Why Creditors Of Mt. Gox Cryptocurrency Exchange Claim Victory?
The creditors of the Mt. Gox cryptocurrency exchange has claimed victory after the civil rehabilitation proceedings commenced. It’s significant that the company has filed for bankruptcy, which would have meant that the existing assets would have to be distributed to shareholders. That will not be the case as per the latest step was taken by the company, and it would allow recovery of massive losses for the creditors. It would be a different issue whether the rehabilitation succeeds or fails.
The Tokyo District Court has issued orders to start civil rehabilitation proceedings thus resulting in returning the enormous assets to creditors rather than shareholders under the proceedings of bankruptcy. This has made noted attorney, Daniel Kelman, to comment that this was the first time in the legal history of Japan that a liquidation process was converted into a rehabilitation process. In the normal case, it is the other way around if and when the rehabilitation fails to click. Therefore, he thinks that this also made legal history in the country, news.bitcoin reported.
The noted lawyer has referred to a post that detailed as to how the court has changed the general perception in respect of bankruptcy proceedings. It was in February 2014 that the exchange has suspended not only trading of bitcoin but also closed its exchange service and website. The company has filed for bankruptcy protection in order to protect itself from creditors, and the liquidation proceedings started in April of the same year. This came after the exchange indicated about 850,000 bitcoins were stolen. At that point in time, it was valued over $450 million.
Later, the exchange claimed that it could find 200,000 bitcoins. The latest turn of events to rehabilitation is claimed as a victory to creditors probably due to appreciation in prices of bitcoin. Kelman has also admitted it as the main reason for the change in ruling. That is because even on a year-on-year basis, the current price represented more than 100 percent growth. The incident happened four years back when the craze for crypto was not that much.
The noted attorney said, “At the initial creditor meetings at Tokyo District Court, the creditors demanded the trustee return bitcoins as bitcoins. Until then he was intent on selling them, but he agreed to look into it. The Coinlab case stalled everything for a couple years, and creditors ended up in the 2017 bull market as a massive holder, until the trustee started market selling in January this year, greatly contributing to the current bear market.”
One More Chance
Kelman pointed out that if any creditor who lost bitcoins in the Mt. Gox affair and has not filed any claim until now, there could be one more chance to file in the rehabilitation process. However, he said that steps were being taken to avoid redoing the entire claim process since it would only cost additional money and take time. He expects things to take some time pointing out the Coinlab case.
For the creditors, they have to wait for three more additional steps to claim victory. Ultimately, they could claim victory only after Mt. Gox makes payment to creditors, and that could happen after the court approval.