Andy Pag, who founded Mt. Gox Legal, has resigned his position as leader of the group, which represents the majority of the now-defunct Bitcoin exchange’s creditors (users who still had funds on the platform at the time of its implosion.) While some reports have said that users could get paid as early as this year, Pag believes that the over-sized claim of startup incubator and one-time Mt. Gox partner CoinLab will slow the process to a crawl.
CoinLab’s $16 Billion Claim Slows Civil Rehabilitation Process
It could be years before creditors ever see any money. The cryptocurrency available to disperse was already partially liquidated, but the crypto exchange still holds thousands of BTC, Bitcoin Cash, and Bitcoin SV, all of which amount to a substantial sum.
CoinLab has filed a $16 billion claim on the Mt. Gox estate, claiming that it deserves to be made whole as part of a profit-sharing agreement. $16 billion far outsizes the amount that existed in the failed exchange’s coffers at the time of its failure. Brock Pierce, who argues a rightful claim to Mt. Gox’s assets, has estimated the exchange’s assets at present to be around $1 billion. CoinLab’s $16 billion claim is interesting because they had previously only demanded $75 million – the amount of a lawsuit filed against Mt. Gox in 2013 alleging that the exchange had not lived up to its end of a partnership.
The CoinLab claim introduces kinks to the process of getting creditors paid due to the voting rights aspect of civil rehabilitation. CoinLab would effectively have more voting rights than anyone else if its claim were approved, but its request has not received approval. The Mt. Gox trustee rejected the application as soon as it was received, but CoinLab is fighting that. Creditors on Reddit are furious about the matter.
Last June, when Mt. Gox re-entered civil rehabilitation, many believed payments would be disbursed – in cryptocurrency or some combination of crypto and fiat – by the end of 2019. It now looks like years will add on to the process, and many place blame squarely at the feet of CoinLab.
Andy Pag Dumps Bitcoin Claim at Massive Discount
According to Pag, everyone else who had a claim during the bankruptcy segment of the Mt. Gox saga simply refiled that claim when it re-entered civil rehabilitation. Essentially, all that needs to happen is all legitimate creditors need to receive approval and then the court needs to approve – along with all verified creditors – the plan to pay everyone.
Pag told CoinDesk that Mt. Gox is not even actually in civil rehabilitation until the creditors approve a plan.
“We’ve started that process but it’s not finished and it’s not confirmed, it’s not confirmed that we’re in civil rehabilitation until the creditors vote on a civil rehabilitation plan.”
Mark Karpeles thinks that CoinLab’s tactics will be swiftly dealt with by the Tokyo District Court. He also says that – despite CoinLab’s claims to the contrary – CoinLab never really did anything for Mt. Gox. CoinLab argues that courts would have dismissed the original lawsuit if it were entirely invalid.
“Courts are likely to consider CoinLab’s case with some matter of urgency today and will likely try to get things handled quickly, but CoinLab has likely no interest of bringing a losing battle to its conclusion, and will likely try to extend the process as much as possible.”
Andy Pag is selling his claim in the Mt. Gox affair, ridding himself of the headache at a mere $600 per BTC held on the exchange. He posted a letter to a private forum that elucidated his reasoning for doing so.
Pag Recuses Himself After Deciding to Sell His Bitcoin Claim
Pag believes that selling his Bitcoin claim disqualifies him from running a large victims group. Mt. Gox Legal represents about 1,000 claimants and about 15% of all the BTC available to creditors. Pag writes in his private forum post:
“Without owning a claim, I don’t think I’d carry support to run the group.”
Some have expressed discontent with Mt. Gox Legal, which is funded with donations from creditors.
“[T]hey didn’t [achieve] anything but spend 200k, half from that went to Andy and his [sockpuppets].”
Perhaps the most notable takeaway from Pag’s resignation is his confidence that the process of repatriating funds will go on much longer than recently expected. Pag also says “Mark is plotting again.”
He elucidates that Karpeles wants to get Tibanne, his company which parented Mt. Gox, out of bankruptcy to fight CoinLab.
“What really pisses me off about this is that after all the scheming and conniving he did in 2011-2014 which led to this mess, he’s straight at it again, trying to co-opt conspirators to rob Peter to pay Paul. I don’t think he’s malevolent, but I got a glimpse at our meeting of someone who is ruthless, and I suspect is only interested in helping creditors if it helps himself.”
For his part, Karpeles was recently exonerated of most charges related to the failure of Mt. Gox and seeks to have his singular conviction overturned.