Mt. Gox was one of the biggest names in the crypto industry and as it was the largest bitcoin exchange in the world and handled more than 70% of total bitcoin transactions worldwide at the beginning of 2014. Its filing for bankruptcy by the end of February 2014 due to a hack is also considered one of the biggest hacks in the history of Cryptocurrencies.
On 7th February 2014, Mt. Gox ceased all bitcoin withdrawals and by 24th February it suspended trading and the website went offline. It was later reported that it had succumbed to a hack and had lost 744,408 bitcoins which belonged to all its customers. On 28th February it filed for bankruptcy both in USA and Japan. Investigations revealed that this was due to a leak in their hot wallet, but many believe this to be an inside job.
A lot of people lost all their money over this hack and improper upper-level management. On August 2018, the victims finally glanced at a ray of hope when Mt. Gox bankruptcy trustee Nobuaki Kobayashi started the rehabilitation process which claimed that the victims have a couple of months to file themselves to recover their lost funds. Since then the process has hit a lot of roadblocks. Kobayashi had raised $230 million by selling huge chunks of crypto in September 2018, but this wasn’t close enough to cover the $7.65 billion loss. This set back the process over another year.
Recovery in 2020
On April 2019, Mt. Gox started to make some tweaks to the civil rehabilitation plan for the victims, which in turn allowed more victims to be enrolled even after the filing deadline was over. This time Kobayashi automatically enrolled victims by using their KYC information. The deadline to compensate victims was set for October 28th 2019.
A recent announcement states that the deadline has been postponed. Kobayashi announced on October 28 that the plan to compensate customers have been extended to March 31, 2020. The Tokyo district court has agreed to his request of extending the deadline right as it was close to expiring.
The announcement mentioned:
“It is not possible at this moment to make appropriate provisions in a rehabilitation plan on modifications of the rights of the rehabilitation claims, repayment methods, and appropriate measures for the undetermined rehabilitation claims, and, accordingly, it is not practically possible to have meaningful discussions with relevant parties about repayment methods. Therefore it is not possible to submit a rehabilitation plan by October 28, 2019”