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Mt. Gox: Announcement of Commencement of Bankruptcy Proceedings [pdf]

67 points by sillysaurus3 12y ago

deleted 12y ago
[deleted]
sillysaurus3 12y ago
The takeaway, if you had any bitcoin in Mt. Gox when it fell: You won't receive any repayment until Feb 2015 at the earliest. Important note: you must fill out a form claiming your debt in order to be considered for repayment in Feb 2015, i.e. as an Mt. Gox debtee, you are required to manually inform them (via their form) of how much money you're owed, otherwise you'll receive nothing. The form can't be filled out yet, because they haven't released it, but presumably they'll post it on mtgox.com sometime in the upcoming months, so make a mental note to keep your eyes open for it and fill it out whenever it's posted. If you haven't sent in the form by Nov 2014 then it sounds like you're guaranteed to get nothing. It also seems fairly likely that you won't recover much of your money. That's just speculation on my part (and I would love to be wrong about it) but it seems like it's time to make peace with the idea that you probably won't be seeing >75% of your money ever again. That said, Mt. Gox recently found 200,000 BTC that they had somehow lost track of: http://www.reuters.com/article/2014/03/21/us-bitcoin-mtgox-wallet-idUSBREA2K05N20140321 http://www.reuters.com/article/2014/03/21/us-bitcoin-mtgox-w... ... so those 200,000 BTC may be distributed among creditors. Since Mt. Gox's total bitcoin debt has been quoted at around 750,000 BTC, that would mean in an ideal world you'll eventually receive 26.6% of however many bitcoins you had at the time of Mt. Gox's shutdown. But the world isn't ideal. It's unclear how such a repayment scheme would work in practice. For example, how will Mt. Gox repay debtees who are owed USD/EUR/AUD/etc, not bitcoin? E.g. let's say someone's Mt. Gox account balance was 3.25 BTC and $3,132. How would Mt. Gox's 200,000 BTC be fairly distributed in that situation? Would that $3,132 debt be converted into BTC debt? Or will Mt. Gox sell some of that 200k BTC in order to get US dollars, which are then repaid to that $3,132 debtee? And if all US/EUR/AUD/etc debts will be converted into BTC debts for purposes of repayment, what prices will they use for the actual conversion? (That is, how many BTC per how many dollars of debt?) Will they use current bitcoin market value for the conversion (which is currently $494/BTC) so that $3,132 would be equivalent to 6.34 BTC? Or will they use the value of bitcoin when Mt. Gox shut down operations? What if they decide the best way to proceed is by selling off all 200k BTC for US/EUR/AUD/etc, which is then distributed among debtees? It's their decision; it seems like that scenario isn't impossible. You can imagine how a firesale of 200k bitcoins would completely annihilate BTC's market value. Of course, it's unlikely that whoever is in charge of Mt. Gox's assets would be that shortsighted, but given that bitcoin is completely new to most legal systems, who knows? The point here is that your money's fate is up to someone else. Your money stopped being your money the moment you deposited it into Mt. Gox, or Coinbase, or any other third party. And now that Mt. Gox has collapsed and taken your money with it, it's probably best to accept that all of your money is 100% gone and never coming back, because that way when Feb 2015 rolls around you might be pleasantly surprised if Mt. Gox happens to repay you some small percentage of your holdings. (A pleasant surprise is much nicer than a sore disappointment, which is why I recommend pretending all your money is gone. Worst case: all your money is gone. Best case: some of it comes back to you via carrier pigeon. Actually, that would be the Awesome case.) So let this be a lesson about the dangers of trusting a third party with your money, unless that third party is insured by a government in the event of disaster.
- blackdogie 12y ago
  great explanation, thank you. I too wonder about the conversion. I had a pending cash out transaction that was cancelled and wondering whether the assets would go towards it (from my reading it does).
- nwh 12y ago
  I remember seeing a comment somewhere on their site that payouts will be in USD rather than BTC. Can't find it now, so I could be wrong.
  - sillysaurus3 12y ago
    Interesting. I wonder what will happen to Mt. Gox's 200k BTC? If it's true that repayments will be in USD, then it logically follows that the 200k BTC will be liquidated into USD, which will then be distributed evenly among debtees. Liquidating 200k BTC would be quite a sight to behold. For example, there are only 18k BTC of orders on Bitstamp right now: http://bitcoincharts.com/markets/bitstampUSD_depth.html http://bitcoincharts.com/markets/bitstampUSD_depth.html ... meaning, selling 200k BTC would blow through the entire order book eleven times over. I have no idea how the market would react to that. I'm sure bitcoin would survive it, just like it's survived every other disaster, but it will be quite the rollercoaster. The reason I say the 200k BTC would be sold off if the repayments are all in USD is because, if I remember correctly, Mt. Gox had almost no cash when it shut down. Most of its cash had been seized by the US government long ago. So if Mt. Gox are going to repay anything of significance, then it seems like those 200k BTC will be sold off. What's the alternative? Those 200k BTC have to wind up somewhere. I know nothing of Japan's legal system, but the alternatives seem to be "either the government ends up keeping the coins, or the coins are redistributed to Mt. Gox debtees, or the coins are all sold off and the proceeds are distributed to Mt. Gox debtees." Anyone have any theories about what will happen to the coins?
    - jebus989 12y ago
      I don't follow your logic. A forced sale of bitcoins to assuage creditors is different to speculators losing confidence in the currency and trying to exit their positions. The latter causes market volatility and price crashes. Temporarily increased liquidity is not inherently disastrous.
TazeTSchnitzel 12y ago
Pages 4-6 are the English.
sparkzilla 12y ago
For a recap of the Mt Gox rise and fall check my timeline: http://newslines.org/mt-gox/ http://newslines.org/mt-gox/
- sparkzilla 12y ago
  Summary: The Bankruptcy Trustee sets April 24 as the date for the start of bankruptcy proceedings, at Mt Gox offices in Shibuya, Tokyo. A creditors’ meeting for reporting on the status of the assets will be held on July 23 at the Tokyo District Court. Creditors do not have to attend the meeting; the proceedings will be posted to the Mt Gox website. Bankruptcy claims must be submitted to the trustee before Nov 28, using a form provided by the trustee. Claims will be assessed on Feb 25, 2015.

67 points by sillysaurus3 12y ago

deleted 12y ago

[deleted]

The takeaway, if you had any bitcoin in Mt. Gox when it fell: You won't receive any repayment until Feb 2015 at the earliest. Important note: you must fill out a form claiming your debt in order to be considered for repayment in Feb 2015, i.e. as an Mt. Gox debtee, you are required to manually inform them (via their form) of how much money you're owed, otherwise you'll receive nothing. The form can't be filled out yet, because they haven't released it, but presumably they'll post it on mtgox.com sometime in the upcoming months, so make a mental note to keep your eyes open for it and fill it out whenever it's posted. If you haven't sent in the form by Nov 2014 then it sounds like you're guaranteed to get nothing. It also seems fairly likely that you won't recover much of your money. That's just speculation on my part (and I would love to be wrong about it) but it seems like it's time to make peace with the idea that you probably won't be seeing >75% of your money ever again. That said, Mt. Gox recently found 200,000 BTC that they had somehow lost track of: http://www.reuters.com/article/2014/03/21/us-bitcoin-mtgox-wallet-idUSBREA2K05N20140321 http://www.reuters.com/article/2014/03/21/us-bitcoin-mtgox-w... ... so those 200,000 BTC may be distributed among creditors. Since Mt. Gox's total bitcoin debt has been quoted at around 750,000 BTC, that would mean in an ideal world you'll eventually receive 26.6% of however many bitcoins you had at the time of Mt. Gox's shutdown. But the world isn't ideal. It's unclear how such a repayment scheme would work in practice. For example, how will Mt. Gox repay debtees who are owed USD/EUR/AUD/etc, not bitcoin? E.g. let's say someone's Mt. Gox account balance was 3.25 BTC and $3,132. How would Mt. Gox's 200,000 BTC be fairly distributed in that situation? Would that $3,132 debt be converted into BTC debt? Or will Mt. Gox sell some of that 200k BTC in order to get US dollars, which are then repaid to that $3,132 debtee? And if all US/EUR/AUD/etc debts will be converted into BTC debts for purposes of repayment, what prices will they use for the actual conversion? (That is, how many BTC per how many dollars of debt?) Will they use current bitcoin market value for the conversion (which is currently $494/BTC) so that $3,132 would be equivalent to 6.34 BTC? Or will they use the value of bitcoin when Mt. Gox shut down operations? What if they decide the best way to proceed is by selling off all 200k BTC for US/EUR/AUD/etc, which is then distributed among debtees? It's their decision; it seems like that scenario isn't impossible. You can imagine how a firesale of 200k bitcoins would completely annihilate BTC's market value. Of course, it's unlikely that whoever is in charge of Mt. Gox's assets would be that shortsighted, but given that bitcoin is completely new to most legal systems, who knows? The point here is that your money's fate is up to someone else. Your money stopped being your money the moment you deposited it into Mt. Gox, or Coinbase, or any other third party. And now that Mt. Gox has collapsed and taken your money with it, it's probably best to accept that all of your money is 100% gone and never coming back, because that way when Feb 2015 rolls around you might be pleasantly surprised if Mt. Gox happens to repay you some small percentage of your holdings. (A pleasant surprise is much nicer than a sore disappointment, which is why I recommend pretending all your money is gone. Worst case: all your money is gone. Best case: some of it comes back to you via carrier pigeon. Actually, that would be the Awesome case.) So let this be a lesson about the dangers of trusting a third party with your money, unless that third party is insured by a government in the event of disaster.

blackdogie 12y ago
great explanation, thank you. I too wonder about the conversion. I had a pending cash out transaction that was cancelled and wondering whether the assets would go towards it (from my reading it does).
nwh 12y ago
I remember seeing a comment somewhere on their site that payouts will be in USD rather than BTC. Can't find it now, so I could be wrong.
- sillysaurus3 12y ago
  Interesting. I wonder what will happen to Mt. Gox's 200k BTC? If it's true that repayments will be in USD, then it logically follows that the 200k BTC will be liquidated into USD, which will then be distributed evenly among debtees. Liquidating 200k BTC would be quite a sight to behold. For example, there are only 18k BTC of orders on Bitstamp right now: http://bitcoincharts.com/markets/bitstampUSD_depth.html http://bitcoincharts.com/markets/bitstampUSD_depth.html ... meaning, selling 200k BTC would blow through the entire order book eleven times over. I have no idea how the market would react to that. I'm sure bitcoin would survive it, just like it's survived every other disaster, but it will be quite the rollercoaster. The reason I say the 200k BTC would be sold off if the repayments are all in USD is because, if I remember correctly, Mt. Gox had almost no cash when it shut down. Most of its cash had been seized by the US government long ago. So if Mt. Gox are going to repay anything of significance, then it seems like those 200k BTC will be sold off. What's the alternative? Those 200k BTC have to wind up somewhere. I know nothing of Japan's legal system, but the alternatives seem to be "either the government ends up keeping the coins, or the coins are redistributed to Mt. Gox debtees, or the coins are all sold off and the proceeds are distributed to Mt. Gox debtees." Anyone have any theories about what will happen to the coins?
  - jebus989 12y ago
    I don't follow your logic. A forced sale of bitcoins to assuage creditors is different to speculators losing confidence in the currency and trying to exit their positions. The latter causes market volatility and price crashes. Temporarily increased liquidity is not inherently disastrous.

TazeTSchnitzel 12y ago

Pages 4-6 are the English.

sparkzilla 12y ago

For a recap of the Mt Gox rise and fall check my timeline: http://newslines.org/mt-gox/ http://newslines.org/mt-gox/

sparkzilla 12y ago
Summary: The Bankruptcy Trustee sets April 24 as the date for the start of bankruptcy proceedings, at Mt Gox offices in Shibuya, Tokyo. A creditors’ meeting for reporting on the status of the assets will be held on July 23 at the Tokyo District Court. Creditors do not have to attend the meeting; the proceedings will be posted to the Mt Gox website. Bankruptcy claims must be submitted to the trustee before Nov 28, using a form provided by the trustee. Claims will be assessed on Feb 25, 2015.