Mt. Gox Case Moving to Civil Rehabilitation, Creditors May Be Paid in Crypto

mt gox civil rehabiltiation

According to the document released by Mt. Gox trustee Nobuaki Kobayashi – who has been villainized by the cryptocurrency community for selling large amounts of BTC in order to reimburse creditors, causing massive price drops across the market – the Tokyo District Court approved a petition filed in November 2017 to move Mt. Gox out of criminal bankruptcy into civil rehabilitation. 

Due to the change in filing, creditors will likely be paid in cryptocurrency, earning them a larger sum of overall value than if the case remained in bankruptcy court. Otherwise, had Mt. Gox continued the process of criminal bankruptcy proceedings, creditors would have received a reimbursement in fiat at the exchange rate of bitcoin in 2014 when Mt. Gox was hacked – a mere $480 estimated per bitcoin. 

Also, had the case stayed in criminal bankruptcy, former Mt. Gox CEO Mark Karpeles may have received the majority of remaining funds – something that he publicly stated he “doesn’t want.”

Moving to civil rehabilitation is viewed as a huge win for creditors who have been long been waiting reimbursements, and were stuck watching the bitcoin that was stolen from them reach all-time high valuations of $20,000 in December 2017.

Creditors seeking reimbursements must file a proof of claim form before October 22, 2018. Even creditors who previously filed claims during the bankruptcy case must re-file now that the case has moved to civil rehabilitation. This means that creditors who missed previous deadlines can now file properly before the new deadline, giving them another shot at potentially recovering a portion of lost funds.

Another major positive coming out of this news, is that Mt. Gox trustee Nobuaki Kobayashi will most likely no longer be selling any of the over 135K remaining BTC in the Mt. Gox estate – allowing the cryptocurrency market to breathe a sigh of relief. Previous holdings sold by Kobayashi to reimburse creditors are blamed in part for the duration and strength of the current bear market bitcoin is in, as each sell off was made at critical junctions in bitcoin’s price movements. 

The document states that the civil rehabilitation proceedings will not begin until February 2019, months after the October 2018 claim filing deadline. Those seeking to file a proof of claim should visit mtgox.com.