Creditors of the nonoperational bitcoin exchange Mt Gox has filed petition to halt a possible billion-dollar payout to its CEO.
The creditors are looking to move Gox out of bankruptcy and into a process of civil rehabilitation.
If effective, the legal effort would move the process of unraveling the company, which is owned by CEO Mark Karpelès, and the 202,195 bitcoins held by the Gox trustee.
Mt Gox notoriously faltered in 2014 after revelations that it had lost hundreds of millions of dollars worth of bitcoin.
The exchange, once the world’s largest, declared bankruptcy and its CEO was charged with embezzlement and data manipulation.
Karpeles was accused of operating Willy bot but allegedly claimed it was for good of company.
The “Willy bot” was suspected of being the vehicle by which fraudulent trading activity was conducted on the exchange in 2013.
This happened during a rapid uptick in global prices.
Under current Japanese law, if Gox keeps its current status, it will pay its creditors the amount they had invested in U.S. dollars in 2014.
Nevertheless, Karpeles could make around $1 billion from the bankruptcy, thanks to Japanese law’s treatment of the Gox Bitcoins.
Article 124 of Japan’s bankruptcy codes required that liabilities be registered at market values when proceedings were opened in April of 2014.
At that point, one Bitcoin was worth roughly $500, but the price has since risen to more than $6,300.
Mt. Gox later recovered some of the allegedly hacked cryptocurrency, and still holds 202,195 Bitcoins, now worth around $1.5 billion.
Debts Can Be Paid Off
Creditors argue that the firm’s obligations can be easily paid off with its existing bitcoins.
This is even after reimbursing what the creditors believe is owed to them due to its current price.
After returning creditors their bitcoin and paying off its debts, Gox would have more than 173,000 bitcoins remaining.
That would be which worth just under $3 billion.
The Japanese court running Gox’s bankruptcy is now examining the claim but has not yet made a decision.
“The creditors bringing the case say the outcome is likely to come down to a “battle of experts”: those working for the bankruptcy trustee, who argue the current liquidation plan is more stable, and those hired by the creditors, who say their solution is quicker and fairer,” the report said.
- Already Bought Your First Bitcoin? Be Ready for the Fees 19 December 2017
- UK Financial Watchdog FCA to Keep Close Eye on ICOs 19 December 2017
- Hedge Fund Pro Bill Miller Admits Half of Investments Already in Bitcoin 19 December 2017
- CFTC Creates New Information Hub for Cryptocurrencies 19 December 2017
- France Calls for Discussions on Bitcoin Regulation 19 December 2017