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Ill-Fated Mt. Gox Exchange Locks Down $1.3 Billion in BTC Until Summer 2019

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Mt. Gox has again garnered headlines for all of the wrong reasons. The ill-fated, hacked, one-time largest cryptocurrency exchange in the world suffered sudden collapse several years ago. Countless people lost their Bitcoin holdings in the greatest digital assets hack of all time. Users have never recovered their money.

Now the regulators determining how the recovered funds will be distributed have opted to hold all of the money left. This will remain in the failed exchange accounts for another whole year. Once upon a time, a court order mandated that the cryptocurrency exchange needed to give back all of the stolen assets to the defrauded victims. In the meanwhile, creditors have created a rehabilitation plan to disperse the stolen money to the owners. Yet the problem continues to be that the bankrupt exchange cannot cover all of its former customers’ losses.

This is why the funds will continue to be under restriction for another year. Next summer they will release them. There is a catch though. The rehabilitation plan states if Mt. Gox is unable to repay the stolen BTC, assets will forfeit to creditors instead.

Issues and Problems With Paying Back the Victims Continue to Delay Repayment

The plan orders Mt. Gox to pay back lost funds in either Bitcoin (BTC) or Bitcoin Cash (BCH) only. Fiat currencies or altcoins will not be permitted in the repayment. There is a second thorny issue surrounding the returning of the remaining funds. Since Bitcoin prices constantly swing in both directions, no one can say for certain what will happen in coming months.

The civil rehabilitation plan should receive full approval come February 2019. Meanwhile, the remainder of Mt.Gox’s funds will be untouchable and held in escrow for the foreseeable future. For sure, the victims and creditors will all be closely watching the proverbial bank safe. Until then, there should be more information from the next meeting of the administrators and creditors in September.

Unfortunately, incidents like this one have badly hurt the rep of Bitcoin and the major altcoins. Hopefully the courts will actually manage to get Bitcoin returned to the clients soon.


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