Hedge Funds Are Reportedly Racing to Buy Mt Gox Creditor Claims

International hedge funds are said to be moving to purchase claims held by customers of the failed bitcoin exchange Mt Gox.

AccessTimeIconFeb 13, 2017 at 5:35 p.m. UTC
Updated Sep 11, 2021 at 1:05 p.m. UTC
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International hedge funds are said to be moving to purchase claims held by customers of failed bitcoin exchange startup Mt Gox.

The Financial Times reported this morning that as many as four hedge funds are moving to buy claims related to the Japan-based bitcoin firm, seeking a possible windfall should creditors be made whole. 

Documents obtained by CoinDesk indicate that Argo Partners, a New York-based firm that focuses specifically on investing in failing or bankrupt companies, is among those seeking to purchase claims.

Argo Partners did not immediately respond to a request for comment.

That hedge funds would be interested in the claims of Gox customers is perhaps unsurprising.

The process of unwinding the exchange, which collapsed in early 2014, is likely to drag on for years given the slow progress in the creditor process as well as the pending trial of Mt Gox CEO Mark Karpeles, who was released on bail last July.

There's also a wide pool of potential claims sellers to pursue. Creditors have claimed hundreds of millions of dollars in outstanding claims since the exchange entered bankruptcy.

Should global hedge funds become involved in the process, it would offer a new twist on an industry-defining narrative.

Gox, once the world’s largest bitcoin exchange by trade volume, collapsed dramatically following months of growing operational problems. Karpeles was arrested on suspicion of fabricating volume data and was later charged with embezzlement.

The demise of Gox set the stage for much of the regulatory response to bitcoin in the years since, particularly in Japan, which has moved to bring the country’s bitcoin exchange ecosystem under existing financial statutes. Japanese lawmakers have cited Gox’s failure as a key driver in the regulatory push.

Image via Shutterstock

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