30 am UTC) on September 26, 2018.