Ungoxxed? Claims to begin

Thursday 23 April 2015

TL;DR: Mt Gox is finally accepting claims from its former customers. Just don’t get your hopes up too high.

It was the single biggest crypto story of 2014, and a stain on the reputation of bitcoin for years to come. The collapse of Mt Gox saw the loss of 850,000 bitcoins worth - at the time - $450 million, though 200,000 were later ‘found’ in a so-called ‘old format’ wallet. At a stroke it changed the landscape for bitcoin, prompting widespread loss of confidence and increased legal and regulatory scrutiny.

Goxxed

Long gone

A recent report has claimed that the missing coins were stolen and sold during a period of time between late 2011 and May 2013, well before MtGox’s final collapse in February 2014. It means that Gox was running a fractional reserve for many months, either unwittingly or (more probably) quite knowingly. The coins were sold on various exchanges, including Gox itself. A silver lining to the report is that the coins are not waiting to be dumped on the market any more - one of the fears of many bitcoin holders and traders.

Now, 14 months later, MtGox’s creditors have finally begun accepting bankruptcy claims, meaning that those who lost coins when the exchange went belly up now have a chance of receiving back at least some of their money - presumably from that part of the 200,000 coins that has not been spent on lawyers’ fees. Full details are available at https://www.mtgox.com/img/pdf/201504_faq_en.pdf

BTC or USD

Former customers have been instructed to log in to their old accounts at https://claims.mtgox.com/, where they can try to claim their money. Kraken will also be managing claims, after being chosen last year by Gox’s creditors for the purpose. It appears that claimants will be able to ask for BTC or USD, though BTC can only be delivered via Kraken. Kraken have promised up to $1 million of free trades for Goxxed customers - a golden opportunity for them to see some increased liquidity and interest in their platform.

Since Gox went bust, bitcoin has been in a downward spiral. On 7 February 2014, when Mt Gox first halted bitcoin withdrawals, the price of one bitcoin was $705. Today it is less than a third of that. Fortunately for customers, money returned to them will be calculated at a price of $483 per coin, plus 6% interest per annum. Unfortunately, no one is going to be making a profit on this one. Customers will only receive a fraction of their original coins, with estimates averaging around 20%. The deadline for claims is May 29.

Mt Gox reminded everyone that bitcoin was still very much in its Wild West phase. The year that has passed since then has seen new and professionally-managed exchanges, and new regulations aimed at protecting customers and managing some of the virtual currency’s worst excesses. The prospect of claiming coins back from the biggest exchange failure in bitcoin history marks the end of that Wild West era. Many bitcoiners will mourn its passing.

Though not the ones who held coins on Gox.


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