Mark Karpeles seeks $ 245 million for the revival of MtGox

Will there be a happy owner of $ 245 million, willing to spend it on restoring the infamous MtGox exchange? Having not yet paid off with lenders who have been waiting for a refund for almost four years, Mark Karpeles, who has grown thin in a Japanese prison, wants to restore the exchange and even hopes for community support. Therefore, without pleading guilty to the charges against him of money laundering and embezzlement, Karpeles stated that the revival of MtGox would help creditors get some of the money lost because of the bankruptcy of the exchange. Otherwise, due to the complexity of the bankruptcy procedure, creditors can hardly hope for early repayments. Karpeles told this in his blog.

As you know, the amount of claims of creditors MtGox was calculated based on the cost of Bitcoins at the time of bankruptcy, which was less than $ 500. Now, when the price of this crypto currency exceeded 8,200 dollars, most of the creditors announced their desire to get profit from the price increase. It is this factor, according to Karpeles, significantly complicates the payment process.

Recall, in July of this year, Karpeles refused to plead guilty to money laundering, embezzlement and involvement in the loss of 850,000 BTC, whose value at the time of the bankruptcy of MtGox was about 400 million dollars.

Usually, capital gains do not allow you to cover all claims for bankruptcy cases, Karpeles notes in his blog. However, the case of MtGox is unique, since the estimated value of the surviving assets is much larger than the amount of debt.

Recall that after the announcement of bankruptcy Karpeles "accidentally found" a purse with 200,000 BTC, which now cost more than 1.6 billion dollars! If the decision to assess the debt will not be revised, then proceeding from the above amount, even after paying all the money for claims, Mark Karpeles will remain a dollar billionaire!

Do not forget also about the large lawsuit filed against MtGox by CoinLab, the amount of which is 75 million US dollars. Most likely, the claim will be submitted to the court and appealed, and this process, according to Karpeles, will take another two to ten years.

Creditors are seeking several things from the bankruptcy that make resolution impossible, Karpeles added.

For one, capital gains have not yet been realized. With Bitcoin's volatility, the 202,000 BTC MtGox held could be worth 10 times more or that much less tomorrow. The way the liquidator sells the Bitcoins could affect the market and drive down the price, fetching only a portion of the current market value.

The trustee, being aware of this fact, has not included Bitcoin value in company assets, listing the value as a separate entry, in addition to Bitcoin Cash.

Another issue is that bankruptcy law does not recognize post bankruptcy capital gains by the bankrupt as a liability, Karpeles noted. The claims are calculated from the liabilities at the beginning of the bankruptcy, and get converted to JPY. Claims are then static to allow the liquidator to do a distribution so creditors can have an accurate idea of how much of their claim can be paid.

The expected repayment rate as of the last creditors meeting was 2.66% (assets/claims), but that is subject to change depending on the realization of profits from Bitcoins held, Karpeles noted, and depending on claims still being assessed.

Distributing pro-rata Bitcoins to creditors is complex, Karpeles claimed.

There is the CoinLab lawsuit asserting a $75 million claim against MtGox that will act against anything that undermines the claim. CoinLab will have the benefit of any doubt until the suit completes.

In addition, MtGox creditors would have to cooperate more than they have. They are currently working in different directions.

Karpeles said the most obvious goal would be to revive MtGox through Japanese civil rehabilitation, providing new management in addition, ownership. The solution would be similar to the Bitfinex solution, where liabilities were covered by tokens issued to creditors that can be cashed out at any time based on current liabilities.

Such a solution allows those who failed to file a claim to get something, Karpeles said.

MtGox would only need a new management team of three directors, at least one being Japanese, and $245 million needed for expenses. Karpeles offered a breakdown of the expenses on his blog.

It would not be feasible to use part of the 202,000 held by MtGox as the plan would never get through all the obstacles needed for approval, Karpeles claimed.