Quick summary of the problem – our bitcoins were valued by the trustee at approximately $483 at the start of the bankruptcy but are now worth an order of magnitude more. This means that the MtGox administrators can sell our 200,000 bitcoins, pay us a fraction of the money from the sale, and regard our claims as having been paid in full. The rest of our money may go to the parent company Tibanne, meaning the Tibanne shareholders Mark Karpeles and Jed McCaleb would be the beneficiaries. Karpeles claims he doesn’t want the money because of the personal lawsuits it would attract, but says has no power over the process.
The lawyers were initially upbeat about the prospects of the creditors receiving the full value from their sold 200k bitcoins. But after more investigation their advice is now that it looks like the bitcoin creditors could be paid only the original valuation amount at around $483 per bitcoin, and the value above that would be passed into the company liquidation. Liquidation is performed under corporate law rather than bankruptcy law, and the remaining money in the company would go to the shareholders. They don’t currently know of a way to avoid this situation. This is not good news.
Please note that the rest of this post is my personal opinion and not necessarily that of the lawyers.
The thoughts and plans of the bankruptcy trustee are as yet unknown. He may be able to perform actions which can change this. Give his stature and the uniqueness of a bitcoin bankruptcy, his suggestions hold a deep influence over the bankruptcy court. They must always comply with the letter of the law, but laws are often not clear-cut when applied to particular contexts – especially one as unprecedented as MtGox. And so there could be scope for either movement within the bounds of the law or for varying interpretations of the law.
The trustee’s responsibility is to maximise return to creditors in a manner which is fair and in the interests of justice. If the creditors’ money passed to the shareholders it would be neither fair nor in the interests of justice. The question is how able and willing he is to achieve this within the constraints of the law.
The lawyers have advised that the best way to discuss this situation with the trustee is to ask at the upcoming creditor meeting on 27th September. I’ll be at the meeting to ask that and other questions, and will be providing a report here.
Having been to these creditor meetings before, I expect we won’t get a significant answer on this. The meaty questions are rarely answered. Creditors come out of that meeting looking about as satisfied as a Bitcoin Core member who’s wife just sold all his bitcoins for BCH.
If we don’t get a resoundingly positive and clear answer at the meeting, I’ll regard this bankruptcy and our money as being in a critical state of emergency. At that point I think it should be a major concern for everyone who wants their bitcoins back.
I’ve been making plans for if this happens. I’ll be spending at least the next 2 months working on this full-time and longer if necessary.
For what it’s worth I believe the situation can be resolved, but it may only be possible if we are all willing to push hard enough for it.
Let’s see what happens at the creditors’ meeting.