Understand the state of affairs of Mt. Gox.
The cryptocurrency space has experienced a widespread adoption by the citizens of various countries around the world. This has got the attention of a number of hackers and fraudsters around the world which have taken advantage of the people’s interest in the cryptocurrencies. A number of centralized cryptocurrency exchanges are hacked. Scams and Ponzi schemes are run in the name of cryptocurrencies.
- The Japan-based cryptocurrency exchange Mt. Gox which was hacked in the year 2014, was forced to file for a bankruptcy due to its inability to reimburse their creditors back.
- Anyhow on November 27, 2014, a number of creditors jointly filed a petition in the Tokyo district court for the Civil rehabilitation proceedings of the exchange as it increases the probability of reimbursing back their Investments. For this petition, the hearing was held on 22nd June 2018.
- During the hack in the year 2014, the cryptocurrency exchange was inevitably compelled to undergo bankruptcy as over $473 million worth of Bitcoins were stolen from the exchange.
- According to some reports the cryptocurrency exchange at that point of time handled almost 70% of the total cryptocurrency transactions.
- The hack resulted in the loss of 850,000 Bitcoins, but surprisingly the exchange was able to recuperate 200,000 Bitcoins.
- Nobuaki Kobayashi was later appointed by the exchange in order to giveaway the investor’s investments by selling these Bitcoins.
- Each time he sold a huge amount of Bitcoin in the cryptocurrency market, it would push the price of Bitcoin down which was disregarded by many of the enthusiasts.
- Currently, the main point of interest of the creditors is the rate of Bitcoin. During the time of the cryptocurrency exchange hack, the price of Bitcoin was around $480 per bitcoin.
- But due to the criminal bankruptcy of the exchange, it is mostly estimated that the creditors would be paid back according to the price of Bitcoin at the time of hack but not according to the current Bitcoin price which is around $6,097. There is a significant amount of difference here which is a very crucial factor to be kept in mind.
- Kobayashi once again is appointed as a Civil rehabilitation Trustee for the company. A virtual cryptocurrency exchange, Cryptoground monitors each and every movement of the exchange by keeping a constant track of its billion-dollar worth cryptocurrency wallets.
- But according to the orders of the Tokyo district court, the representatives of Mt Gox had lost the authority to dispose of the assets of the cryptocurrency exchange.
- Any further proceedings in this matter are likely to begin from February 2019.
- The deadline to file proof of claim by the creditors is up to October 22, 2018. This is applicable even to those creditors who had filed for claims during the criminal bankruptcy of the exchange.
- This opportunity can be made use of by the creditors who had failed to file a claim during the criminal bankruptcy. Elaborate details are mentioned in this document from the exchange’s website.
Almost everyone in the Cryptocurrency community believes that the cryptocurrencies have the potential to overthrow Fiat currencies in all the financial fields, but the fact can be denied that the cryptocurrencies after all or nothing but products. It is a unique product which is used to store or transfer value between people. It is our human tendency to assume that any new product that is launched in the market is better than the previous one. Redemption of billions of coins by the creditors, in this case, is highly difficult. The moral hazards of the cryptocurrency space are effectively portrayed due to this cryptocurrency exchange hack.
Sometimes we boast about the decentralized nature of the cryptocurrencies but when it comes to such issues, the enthusiast wishes the cryptocurrency space should have been regulated.
The actual financial sector becomes a preferred option when it comes to claiming any losses since assets in this field are backed up by something, but this is really not the case for cryptocurrencies. When such security breaches occur at any cryptocurrency exchange, it is the customers who have to suffer losses most of the time.