MtGox Legal, October update, and Creditor Committee

I am constantly being asked about what I think of the MtGox Legal group. I have been sharing information with the group and I explained my position in a post on their forum a while back. As much as I’d like to be part of it in some way, I can only give limited support to something like this because it potentially puts the needs of the few above the needs of the many. MtGoxProtest.com has always been about the creditors as a whole (although it’s probably weighted slightly towards bitcoin creditors).

I think we should be investigating as many legal avenues as possible, and it’ll be very interesting to hear what their lawyer comes up with because it may be something which helps us all. But my issue is that the group has said it will be taking the path of most benefit to the paying members, and right now the greatest danger in the bankruptcy is if we move in separate directions. So I worry about what is going to happen if the group’s lawyer’s recommendation is something which doesn’t benefit everyone. His incentivisation is towards helping the group specifically and that in itself could be dangerous because it might be an easier task.

I mentioned in my last post that the most important thing now is that we all work together. The best way to serve our own interests is to work towards everyone’s interests. If we slide (maybe unconsciously) into a “me first” culture we will end up fractured and could destroy any chance we have of solving the main issue(s). Information or idea sharing could become strained because those who have important information/ideas may not want to share it when others might ultimately end up using it against them. I feel this bankruptcy situation is like the Prisoners’ Dilemma in game theory, where different factions might be inclined to do their own thing to maximise their interests but in fact they may only be moving themselves away from the best possible solution.

That brings me to what I’ve been doing since 2 or 3 weeks ago. Following on from my last post, I believe the best possible way forward is to build a universal creditor committee which represents the interests of every creditor, including bitcoin and fiat creditors. I’ve been working towards this goal almost full-time, and there are other well-known names now involved in it.

If we can manage to get a committee formalised and approved, we will wield a significant degree of influence over the bankruptcy. The main thing which is hobbling the creditors right now is that any proposal to the court, or to the trustee, which deals with the bitcoin surplus is likely to be thrown out. That’s partly because there will likely be a set of creditors (or shareholders) who will be disadvantaged by it. If the proposal is part of a wider effort which considers all creditor interests, and there’s committee backing to prove it, it would become difficult to throw out on the basis that it goes against the interests of other creditors. Bankruptcy law is vague enough that novel approaches can be tried without going against the letter of the law, and if we can remove the main barrier which is stopping us from doing this then we give ourselves a reasonable chance.

This is something which has never been done before in Japan, and we have our work cut out for us because getting support from the required creditor majority (around 12,500 people) will be quite a logistical problem. And the court representative has told us that it will be difficult to fulfil the legal requirements because they will only allow a committee which can demonstrate it is truly working on behalf of everyone.
However I believe it’s possible to accomodate the interests of all creditors when there is so much “surplus” money at stake. We are still working thorough the details of how this could be done.
The entry barrier to supporting the committee is being kept down by having no joining fee and by making it as easy as possible to sign up. Built into the committee will be a constitution which guarantees it operates in the manner expected, and of course anyone can opt out of supporting it at any point. Joining a legal action group will not affect your ability to support a creditors’ committee, so you don’t need to worry about making a choice between the two.

More on this soon.

5 thoughts on “MtGox Legal, October update, and Creditor Committee

  1. […] and approved, we will wield a significant degree of influence over the bankruptcy,” Burges wrote on October 18. “The main thing which is hobbling the creditors right now is that any proposal […]

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