Mt. Gox Creditors' Meeting Delivers Few Answers and One Apology

Mt. Gox's bankruptcy trustee and CEO Mark Karpeles faced creditors for the first time today, but many answers remain.

AccessTimeIconJul 23, 2014 at 10:17 a.m. UTC
Updated Mar 6, 2023 at 3:25 p.m. UTC

Today's long-anticipated meeting between Mt. Gox bankruptcy trustee Nobuaki Kobayashi and creditors from the defunct exchange provided several revelations, but left many more questions unanswered.

At the Tokyo meeting Kobayashi disclosed he would consider distributing the exchange's remaining funds as bitcoin, not Japan's native yen. He also revealed plans to meet with potential purchasers of Mt. Gox's remaining assets.

Over 100 creditors, the large majority of whom were Japanese, filed into the meeting room of Tokyo's District Court to hear Kobayashi speak live on the matter for the first time.

Kobayashi spent 25 minutes running through the details of the case, followed by a question-and-answer session that continued for another 90 minutes. All proceedings were in Japanese, with non-Japanese attendees told to provide their own interpreters.

The court did, however, provide a written English summary of Kobayashi's update.

The apology

CEO Mark Karpeles was also present, sitting front and center. Occasionally glancing up from his desk, he remained silent other than to deliver a brief apology at the request of a creditor.

As well as his impromptu courtroom mea culpa, Karpeles also made a longer apology to Japan's Asahi Shimbun. Karpeles told the newspaper he wanted to use any future profits from Mt. Gox's parent company Tibanne to pay the exchange's creditors.

This was actually a suggestion made by creditors present in the meeting, who were also presented with an itemized list of unpaid loans from Mt. Gox to Tibanne and its other affiliate entities including the Bitcoin Cafe, which totalled ¥1.17bn ($11.54m).

Some rays of hope

Regarding the remaining 200,000 bitcoins, Kobayashi said several people had approached him to ask if they could be distributed to creditors as bitcoins. While he couldn't give any guarantees, he said he would attempt to do this if it were legally possible.

He asked attendees who preferred bitcoin to raise their hands. About 70-80% of the crowd did so, prompting applause – the only outbreak of emotion in the courtroom during the session.

Kobayashi also stated he would be meeting with parties interested in purchasing Mt. Gox's remaining assets in the hope of continuing the business somehow. He would meet each group individually and assess each bid on its merits, including whether they had previous involvement with bitcoin or not.

He did not, however, present any deadline or formal timeframe in which this could happen.

 TV crews gather outside the Mt. Gox creditors' meeting
TV crews gather outside the Mt. Gox creditors' meeting

What happened to the bitcoins?

Of particular interest to the creditors was the investigation, or lack thereof, into the disappearance of roughly 850,000 BTC from Mt. Gox's reserves that drove the company into bankruptcy.

Throughout the procedings Kobayashi and the court gave little impression of understanding bitcoin, nor its workings and related issues. The answers "that's still under investigation" or "that's confidential" were frequent responses to bitcoin-related questions.

Another recurrent answer was that the court could not reveal any information capable of jeopardizing the investigation or increasing risk for parties involved – which seemed to include any information regarding Mt. Gox's missing or present bitcoins.

One attendee asked why, given bitcoin's public ledger, a forensic analysis could not reveal more about February's supposed heist.

Another asked why Kobayashi had retained two accounting firms, Deloitte Touche Tohmatsu and ReEx Accounting, to investigate the disappearance rather than deploying the kind of computer security resources available to the FBI or Interpol.

Both questions were met with the response "it's still under investigation". Both accounting firms had been chosen for their reputable statuses in the field, Kobayashi said.

 Upon exiting, creditors were approached by TV news crews
Upon exiting, creditors were approached by TV news crews

Reactions from creditors

After the meeting, most creditors expressed a general dissatisfaction with the way the court was investigating the disappearance of Mt. Gox's funds and disseminating information to those who lost money – particularly the large majority of customers who reside outside Japan.

Kolin Burges, a creditor who famously stood in the snow outside Gox's office to protest the company's freezing of customer funds in February, said he was "very very disappointed" with the investigation's slow progress and remained suspicious of amounts loaned and invoiced to other companies under the control of Mark Karpeles.

He said:

"What about the fiat money that disappeared in March? It seems like they haven't done anything. With the bitcoins, they won't even give us the address."

Some were relieved that the court would not be liquidating the company and selling its remaining funds on the open market.

Daniel Kelman, a lawyer involved with the new BitOcean bid to buy Gox's assets and continue the business in the interests of creditors, told CoinDesk:

"We want the bitcoins distributed as bitcoins. Also he (Kobayashi) wants to talk to creditors, and that's good. If not, we should be forming a creditors' committee."
 All participants were hastily escorted out of court and off the property
All participants were hastily escorted out of court and off the property

Reactions from international visitors

Ben Kraus, a bitcoin miner who traveled from Thailand to attend the meeting, said he was disappointed by the lack of a translator, and that he'd "naively expected they'd cater a bit more to the English speakers".

He remained positive however, adding:

"I think we share everyone's happiness that they're not just selling the bitcoins [...] it could be a good sign, if we get some of them back five years down the road."

Sylvain Goupil, a creditor who had traveled from France but spoke Japanese, demanded a more open investigation into the missing bitcoins.

He asked:

"Who will represent us? Will the police continue to investigate? If something is found later, or if there's a leak, can we still find out? Should the Bitcoin Foundation volunteer to represent us? At the very least, we should know the bitcoin addresses. What are the police even doing?"

"If we'd had the information in time, maybe we could have looked at other exchanges, maybe identified the flow of money before it was all lost."

Georg, a creditor who came from Germany for the meeting, told CoinDesk he had the misfortune of being sick the week Mt Gox closed, preventing him from withdrawing his funds as planned.

Having predicted bitcoin's bubbles and traded skillfully to build his nest egg, like many others Georg is now cut off from his funds. Describing the amount he lost on Mt. Gox, he revealed it was: "A lot. Not something you can just earn back."


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