Bankrupt Mt. Gox may soon be able to pay its creditors

https://qz.com/1003609/bitcoins-soaring-price-means-mt-gox-could-pay-its-debts-and-drw-wants-to-help/

by Nitishshah700 • 9 years ago

104 80 9 years ago

Simulacra3• 9 years ago

I think the obvious thing to do is sell the bitcoins, pay off the debt, make account holders whole again, and then figure out what to do. This seems like a no-brainer.

advisedwang• 9 years ago

Except that bitcoin doesn't have $400 million of liquidity. If you sold them you'd get way less than the current price suggests. I doubt many creditors would be willing to accept bitcoin directly.

Simulacra3• 9 years ago

So does that mean a gradual sell off? Disbursement and sale to lots of different entities? I'm just not clear why there would be any lack of movement on this.

sp3322• 9 years ago

The exchanges don't represent the whole market for bitcoins. In 2015, the US Marshals auctioned off tens of thousands of bitcoins seized from Silk Road accounts. The price on the exchanges went up for a few days around the auction, but recovered quickly afterward.

orblivion• 9 years ago

Maybe they could just transfer the bitcoin directly to the creditors.

EmielMols• 9 years ago

I imagine it would be easy enough to - at a discount - sell all the bitcoins to a (single) other party and have them sell the coins over time. Don't know if many entities would want to take such a position, but there are probably at least some.

If mtgox were still operational, they would probably take a loan (in yen) with the btc as collateral, if they needed the amount of money on a short notice (and provided they really owned the bitcoin by that exchange).

kentt• 9 years ago

Are you assuming that mtgox would sell it as fast as possible and drive the markets down as much as possible? They've been in debt for years, surely taking a month to sell off the Bitcoin would not be unreasonable. Additionally large orders are not always done on the open market but are arranged privately. It is just as reasonable to assume they could sell them at a premium to an interested party who didn't want to drive up the market unnecessarily as the opposite which is the only one I ever see claimed. If anything, with the rising price, a premium seems more likely.

Animats4• 9 years ago

Bitcoin supposedly has a $45 billion market cap, and you can't liquidate 1% of that without crashing the price? If that's the case, the market cap is totally fake.

What would happen to Bitcoin if the Mt. Gox trustee sold $4 million a day of Bitcoins for 100 days?

Obi_Juan_Kenobi• 9 years ago

Those coins would be sold at auction, not dumped onto exchanges.

The Silk Road coin auctions didn't affect the price too much. Parties buying large lots at auction probably aren't doing so to dump the coins on exchanges right away.

Yes, it creates some selling pressure, but the larger significance is as an event. And events in Bitcoin that 'should' be bearish have a way of affecting price in unexpected ways. Busting the Silk Road started the November 2013 bubble, a 30,000 coin market sell finished off the subsequent bear market, etc.

xiphias• 9 years ago

I'm not sure everybody wants to get 200000 BTC sold on the market (even the account holders). It would be crazy

emodendroket6• 9 years ago

Well, you know, half a loaf is better than none.

ggambetta2• 9 years ago

Bitcoins have appreciated 10x since MtGox crashed and took mine. Getting back the dollar value the bitcoins had back then would still piss me off.

emodendroket6• 9 years ago

More than getting nothing? The only reason this is even a possibility is the appreciation.

ne0n2• 9 years ago

If MtGox only had enough funds to cover 15% of deposits, and they paid back each creditor 15% of their claim a year ago, the creditor could have bought Bitcoin with what was refunded and be in the same situation now. Instead, they seem to be dragging it out. I think most creditors would rather have something last year than nothing right now. Additionally, there's no upside for creditors if Bitcoin becomes $5,000.

ggambetta2• 9 years ago

I prefer getting 1/10th than getting nothing, but the only fair outcome would be getting exactly what I lost.

The only reason this is even a possibility is the appreciation.

Sure, but the only reason we're even having this discussion is that MtGox fucked up. That isn't my fault.

saurik• 9 years ago

You lost a certain amount of value at that time. You could have had that value in any storage format. It isn't like Bitcoin was a rare irreplaceable work of art: it was a thing you could have bought more of using other dollars, and so the tort against you should be measured in the common unit of value and not exactly what you owned.

stereo• 9 years ago

How come the debt is in Yen and not in bitcoin?

flyingfences2• 9 years ago

I'm sure that the creditors would love to be paid back the full XBT amount that they lost, but since it's a legal proceeding they essentially have to operate in the currency of the realm which, given that Mt. Gox was a Japanese company, is JPY.

patio112• 9 years ago

Because Mt. Gox is a corporation organized under the laws of Japan. Corporations in Japan can own many things of value, such as hotels, laser printers, intellectual property rights, Alpha Black lotuses, swiss francs, and promises to be paid in the future... but all of these things exist, on their books, with a yen value next to them.

In the event of a bankruptcy or civil rehabilitation (民事再生, which is what Gox is going through IIRC), creditors generally get paid out in yen, not in cement mix, even if the company only happens to own cement mix.

literallycancer• 9 years ago

Yen value at the time of purchase? Does it get updated at any time? Surely 20 years old construction machines aren't worth as much now?

abritinthebay2• 9 years ago

Because currency describes the value.

It's like MtGox was an apple storage facility and lost all your apples - you wouldn't get apples back, you'd get the value of those apples.

Which is in a real currency.

josephagoss• 9 years ago

Which is in a real currency.

It's not about being a real currency or not. It's about what is the legal currency of that particular nation. Notice how they are not pegging the amount to the Australian dollar?

dragonwriter2• 9 years ago

Because when debt hits the legal system, as is the case with bankruptcies, it gets converted to the currency in which the legal system works.

ChuckMcM2• 9 years ago

Wow, I'm surprised they wouldn't be selling coin at a slow rate to convert into cash at this point. Basically sell coin until the price drops below what is needed to clear debts, then wait, when it comes up some more sell some more, then wait. Repeat.

zulln• 9 years ago

That would assume it always gets back.

ChuckMcM2• 9 years ago

Not exactly, as the trustee it would make sense to consider all possible ways of making the creditors whole. And one would put down in their notebook "We have x BTC, if it was selling at $Y/btc each BTC we sold would get us z% closer to returning all the cash obligations." And then each time it reached $y you start selling, if it never reaches you are no different than you were to begin with, if it reaches it only for a short time, perhaps you can pay back some cash.

Now if you're creditors will take BTC and sign off on any future claims, then you are golden. You trade them BTC at market value against all future claims.

Abundnce10• 9 years ago

Doesn't it seem like they should sell the amount of Bitcoins needed to pay off any debt in fiat and then distribute the remaining coins to each user proportionally based on the amount they had on the exchange? Then you're not flooding the marking with 200k Bitcoins. Also, MtGox users are losing substantial value in this deal since the value of a Bitcoin is pegged at $483 and they're now worth well over $2,500. MtGox shouldn't become solvent once they pay all Bitcoins owed at a $483 price, they should return the remaining value to each user proportionally.

Doesn't this seem like the most logical/fair approach?

judofyr• 9 years ago

Converting all the claims to a single currency is the only logical approach. Keeping the claims separated leads to a bunch of difficult questions:

- Should the BTC creditors only get money from the remaining BTC pool?

- Assets (servers, offices etc) will be sold for Yen, should this money only be used to pay the Yen creditors?

- Expenses are being used from the Yen pool at the moment. Does this mean Yen creditors would get less money?

And let's not kid ourself: No one thinks about the value of Bitcoin in terms of "amount of BTC". Everyone converts it to dollars using the current exchange rate. It's not like there's a society where "50 BTC = big house", and now that you'll only get back 10 BTC (or whatever the ratio is) you can't buy that house anymore.

You could argue about at what rate/date you should convert the BTC claims to Yen, but the only reason people complain now is that the price happens to be higher. I personally think it would be more fair to lock the price to the exchange rate when MtGox stopped trading.

(Disclaimer: I have a 16k USD claim in MtGox)

brianpgordon• 9 years ago

50 BTC = big house

You're killing me. I'm pretty sure that back when BTC was worth in the single digits of USD I had that many BTC in my account. I must have sold them for a pittance. It's so painful to just read the above words.

A lot of people must feel this way because ICOs seem to be attracting a strangely large amount of capital. I guess psychologically nobody wants to miss the next big thing.

simon832• 9 years ago

Since when is it beneficial for multi million (billion?) companies to act in the interest of their customers? This isn't communism.

fjdlwlv4• 9 years ago

You confuse "communism" with the rule of law, which capitalist societies follow

Mc_Big_G• 9 years ago

I don't know but, on the flip side, would it be logical/fair to do the same if bitcoin was currently priced at $3?

Grangar• 9 years ago

According to Japanese law the value is denominated in Yen at the time of bankruptcy. Therefore any payoff is to be in Yen. No source on hand for it right now though.

bitJericho2• 9 years ago

If anyone's looking for a new exchange, I'd suggest my own exchange http://bitcoinsexchange.itmustbetrue.com

anothercomment• 9 years ago

You can pay for sex changes with bitcoin now? Woot!

bitJericho2• 9 years ago

Call 1-600-DOCTORB, the B is for bargain.

corobo• 9 years ago

What's the deal with the sunglasses guy on the homepage. I was going to just glance and leave but that's really caught my attention. Going by a reverse image search it looks like a semi-stock photo so it's probably not anyone involved but also the positioning is just so.. odd

ryanmarsh3• 9 years ago

Selling that many coins could drop the price considerably, no?

ryanmarsh3• 9 years ago

Glass–Steagal

delegate• 9 years ago

This appreciation in price has made a lot of shady people fabulously rich.

While MtGox still has 200k BTC, the thief(s) went away with 650k BTC - now worth almost $2B - richer then most hot shot unicorn startup founders worshiped these days.

If they ever get caught, they should be awarded some kind of prize - biggest and cleanest heist in the history of humanity. I mean, this is a proverbial "for $2 billion, would you create an anonymous transaction in the block chain?". (!?!)

Then there are the drug dealers, the drug market admins who stole coins and all the other hacks, extortions, pump-and-dumps, etc.

These shady people are now rich and are probably thinking about investing their money - into companies, politics, etc. They are joining all the other nouveaux riche from all over the world who made their money from corruption, arms trades and everything in between.

Interesting times ahead indeed.

rubber_duck3• 9 years ago

This is assuming everyone who acquired BTC held on to them to this point, I very much doubt that's the true for any scenario you mentioned except the MtGox.

Also 650k BTC - could you ever cash that out at anywhere close to current price :|

adventured• 9 years ago

Also 650k BTC - could you ever cash that out at anywhere close to current price

Instead you might cash it out at several times greater than the present price in a few years. It would be easy to drip 10k BTC into the market and liquidate several hundred thousand coins over the next year.

captainmuon2• 9 years ago

Shouldn't we be able to see on the blockchain if these coins have been spent again? That would be interesting to see.

Also, I would not know what to do with 650k hot bitcoin. I think nobody is currently tracking "taint" and would refuse tainted BTC. But I would have trouble liquidating much less. It seems even the anonymous "guy in the park" wants to see documentation nowadays. Governments have really stepped up their anti-laundering game.

h1d4• 9 years ago

Pretty sure BTC owners are only a small part of the shady people who got rich by any means.

Bankrupt Mt. Gox may soon be able to pay its creditors

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