Exchanges

Mt. Gox creditors could receive billions as trustee announces approval of rehabilitation plan

  • Thousands of creditors of the Mt. Gox exchange may now receive compensation for the billions of dollars they lost at the time
  • The plan's adoption will take place on November 20, after which the recovery plan will become "final and binding."
  • The hack resulted in nearly 24,000 creditors losing their cryptocurrency funds, which were worth about $56 billion at the time of writing.

Thousands of creditors of the Mt. Gox exchange may now receive compensation for the billions of dollars they lost at the time. The hack resulted in a loss of around 850,000 Bitcoins between 2011 and 2014, driving the crypto exchange into bankruptcy.

Victims to receive compensation for the cryptocurrencies they lost

The trustee of the now-defunct Japanese exchange, Nobuaki Kobayashi, announced on Wednesday that a draft rehabilitation plan, initially filed with the Tokyo District Court in February, has now been accepted by about 99% of affected creditors. Once the plan is in place, victims will receive partial compensation for the cryptocurrencies they lost in the hack. The voting period for the proposal was between May 31 and October 8. For the proposal to be approved, at least 50% of eligible creditors had to agree.

The plan’s adoption will take place on November 20, after which the recovery plan will become “final and binding.” While users had lost nearly 850,000 Bitcoins, of which 200,000 tokens have since been “found,” Kobayashi will reportedly be able to compensate them with just 15,000 BTC. Creditors will then receive compensation by registering their bank details on the exchange’s web portal.

Mt. Gox handled nearly 70% of all Bitcoin transactions worldwide

At the time of the hack, cryptocurrencies were even more nascent than they are today. Mt. Gox was one of the largest exchanges in the world, handling nearly 70% of all Bitcoin transactions worldwide. However, the hack resulted in nearly 24,000 creditors losing their cryptocurrency funds, which were worth about $56 billion at the time of writing. A petition to initiate a civil rehabilitation of the exchange was granted by Japanese courts in 2018. However, it has been repeatedly postponed for various reasons. The Tokyo District Court finally approved the current draft plan in December 2020 and issued an order in February this year allowing creditors to vote on the plan.

In a similar incident, Bitfinex, which had replaced Mt. Gox as the leading Bitcoin exchange, also suffered a security breach in 2016. Bitfinex’s creditors lost 119,756 Bitcoins worth around $72 million at the time. However, they were all compensated for their losses over the next year.

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