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The leader of the largest group of organized creditors representing former users of the failed bitcoin exchange, Mt Gox, resigns amid what he has described as an extended legal quagmire that could take years to fully resolve.
Andy Pag, founder and coordinator of Mt. Gox Legal told CoinDesk in an exclusive interview this week that he was now convinced of ongoing legal issues, particularly a mbadive claim from a start-up incubator and the company. old mount. Coinlab, a Gox partner, can suspend Crypto Exchange's civil rehabilitation process for up to two years.
Pag, who started the mountain. Gox Legal, about 18 months ago, with the intention of pleading for the repayment of creditors, first revealed his opinion on the timeline expected in a private message released last week by CoinDesk, which announced to the creditors that he would leave his position of coordinator. at the end of the month.
The view presented in the letter (attached below in full) contradicts the more optimistic badessments that creditors could be paid by the end of 2019.
Gox, which was once the largest cryptographic exchange in the world, went bankrupt in 2014, soon after its operators discovered that some 850,000 bitcoins had been stolen from its portfolios. Some of these funds were later recovered, but the exchange has never been.
However, in part because of the mbadive price hike between 2014 and 2017, Mt Gox has gone from a bankruptcy proceeding to an ongoing civil rehabilitation process.
The fact that this happened is significant: in a bankruptcy proceeding, the clients of the stock exchange would receive the fiat equivalent to their badets at the time of the Mt Gox bankruptcy. In civil rehabilitation, customers will instead receive the amount lost in bitcoins.
When the Tokyo District Court, which oversees the case, announced for the first time that Mount Gox would enter civil rehabilitation last June, the claimants expected to receive their missing bitcoin as early as this year. Coinlab's claim, however, has since put this date in jeopardy.
Now it seems that creditors have had trouble self-organizing to get a refund.
Legal Slugfest
Coinlab, which was supported by Tim Draper, Barry Silbert and Roger Ver (among others), entered into a partnership with Mt. Gox in 2012 to essentially play the role of the US Stock Exchange branch. However, Coinlab sued Mt Gox in 2013, alleging that the stock exchange had not complied with the agreement and claiming $ 75 million.
Mt. Gox then sued, claiming that it was Coinlab who had violated their agreement. No cases were resolved before Mt. Gox's bankruptcy filing, although Coinlab argued against the exchange at the time of filing.
"Originally, Coinlab had filed a bankruptcy claim amounting to $ 75 million, which people found excessive … When we went to civil rehabilitation, everyone filed a new complaint, but Coinlab has deposited $ 16 billion, "explained Pag.
Edgar Sargent, an American lawyer from Coinlab, told CoinDesk that he could not talk about the amount paid in Japan and that he was not sufficiently familiar with Japanese law or court proceedings to discuss of the case. The Japanese lawyers of Coinlab could not be contacted for comment. The founder of Coinlab, Peter Vessenes, did not respond to a request for comment.
The first problem arises from the fact that Mount Gox's agent, Nobuaki Kobayashi, normally grants creditors the right to vote according to the size of their participation. This can not happen with Coinlab before the claim is badessed.
Pag explained:
"Because it is pending and still subject to controversy, the trustee can not grant equitable voting rights if it is accepted or a void vote if it is rejected, but .. . until [resolved] the trustee can not give them the right to vote … it looks like it's blocked. "
The bankruptcy judge could take several months to a year to badess the claim. If Coinlab's claim is rejected, the company can sue it, which would take another year. If the court rejects Coinlab's claim, the company can then appeal, which will also take some time.
In total, Pag believes that the settlement of a credible claim by Coinlab can take between 18 and 24 months.
Once this is resolved, creditors can only then vote on a civil rehabilitation plan (and there is always a chance that there are competing plans). Depending on the outcome, the potential payment to creditors will also be radically different.
"We have started this process, but it is not finished and it is not confirmed We have not confirmed that we are in civil rehabilitation until the creditors have voted for a civil rehabilitation plan" said Pag.
Coinlab's claim
In general, Sargent told CoinDesk that Coinlab's complaint came from a "good claim", adding that "it's not just something we've invented".
He confirmed to CoinDesk that he had attended a brief AMA on Reddit a few weeks ago, where he had noted that Mount. Gox did not get a dismissal when Coinlab filed a lawsuit against the exchange, which could have been done "if the case was frivolous".
In an email, however, Mark Karpeles, former CEO of Mt Gox, told CoinDesk that Coinlab had done "almost zero" work for the exchange.
"The courts are likely to look into the case of CoinLab with some urgency today and will probably try to fix things quickly, but CoinLab probably has no interest in carrying forward a battle lost in advance and will probably try to extend the process as much as possible. possible, "he said.
Coinlab is currently in a strong position, "because they are holding the entire Mt Gox distribution process hostage," although the company can quickly end the situation by signing an agreement. If a settlement is signed quickly, the distribution of bitcoins can begin by the end of 2019.
It may also be the plan. According to Pag, "many creditors feel that it is a very conscious strategy to try to impose a regulation on the trustee. Most creditors do not want them to receive a penny. "
Although Pag and his lawyer tried to contact the law firm Wada, who represents Coinlab in Japan, none of them received a response.
Hibernation
In the words of Pag, Gox Legal is the largest group of creditors for Mt Gox. There are currently more than 1,000 members claiming more than 150,000 bitcoins, or about 15% of the total value of creditors.
The group was founded in the fall of 2017 to advocate for the pbadage from bankruptcy to civil rehabilitation at Mt Gox.
"It started about 18 months ago when it became clear that the price of bitcoin was rising and that the badets of Mt Gox's agent were going to be more than the liabilities," Pag said. "The best Japanese lawyers are very expensive, so [we pooled together]. "
Gox Legal has filed a Change Request, possibly establishing a number of legal precedents in Japan. Pag explained that in such a transition, a business typically does not go from bankruptcy to civil rehabilitation, adding:
"It gives enough strength to the legal entity so that you can distribute badets without restarting it as a business."
Pag is currently the coordinator of the group, his activities being supervised by a board of directors. In the past 18 months, he has traveled to Japan several times to communicate with Kobayashi and gather updates for group members.
"We are a very important group of creditors and we have spent time building relationships with all the players, the custodian, other groups of creditors. [and] law firms, "he said.
At the end of April, he will retire.
"As the price of bitcoin goes up, so do the vultures around it. My personal concern is that we are just going to get bogged down in litigation, "he said. "For me personally, and it's a personal decision, it makes more sense to sell my claim."
Mt. Gox Legal's board has already begun the process to replace it by opening nominations for the position of new coordinator. If a new coordinator has not been confirmed yet, Pag hopes the group will probably hibernate, as there will be little to do until the legal demands are resolved.
To move on
Rather than waiting for the legal system to determine if Coinlab has a legitimate claim, Pag said he intended to sell his claim, leaving Mount. Gox Legal and move on.
"I put my career on hold for 18 months and … It's just a big regret that we've been a bit overwhelmed by other parties," he said.
"In 2014, I had this money at my disposal and it was this tremendous unexpected benefit. It was amazing and I had all those plans I was going to put up with that money. It's not losing money that stung, but losing those plans and not being able to do the things I wanted to do, and there's a bit of repetition here. "
A New York-based investment firm will buy Pag's claim at $ 600 per bitcoin. Although he refused to name the firm, Pag added that if other creditors had approached, he would be happy to put them in touch.
"This is not the windfall that I hoped for, but it is still a windfall and it is a windfall today," he said.
Pag said that he had witnessed negative reactions to this decision, which he understands. However, "it's a really personal decision that everyone has to take for themselves," he added.
He does not recommend to other creditors to sell or not to sell, added Pag, noting that many creditors have a common identity born from the struggle to recover the missing coins.
That being said:
"I had to ask myself what is my position on the principle? When I say enough, that's enough. Do I want to be right or do I want to be happy? I decided that I would prefer to be happy and continue my life. "
Andy Pag from Scribd
Image Gox via Shutterstock
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