Mt. Gox commences bankruptcy proceedings [pdf](mtgox.com)
mtgox.com
Mt. Gox commences bankruptcy proceedings [pdf]
https://www.mtgox.com/img/pdf/20140424_announce_qa_en.pdf
46 comments
> This is the easy way out for them.
As far as I understand they wanted to restructure but they are not being allowed to by the court. The first line[1] in the doc essentially says this. This happens when the court doesn't think there is hope for rehab, which is not surprising in Mt.Gox case.
[1] "At 5 p.m. on April 24, 2014, the Tokyo Distri ct Court issued an order of commencement of the bankruptcy proceedings for MtGox Co., Ltd."
As far as I understand they wanted to restructure but they are not being allowed to by the court. The first line[1] in the doc essentially says this. This happens when the court doesn't think there is hope for rehab, which is not surprising in Mt.Gox case.
[1] "At 5 p.m. on April 24, 2014, the Tokyo Distri ct Court issued an order of commencement of the bankruptcy proceedings for MtGox Co., Ltd."
That doesn't make sense. Due to the nature of bitcoin we might actually be able to know where the coins went. what do you mean by nature of Bitcoin? if someone steals yoir wallet, then due to the nature of your physical wallet we will never 100% be certain where it went. Due to the nature of Bitcoin there is a trace left in the blockchain.
People keep saying that, and one would think that if it were that simple, and enough people lost money/BTC on the MtGox debacle, then someone would have gone hunting for it, and found it.
I have read no report, so if it hasn't happened yet, why should I believe it will happen?
I have read no report, so if it hasn't happened yet, why should I believe it will happen?
It is that simple once you know all of MtGox addresses and transactions. But I doubt you will ever get that information, I even tend to doubt MtGox that MtGox has this information itself.
No it isn't that simple, because a 1BTC on a MTGox account isn't the same thing as 1BTC on the blockchain, if it were then Gox wouldn't have collapsed the way it did.
MtGox internals don't matter for tracing the lost coins. You need to know all addresses owned by MtGox, then you also know all the coins deposited to MtGox, and you need the list of legitimate withdraws. Then you can just look what happened to the coins not legitimately withdrawn.
Well, they likely want to turn the bitcoin assets still left in cash.
But wouldn't a 150k BTC dump on the biggest exchanges literally obliterate the exchange rates, as well as massively devaluate the assets?
But wouldn't a 150k BTC dump on the biggest exchanges literally obliterate the exchange rates, as well as massively devaluate the assets?
Only if the liquidation trustee is an idiot, and courts try to avoid appointing idiots to that position.
The concept of suddenly dumping too much "X" on the marketplace is so well known I wouldn't expect this to happen in this context (compared to, e.g., some of the stunts the Congress pulled in the jihad against "junk" bonds and/or trying to "fix" the S&L crisis).
The concept of suddenly dumping too much "X" on the marketplace is so well known I wouldn't expect this to happen in this context (compared to, e.g., some of the stunts the Congress pulled in the jihad against "junk" bonds and/or trying to "fix" the S&L crisis).
it would totally wipe the order books of all the major exchanges. Hopefully they will be sold privately.
I had 2 BTC and $6000 USD in mtgox.Will I be getting them back after the bankruptcy proceedings? Please someone explain me clearly.!
Basically what happens under bankruptcy is the trustee sells all the assets of the business. From that revenue, the trustee pays any costs related to the administration of the bankruptcy proceeding, whats left over gets distributed to the creditors.
Thanks. Creditors means Mtgox users like me who had BTC and currencies in mtgox? What if the trustee couldn't make an enough revenue to pay all the mtgox users?
Yes, Creditors are people who Mtgox owes money (you've extended a line of credit of X bitcoins or fiat to them). This is really not a what if. The whole purpose of bankruptcy is because the entity can meet all its financial obligations, if the trustee could make enough revenue to pay all the users than company assets (bitcoins in wallet) would equal company liabilities (bitcoins that belong to users).
After all the stuff is sold, and expenses related to the administration of bankruptcy proceeding is paid, the remaining funds is distributed in an order of priority to the creditors (so back wages normally have priority to other liability). Assuming all users are in the same priority level, it would be a safe judgement to assume that each user would get a percentage of the remaining funds = user's number of bitcoins / total number of user bitcoins.
This is how it works in the US at least, I'm not versed with Japanese bankruptcy protection laws but assuming its similar, you'd be lucky to get a portion of the money you're owed. If I recall correctly, they owed about 700,000 in btc and they found 200,000, assuming no other assets / liabilities / expenses you'd get 28% of your btc/fiat back.
Sir,Thank you so much for the taking your time to make a better explanation.! I really hope I could get back at least 50% of what I lost with Mtgox.!!
The pot is divided up proportionally to how much each person is owed, so everyone gets a fair share.
So you get $1 for every $5 you are owed for example.
So you get $1 for every $5 you are owed for example.
This is not necessarily true. Bankruptcy proceedings are complicated, but some creditors may have a legal preference - that means they get paid their debt in full, and everybody else then evenly shares what is left.
The government is usually entitled to this sort of treatment - the company's tax bill and fines will likely have to be paid in full before everything else is shared out. But this is being conducted under the bankruptcy laws of Japan, which I know nothing about. Ask a lawyer if you want to know.
The government is usually entitled to this sort of treatment - the company's tax bill and fines will likely have to be paid in full before everything else is shared out. But this is being conducted under the bankruptcy laws of Japan, which I know nothing about. Ask a lawyer if you want to know.
Not in the UK in General, the Government lost it's preferential creditor status several years ago.
The result of which is that they chase their debts a lot quicker and a lot harder than they did before.
I too know nothing of Japanese bankruptcy laws.
The result of which is that they chase their debts a lot quicker and a lot harder than they did before.
I too know nothing of Japanese bankruptcy laws.
Unlikely. Some assets will probably be distributed to depositors, but chances are you'll get less than 10% if anything.
well, the BTCs are stole, but what about the MONEY (USD) every users had in mtgox? Won't they be paying it back?
In my experience a lot gets swallowed up my the trustees fees, and by lawyers chasing debts.
Although in this case I can't see what debts might need to be chased.
Although in this case I can't see what debts might need to be chased.
Well, let's wait and hear it from Mtgox truste. I am gradually losing my hope.! :(
Well, let's wait and hear from Mtgox Trustee. I am losing my hope.! :(
Almost certainly not.
So does it mean my 20 btc is permanently gone?
Gone? Probably not. In the possession of someone who will not give them to you? Probably.
Gone sounds so permanent, they're somewhere, will you be getting them back? Probably not. At most you might get ((sum of MtGox assets sold at liquidation prices) - (amount owed to non users, past due bills, etc))/(number of bitcoins they owe their users) * 20. Read: Not much
You gave control of "digital cash" to a fly by night internet company. What were you expecting to happen?
Bankruptcy should mean that the individual(s) responsible for the debt need to be held liable for it indefinitely. Regardless if there is a corporation/LLC/company between the responsible individuals and the people that lost their money.
As an example, the responsible individuals of Mt.Gox would need to come up with a repayment plan for every single penny/bitcoin that they still owe. The fact that it was "stolen" from them is irrelevant, as the users entrusted the safekeeping of their money/bitcoin to MtGox. If that means that they will continually have X% of their yearly incomes divied up amongst the users, then so be it. And this will continue indefinitely until the debt has been repaid.
Sadly, this sort of solution to the problem would never be instituted in our society. Precisely because it exposes flaws in our concept of the relation between debt and slavery. In essence, it would put the individuals responsible for the fraud in a sort of indentured servitude until the debt has been settled.
It does sound like quite a scary proposition, I'll be honest. As it's something completely alien to what we're accustomed to when it comes to debt/bankruptcy. But I assure you, if this were ever instituted, and a few individuals got bitten by it: Society as a whole will grow in a much safer direction, both with more security precautions when debt is involved, and with insurance to cover losses such as this. All that, without state intervention/bailout.
As an example, the responsible individuals of Mt.Gox would need to come up with a repayment plan for every single penny/bitcoin that they still owe. The fact that it was "stolen" from them is irrelevant, as the users entrusted the safekeeping of their money/bitcoin to MtGox. If that means that they will continually have X% of their yearly incomes divied up amongst the users, then so be it. And this will continue indefinitely until the debt has been repaid.
Sadly, this sort of solution to the problem would never be instituted in our society. Precisely because it exposes flaws in our concept of the relation between debt and slavery. In essence, it would put the individuals responsible for the fraud in a sort of indentured servitude until the debt has been settled.
It does sound like quite a scary proposition, I'll be honest. As it's something completely alien to what we're accustomed to when it comes to debt/bankruptcy. But I assure you, if this were ever instituted, and a few individuals got bitten by it: Society as a whole will grow in a much safer direction, both with more security precautions when debt is involved, and with insurance to cover losses such as this. All that, without state intervention/bailout.
The entire concept of the company was created for Limited Liability. Without that you are basically just a partnership.
You need limited liability or investment becomes a very risky prospect. Imagine investing to get a 10% stake in a startup company and they end up getting sued because they violate some patent accidentally?
The current situation all comes down to intent. The way it's supposed to work is that if someone was actually negligent in their duty, then, and only then, do they become personally liable.
You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?
My point is that shit happens in business, debts can be created in unexpected ways and sometimes those debts can be far in excess of what was invested. It's not really reasonable to expect shareholders to be personally liable come what may.
You need limited liability or investment becomes a very risky prospect. Imagine investing to get a 10% stake in a startup company and they end up getting sued because they violate some patent accidentally?
The current situation all comes down to intent. The way it's supposed to work is that if someone was actually negligent in their duty, then, and only then, do they become personally liable.
You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?
My point is that shit happens in business, debts can be created in unexpected ways and sometimes those debts can be far in excess of what was invested. It's not really reasonable to expect shareholders to be personally liable come what may.
I agree that the concept of limited liability is critical to modern capitalism and entrepreneurship, but I think you may be mistaken about the history of companies.
The concept of corporations is based on a legal identity that is separate from any individual. Incorporation historically was a rare grant at the behest of the ruling monarch. This dates back to the Roman Emperors, who granted incorporation to municipalities, guilds, and religious groups. However, these corporations are distinct from what we would consider a company today. The typical business did not have access to incorporation.
Several of the oldest known companies, dating back to the 6th century, were Japanese companies that were family-owned, and were not legally limited in liability. The concept of joint-stock companies is based on transferable shares, and dates back to at least the 13th century. Limited liability was not really a legal concept (separate from royal charters) until the 19th century. The first joint-stock companies in England were unlimited liability, and the public was very much opposed to the concept of liability limitation. However, many joint-stock companies wrote liability limitation clauses in contracts with creditors, and these were considered legally enforceable. In the second half of the 19th century, most European and US states had adopted limited liability laws. Limited liability is a modern concept that has not existed for most of the history of companies.
The concept of corporations is based on a legal identity that is separate from any individual. Incorporation historically was a rare grant at the behest of the ruling monarch. This dates back to the Roman Emperors, who granted incorporation to municipalities, guilds, and religious groups. However, these corporations are distinct from what we would consider a company today. The typical business did not have access to incorporation.
Several of the oldest known companies, dating back to the 6th century, were Japanese companies that were family-owned, and were not legally limited in liability. The concept of joint-stock companies is based on transferable shares, and dates back to at least the 13th century. Limited liability was not really a legal concept (separate from royal charters) until the 19th century. The first joint-stock companies in England were unlimited liability, and the public was very much opposed to the concept of liability limitation. However, many joint-stock companies wrote liability limitation clauses in contracts with creditors, and these were considered legally enforceable. In the second half of the 19th century, most European and US states had adopted limited liability laws. Limited liability is a modern concept that has not existed for most of the history of companies.
"You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?"
Well, that all depends on what sort of agreement I had with the institution in question. This is precisely the sort of thing that insurance is supposed to fix. If the owners failed to get insurance to cover whatever agreement they went in to, then yes, they should be held fully liable for the losses.
Well, that all depends on what sort of agreement I had with the institution in question. This is precisely the sort of thing that insurance is supposed to fix. If the owners failed to get insurance to cover whatever agreement they went in to, then yes, they should be held fully liable for the losses.
>this sort of solution to the problem would never be instituted in our society. Precisely because it exposes flaws in our concept of the relation between debt and slavery.
Exactly. We have decided that you can't be placed into involuntary servitude without criminal charges being brought against you, due process, etc... I think this is a good thing.
Personal bankruptcy is an essential check on "freedom of contract" I think. Sort of how you aren't allowed to sign yourself into slavery.
Aside from giving someone who really screwed up a second chance, personal bankruptcy places some of the risk of a poorly considered loan on the creditor, which is fair, I think.
That said, we do need to be careful that corporate bankruptcy doesn't protect decision makers from criminal liability for their own actions. There are certainly some problems with the current implementation, but bankruptcy was never intended to protect you from criminal acts, fraud or otherwise.
But personal bankruptcy is essential, as you imply, because most of us feel that indentured servitude is enough like slavery that we don't want it in our society.
Exactly. We have decided that you can't be placed into involuntary servitude without criminal charges being brought against you, due process, etc... I think this is a good thing.
Personal bankruptcy is an essential check on "freedom of contract" I think. Sort of how you aren't allowed to sign yourself into slavery.
Aside from giving someone who really screwed up a second chance, personal bankruptcy places some of the risk of a poorly considered loan on the creditor, which is fair, I think.
That said, we do need to be careful that corporate bankruptcy doesn't protect decision makers from criminal liability for their own actions. There are certainly some problems with the current implementation, but bankruptcy was never intended to protect you from criminal acts, fraud or otherwise.
But personal bankruptcy is essential, as you imply, because most of us feel that indentured servitude is enough like slavery that we don't want it in our society.
Commercial banks prior to the 1930s commonly issued assessable stock to their directors and officers -- a form of stock that allowed the corporation to levy the stockholder for additional funds. The liability of the shareholder was therefore not limited to their investment in the shares. With the passage of Glass-Steagall, which established the FDIC, this form of organization fell out of favor as it was assumed that commercial banks were safe and it was no longer needed.
Investment banks continued to be run as unlimited liability partnerships until the 1980s. The partners were personally responsible for all debts incurred by the bank, and unsurprisingly, the banks were very conservatively run. Goldman Sachs, one of the most conservative firms, retained this structure until 1999. What changed was that the NYSE altered its rules to allow public companies to be member firms, and the investment banks decided to go public, converting to C-corps and listing their shares on the stock exchanges. The side effect of these two changes was that the investment banks began engaging in riskier behavior, which almost certainly contributed to the financial crisis of 2008. Post-crisis, the introduction of clawbacks has partially returned the concept of personal liability.
Unlimited liability is not needed or desirable for corporations in general, because market forces can lead to desirable outcomes in an efficient market. However, there's an argument to be made that personal liability could play a role in systemically important institutions, because systemic risk is an externality or market failure which cannot be solved by market forces.
Investment banks continued to be run as unlimited liability partnerships until the 1980s. The partners were personally responsible for all debts incurred by the bank, and unsurprisingly, the banks were very conservatively run. Goldman Sachs, one of the most conservative firms, retained this structure until 1999. What changed was that the NYSE altered its rules to allow public companies to be member firms, and the investment banks decided to go public, converting to C-corps and listing their shares on the stock exchanges. The side effect of these two changes was that the investment banks began engaging in riskier behavior, which almost certainly contributed to the financial crisis of 2008. Post-crisis, the introduction of clawbacks has partially returned the concept of personal liability.
Unlimited liability is not needed or desirable for corporations in general, because market forces can lead to desirable outcomes in an efficient market. However, there's an argument to be made that personal liability could play a role in systemically important institutions, because systemic risk is an externality or market failure which cannot be solved by market forces.
In the UK, if a company owner (Director) files for bankruptcy (Administration) then their conduct is investigated by the trustee and a report is sent to the Department of Trade and industry.
If anything is found, said owner can potentially be held liable for debts, or at the very least be disqualified from running a LLC again.
However, the owner can just then declare themselves bankrupt and escape making any payments, and use a puppet director in their next venture.
If anything is found, said owner can potentially be held liable for debts, or at the very least be disqualified from running a LLC again.
However, the owner can just then declare themselves bankrupt and escape making any payments, and use a puppet director in their next venture.
Assuming that a person putting money into an institution is gauranteed to get that back, given enough time, even in the case of bankrupcy, then it would be reasonable to expect them to fall into permanent debt.
But, if you've put money into an institution, knowing ahead of time how bankrupcy could affect you in that particular instance, and you want different laws after the fact, then you're shit out of luck.
Regardless of that, equating an individual's assets with a business's assets would discourage any growth of a business, given that the individual can no longer cover the fallout if it goes bankrupt, which suggests that the economy as a whole would suffer.
But, if you've put money into an institution, knowing ahead of time how bankrupcy could affect you in that particular instance, and you want different laws after the fact, then you're shit out of luck.
Regardless of that, equating an individual's assets with a business's assets would discourage any growth of a business, given that the individual can no longer cover the fallout if it goes bankrupt, which suggests that the economy as a whole would suffer.
You're so off base it's not even funny. Most countries in Europe have enacted variants of 'personal bankruptcy' the last years/decades to get away from exactly the situation you are describing. There is no reason to keep chasing people with no prospects of ever being able to pay off their debt until they die. Regardless of the origin of the debt. This whole petty vengeance thing is quite barbaric, to be honest.
(I say this as someone who was notified last week of one of my debtors being declared bankrupt. Sucks that I lost my money (probably), but what good would it do if the guy would be chased by collection agencies for the next 40 years until he dies?)
(I say this as someone who was notified last week of one of my debtors being declared bankrupt. Sucks that I lost my money (probably), but what good would it do if the guy would be chased by collection agencies for the next 40 years until he dies?)
"This whole petty vengeance thing is quite barbaric, to be honest."
It's not vengeance, it's getting back what was stolen or defrauded from you. If you wish to pardon peoples' debts to you, then that's your humanitarian deed, but leave it at that.
Instead, you want to make a legal loophole for people to steal from you. And then people like you whine and complain incessantly about "the wall street wolf banksters and corporations that stole money" etc etc. Yeah, well that's a natural consequence of you making legal loopholes because you feel sorry for the poor and get taken advantage of.
Instead, you want to make a legal loophole for people to steal from you. And then people like you whine and complain incessantly about "the wall street wolf banksters and corporations that stole money" etc etc. Yeah, well that's a natural consequence of you making legal loopholes because you feel sorry for the poor and get taken advantage of.
Nobody would be willing to start a risky business if it could ruin you in case of failure.
That was the case for essentially all of human history, and remains largely the case today. Risky businesses have been starting, running, failing, and succeeding all along.
That's because they've formed LLCs to prevent the owners from being personally liable.
That's a very negative and demeaning view of humanity. I think we're way too ingenious and creative to let risk stop us from doing amazing things.
Perhaps if something is risky, then maybe it shouldn't succeed, ever thought of that? Perhaps risky things come with greater rewards precisely because they are more likely to fail?
Perhaps if something is risky, then maybe it shouldn't succeed, ever thought of that? Perhaps risky things come with greater rewards precisely because they are more likely to fail?
I am absolutely certain the owners or at least an elite top at Mt. Gox have made a gain from this. Due to the nature of Bitcoin we will never 100% be certain where the coins exactly went, but it's highly unlikely they just vanished in air somewhere.