Mt Gox – Just the name alone can induce waves of nausea and disgust in the minds of those involved in the bitcoin scene circa 2014. Not named after a mountain, but instead an acronym for “Magic the Gathering Online Exchange”, the site was embroiled in a controversy and scandal that continues even to this day.
Now, the two men at the center of the turmoil, Mark Karpeles and Peter Vessenes, are under fire once again as the lawsuit develops.
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A brief refresher course on the Mt Gox Case
The actual story behind Mt Gox is complicated enough to fill several War and Peace sized volumes, but before we go into recent developments in the issue let's discuss the basic facts of what happened.
The site was, at one point, the single largest bitcoin exchange in the world. It was involved in almost every bitcoin transaction at its peak, and millions of bitcoin were deposited and moved through the exchange. At some point before 2012, the exchange was hacked and bitcoin were steadily and stealthily siphoned out. This was later tracked to an individual called Alexander Vinnik.
Through mismanagement and failure to act on the security issues, Mt Gox quickly became insolvent and shut down. Today, scores of investors (or creditors, as they are often called) are owed an unbelievable sum of money.
The controversy continues
In July of this year, former Mt Gox CEO Mark Karpeles took the stand in a Tokyo courtroom to declare his innocence against charges of embezzlement and data manipulation.
Back in 2015, Karpeles was arrested on charges of embezzlement. According to a piece that appeared in phys.org, Karpeles could face up to five years in prison or a meager $4,000 fine. The former CEO stands accused of personally pocketing as much as 341 million yen (about $3 million dollars).
Peter Vessenes claws for cash
While Mark Karpeles, disgraced CEO of Mt Gox has his own troubles in court, CoinLab CEO Peter Vessenes is on the warpath for a payday to the tune of $158 million dollars. By relying on a number of contractual clauses (which some deny the validity of), many Mt Gox victims fear that Vessenes aims to personally rip their investments away so as to further line his own pockets with digital gold.
According to technology lawyer Daniel Kelman who has informally picked up the case, Vessenes is intentionally acting shady and making selfish legal moves to secure the undeserved portion of the Mt Gox proceeds. Earlier this year, Kelman offered Vessenes a chance to come clean in the form of a public debate. Vessenes declined.
Will the Mt Gox victims ever see restitution?
In a 2016 New York Times piece, the amount of money that disappeared is over $2.4 trillion dollars. Of this incredible sum, the Japan based trustee who is overseeing the funds states that only $91 million worth of assets had been secured.
In the interview with BitsOnline, Kelman suggested that creditors will see some form of restitution, but the biggest issue standing in the way of repayment was Peter Vessenes massive $158 million dollar “bogus” claim.
Another issue that could have massive effects on the payouts given to creditors is if they are repaid in Japanese Yen or bitcoin. Those who elected to receive Yen may see a significantly smaller return, as their payouts will be based on 2014 values of bitcoin.
Could the trapped bitcoin affect bitcoin prices?
One final thing to consider for when the Mt Gox case finally reaches a conclusion and funds are released is – what happens if suddenly there are hundreds of thousands of bitcoins released on the market all at once?
At its peak, it was estimated that as many as 850,000 bitcoin were stolen or otherwise misappropriated from Mt Gox creditors. At present, there may be only 200,000 bitcoin left in the Mt Gox reserves.
However, if someone like Peter Vessenes gets his hands on them, and he decides to cash out for a quick payday, bitcoin prices may see a sudden slide due to the market suddenly being flooded.
At this point, all we can do is watch, wait, and hope that not only will the victims of Mt Gox receive some kind of payout, but that undeserving parties won't snatch it away or flood the market.
Featured Image via Fotolia
