Mt. Gox, the infamous cryptocurrency exchange that suffered a security breach in 2014 losing 850,000 Bitcoin (BTC) and leaving investors unable to withdraw their funds, continues to delay its plans for reimbursement. The latest announcement states that the repayment deadline has been extended once again, pushing the wait for closure into its 11th year.
In 2014, Mt. Gox experienced the largest Bitcoin hack of that time, resulting in leaked documents revealing the exchange’s insolvency. This raised concerns about the future of Bitcoin, as Mt. Gox controlled 70% of the total circulating Bitcoin. The exchange filed for bankruptcy protection and faced numerous lawsuits from investors who were worried about the recovery of their funds. Mt. Gox further exacerbated the situation by deleting its website and social media presence, creating a sense of mistrust among users.
In 2015, the CEO of Mt. Gox, Mark Karpelès, was arrested for allegedly manipulating the exchange’s computer system to inflate his own account. This arrest highlighted the challenges of linking criminals to crypto crimes due to the lack of regulations surrounding cryptocurrencies. That same year, Mt. Gox’s bankruptcy trustee instructed users to file claims for their missing Bitcoin, with the expectation that only around 20% of funds would be returned considering the decrease in Bitcoin’s market price.
By 2016, it was revealed that only $91 million in assets would be distributed to claimants, leading to a discrepancy between what Mt. Gox intended to reimburse and what investors believed they were entitled to. This resulted in total claims for reimbursement reaching as high as $2.4 trillion, despite the actual loss amounting to only $500,000. Additionally, 2016 saw the rise of cold wallets as a secure means of storing cryptocurrencies, gaining attention from the crypto community.
Legal struggles took center stage in 2017, as former CEO Karpelès faced trial for alleged funds embezzlement. During the trial, Karpelès admitted to operating a bot that manipulated the exchange’s volumes. In an attempt to revive Mt. Gox, Karpelès announced plans for an initial coin offering (ICO) to raise funds, but ultimately abandoned the idea due to legal obstacles.
In 2018, Mt. Gox revised its policy, stating that it was unable to return all Bitcoin deposited by creditors and that assets should be distributed to creditors rather than shareholders. However, no resolution was reached that could satisfy both legal requirements and the demands of creditors.
The anticipation for a rehabilitation plan in 2019 led to yet another extension of the deadline by Mt. Gox. A New York-based private equity firm, Fortress, offered to buy out creditor claims, but the deal did not materialize. In 2020, Mt. Gox presented a draft rehabilitation plan and disclosed plans to liquidate cryptocurrencies other than Bitcoin and Bitcoin Cash. However, the Tokyo court approved another extension, citing the need for further examination.
In 2021, creditors approved a rehabilitation plan that aimed to compensate them for their lost Bitcoin. With the price of Bitcoin reaching an all-time high, it was believed that the value held in Mt. Gox’s Bitcoin stash could cover the losses. The approval of the plan brought hope to investors, who eagerly awaited further instructions.
The enthusiasm spilled over into 2022, as investors provided details for registering repayment methods. It was rumored that the release of 150,000 BTC could have a significant impact on the Bitcoin ecosystem. Creditors were given until January 2023 to register and select a repayment method.
However, in 2023, the repayment deadlines were pushed into the future, disappointing creditors once again. The most recent announcement stated that the deadline for creditors to provide repayment information had passed, and the repayment deadline was further extended to October 2024.
Mt. Gox’s continuous delays and extensions have left investors frustrated and uncertain about the fate of their funds. Despite the approval of a rehabilitation plan in 2021, the long-awaited closure seems distant. Mt. Gox has not provided any comments regarding its commitment to reimburse users’ funds. This ongoing saga serves as a reminder of the challenges and risks associated with investing in cryptocurrencies.