Topic: MtGox withdrawal delays [Gathering] - page 36. (Read 908720 times)

It would be really great to see this matter settled in the "Japanese way" like JAL without having endless amounts of litigation. The bottom 80% of depositors could immediately be refunded their bitcoins with quite a bit of change left over from the 220K bitcoins held by the trustee. Then, the government could simply guarantee the funds of the remaining depositors--a relatively small number compared to the 80%--after selectively purging any accounts involved in the heist, money laundering, or other crime. Perhaps Mt. Gox could even be resurrected under the watchful eye of JADA.

The Madoff ponzi was much bigger than MtGOX: 64 billion US$. WorldCom, Enron, Lehmann Bros, Washington Mutual, were many times bigger than MtGOX, and much more complicated, with dozens of subsidiaries, branches, etc.. Even the Brazilian oil company OGX and the Brazilian MLM scam TelexFree were much bigger.

In Japan there was, for example, memory manufacturer Elpida (5.5 billion $) and Japan Airlines (at least 10 billion $).  (JAL was one case when the bankruptcy did not end in liquidation: the government bailed it out in part, and put pressure on creditors to suspend their demands and give it a chance, so it was back in normal operation after 2 years.)


You cannot consider only the pluses and ignore the minuses.  When it closed, MtGOX did not have 220'000 BTC, it had minus 660'000 BTC.

Sunlot wanted to do just that: convince the Japanese court to stop the liquidation and sell them all the MtGOX assets -- including the 220'000 BTC -- for 1 BTC, but without the 660'000 BTC debt to their clients.  That would have been very sweet idned -- for Sunlot, not at all for the clients.

Those 220'000 coins indeed are a relatively uncomplicated part of the assets (although they may have to be auctioned; if not, returning them as BTC may be a big legal and accounting headache).  The messy parts include the loans of 13 million dollars to mark and his other companies; the money in various bank accounts; the suspended Coinlab lawsuit; the assets of the US subsidiary (and others perhaps); and understanding what happened to the 660'000 missing coins.


The decision to liquidate the company was totally inevitable given that its obligations were  ~500 M$ more than its assets.  Far from being "fraudulent", the decision to liquidate MtGOX may be the only part of this saga that was totally transparent and undeniably correct under the law...

The purpose of the bankruptcy law is precisely to suspend any creditors' lawsuits already underway, and block any new ones.  It will not prevent more specific lawsuits in the future, civil or criminal, against the people involved -- e.g. for fraudulent management (if Kobayashi does not start some himself).  But the civil lawsuits against the company MtGOX will be aborted, and there will be no more point in starting new ones  -- because even the corpse of MtGOX will have ceased to exist.

By the way, when people say "file for bankruptcy", that is a short for "ask the courts for protection from creditors' lawsuits as specified in the bankruptcy law."

My understanding of what happened in the US courts is limited.  I think (not sure) that several things happened, in some order:

* MtGOX USA filed for bankruptcy protection in the US too, after MtGOX KK did so in Japan.

* An US judge aborted that MtGOX USA bankruptcy process because he concluded that it was best for the Japanese court to handle it too.

* Greene and Lack sued MtGOX in the US.  They claimed to have evidence of wrongdoings by MtGOX managers.

* The court requested Mark to show up to testify in the Greene & Lack case.  Mark was very relctant to do so.

* The Sunlot guys convinced Greene & Lack to withdraw their lawsuit and support Sunlot's plan to stop the liquidation and take over MtGOX.

It must be noted that Sunlot had already promised immunity to Gay-Bouchery and McCaleb, even before starting any investigation.  And they never replied when asked about whether they would extend that coutesy to Mark too.  if we are talkng of cover-ups and evading justice, then...

Also Sunlot never replied when asked whether GB and McC and Mark would get their share of the 220'000 together with (or before) the other clients.  (IIRC, Japanese liquidation law, like the US one, says that management is always last in the queue of creditors, so they should get nothing in this case.)

so this thread is about 1 year old, but did stuff get liquidated for mt gox customers?

220,000 btc is so mind blowing..

Do you think the trustee would be able to auction the Gox coins like it is done for the SR coins at the moment? Who would like to buy or exchange these Gox coins of the "former clients"? Coins with a big red flag on it.
The trustee can maybe sell at a ridiculous discount and the buyers should remain anonymous forever. In the end everyone would lose. What would be the point of it all? I think that the matter is handled much more down-to-earth. Our legal system is much more flexible and no religion.

I'm not sure at all that I have any preferred viewpoint, yet due to Mt. Gox's novelty as well as  its huge size, it is rather unique, and undoubtedly will be quite some challenge to the legal authorities in terms of its complexity.
Technically, it does seem correct that Kobayashi probably works only for the judge. I'm not a lawyer, but still I'm pretty sure the court's intent though is to at least try and be as fair as possible to the depositors under these very difficult circumstances. Nevertheless, I'm still not sure I would ever call 220,000 BTC a "messy pile of assets." It would smell rather sweet to me.

It appears that the bankruptcy liquidation route was largely unnecessary, and could have been chosen primarily in order to evade having Mark Karpeles testify in a Texas hearing last April. See http://cdn.arstechnica.net/wp-content/uploads/2014/04/mt.goxflap.pdf If that is truly the case, then the company may have been fraudulently pushed into liquidation. It seems now that Karpeles will never have to travel to the U.S. and testify.

Maybe, but there have been so many bankruptcies since WWII that surely there are cases that are similar enough to establish a precedent.  A lawyer would know whether there are precedents that can be used to support your preferred viewpoint, whatever it is.

It is totally useless to discuss what you or I think would be the "right" way to do it without knowing the laws and precedents.


I don't understand what you are trying to say.  By their own books, MtGOX owed their clients more than 800'000 BTC, worth more than 500 million USD then, more than 300 million USD today; not counting the USD balances.  Even after "finding" those 220'000 BTC, it still had only 1/4 of the bitcoins and money that it owed, and had no hope of earning enough fees in a reasonable time to cover the difference.  That is what "insolvent" means.  

When a company is insolvent, by definition it is unable to pay all its creditors.  If the concept of bankruptcy did not exist, when news get out that a company is insolvent, every creditor would sue it in order to get his money; the first ones may succeed, many would go empty-handed.  The purpose of the bankruptcy laws is, first, to prevent that flood of separate lawsuits; then, let an impartial judge evaluate whether there is any chance of the company becoming solvent again in a reasonable time; and, if not, guarantee that the remaining assets are distributed to the creditors as fairly as possible.


There seems to be a persistent misunderstanding.  The trustee is not the new manager of MtGOX, who is supposed to answer to the clients and try to make their wishes.  MtGOX is no more, there is only a messy pile of assets that the court must try to untangle and dispose according to the law.  The trustee works for the judge, not for the former clients, and is obliged to answer to him only.  

To me, this case seems very different than your normal bankruptcy liquidation. Should you count the depositors' coins, which now appear to be property of the Mt. Gox estate, the company is neither illiquid nor insolvent. In reality, the trustee holds at least $75,000,000 in bitcoin given today's prices. Many small companies would love to be in such an enviable position as to have so much cash lying around. Of course, those funds are now in the trustee's hands, yet there was really no reason for Mt. Gox to ever even declare bankruptcy in the first place. The story about later finding the 200,000 BTC in an "old format" wallet is quite dubious, and more than likely is a complete fabrication. It essentially says,"the dog ate my homework." ("We didn't realize the company wasn't bankrupt, because we couldn't find our 200K coins" - LOL)

Then, under these circumstances, this legal proceeding can be viewed as more of a legal smoke screen puffed up in order to obfuscate any misdeeds. Kolin's report took note of the great amount of secrecy that is taking place around all this in Tokyo. The lack of transparency seems to imply there really is something serious to hide.

The popular media have been encouraging the public to believe this deplorable situation is all Mark Karpeles' fault, and nobody looks further. However, the explanation of who really is to blame could be hiding in plain sight, if only one were to look. (That's not to say, MK didn't do something uncool, but exactly what he did or didn't do has never been firmly established.)

Well, here is your first surprise.  It is NOT the creditors who decide the way claims are to be computed and how the spoils are returned.  There are laws and precedents; the trustee will propose suitable formulas and methods to the judge, and then the judge will decide.  I repeat, in case I was not suffirciently clear: the judge decides how the liquidation will happen, within the limits of laws and precedents, not the creditors.

The creditors may (politely and humbly) offer their preferences and suggestions to the trustee, but the trustee is not required to pay attention to them: the only person he must satisfy is the judge.  Yes, the trustee may, and probably will, disappoint the creditors (especially if the creditors insist in believing that they can tell him what to do).  He  will not "drown in lawsuits and counter-measures", because his work will be approved by the judge, step by step, until the funds are distributed -- and you cannot sue a judge just because you did not like his decisions.  

Understand that the trustee is not a servant of the creditors; he is an "employee" of the judge, and was charged by the judge with the task of gathering the assets and claims, and drawing a distribution plan that will satisfy the judge.

That is why you should ASK your lawyer what the laws say about such liquidations, and ASK the trustee what he plans to do.  ASK, and after that maybe SUGGEST; not TELL.  And you had better let a lawyer write up your suggestions, if you want the trustee and the judge to pay attention to them.  

(You don't tell the surgeon how he should proceed with your liver transplant.  If you really think you must, you should tell your concerns to your doctor, and let him talk to the surgeon, in the proper terms.)


And that is one of the reasons that may force the truestee to ignore the account balances, and use some other formula to compute the amount owed to each client.

Yep!
Put it also on my blog:

http://www.olivere.de/blog/archives/2014/11/30/open_letter_to_mtgox_trustee/

The task of the trustee is to disappoint as few people as possible. Otherwise he will drown in lawsuits and counter-measures.


I know for sure that Gox credited coins by bad programming that people never had. Customers in the German forum have reported that. People just keeped this coins. Coins for "free".  

My only consolation in the matter is that it's unlikely to restore something from modern hard disks, if it has been already physically overwritten. Data which was just logical deleted should endure also on the images (if they were made professionally). So, there is some hope. Nevertheless, it's a shame that they delete the data at such an early stage. A bad sign even if it not cause any further damage.

I did not recall saying that.  What I said is that I do not see risk in interrogating Mark, as long as the drives are in the hands of the receiver. 

I am not happy either with erasing the disks, since advanced forensics could recover files from them that were deleted prior to the receiver taking control.  Any such deleted files probably were not copied when  Fujitsu (or whoever) made the full-image copies.  Perhaps you should point that out  to the receiver.

Actually, I do not see why Kraken would want those disks. 

Actually, I see some risk in involving Kraken. At this stage, every bitcoin entrepreneur is in principle suspect of involvement in the disappearance of the coins, IMHO.

True enough--Willy-bot, Markus-bot, TIBANNE_LIMITED_HK / THK--are all indications of some abuse having occurred there at Mt. Gox, yet still you see absolutely zero risk in erasing/reformatting the original Mt. Gox server hard drives, as the the trustee indicates he plans to have done before they are transferred to Kraken?  Then with these proceedings, how sure can we be that the fox has not been guarding the hen house?

Good report!

I disagree with the assessment that no progress has been made.  It may be less than what the creditors expected, but is more than what I expected.  Even simple bankruptcy procedures are slow, and this one is quite unusual and complicated.  Kobayashi must folow legal procedures at every step, document his actions and other people's reactions, give sufficient time for formal replies...

I find it quite encouraging that Kobayashi is actively trying to get back the money that Mark took:


I guess that the "legal action" in the last sentence would be criminal charges for fraudulent management (when managers spend lots of company money on their own salaries,  or in other ways that will end up in their pockets, while creditors are unpaid).  In that case his personal properties will be seized and auctioned (as they did with Madoff).

On the other hand, it is indeed likely that most of that money was spent and cannot be recovered.  Unless Mark, threatened with jail time, suddenly "finds another old format bitcoin wallet that he had forgotten about"

My reading is also that Kobayashi and the consultants that he hired are working hard enough, trying to make sense of MtGOX's  database and other records.  AFAIK, this was the first reliable confirmation ever that the database was compromised.  Another reason to expect that mark will face criminal proceedings.


Kobayashi already said that the all files were secured as soon as he could, with the help of experts from Fujitsu, and copies were given to the consultants.  Mark and/or other employees may have doctored the records before the trustee took over, but I do not see any danger that he could alter or erase anything now.

It is quite natural to interrogate the management of a failed company about its operations, and the organization and meaning of its records.   Those statements are usually taken under oath, so Mark would face additional criminal charges (perjury, contempt of court, obstruction of justice...) if he were caught lying or trying to sidetrack the investigation.  However, depending on the local laws, he may have the right to refuse to provide information that would incriminate himsef.


Unfortunately, creating multi-layer companies is a standard trick that sleazy entrepreneurs often use to dodge the laws.  Thus they can let debts, liabilities, and unpaid taxes pile up in one company, which is destined for bankruptcy, while transferring its revenue to the other company.

For the purposes of bankruptcy, and perhaps other civil proceedings, Tibanne is just another company that provided services to MtGOX.  While MtGOX was insolvent and, for that reason, had to be liquidated, Tibanne is doing pretty well and has no debts.  I guess that this shielding will be ineffective if Mark (not MtGOX) is charged with fraudulent management ("piercing the corporate veil").

On the other hand, I was disappointed by the lack of any questions about the accounting method that will be used to define the claim of each client.  Is everybody still assuming that his claim is just his final MtGOX account balance?  There may be unwelcome surprises there.

Finally, I cannot stop thinking that some of the alleged victims may in fact be accomplices -- e.g. clients who got non-existent coins and/or money credited to their accounts.  The database may have been doctored to hide fraudulent trading and accounting.

updates on www.mtgoxprotest.com and Kolin Burges

Thanks Oliver for the updates !

Whats most interesting is the amount in loans karpeles is being asked to pay back:

http://www.reddit.com/r/Bitcoin/comments/2ngtog/so_mark_karpeles_currently_has_a_personal_loan_of/

Great to see kraken on board, i smell a fraud charge coming MKs way.

I'm lost on this one also.

Let's say for the sake of argument he had no malintent and really did lose all those coins. In that case he was at least extremely (if not criminally) negligent and you should bring him before a civil court and get some compensation.

He did get rich by operating the exchange, why should you settle for a loss?

Why Karpeles is not even considered as a suspect is beyond me.

- Hundreds of millions are missing
- It has been proven that he lied about TM
- Some data has been corrupted / destroyed according to Kobayashi himself
- He was in the best position to manipulate data and steal the coins

What do they need more

http://youtu.be/otvYeCwQO8s


Just found it   we got Goxed video

at least now kobayashi informed us will take legal action against Mark Karpeles and Tibanne ....
 

Ridiculous that all of the hard drives will be scratched. Hard drives are cheap. Kraken should go out to Fry's and buy their own. Good way to destroy the evidence by copying and erasing the originals. These drives should all be held in escrow until such time as all investigations have reached their final conclusion. Are we forgetting that hundreds of millions in BTC and fiat are supposedly missing, or is that just another fairy story, like the one about transaction malleability having somehow been involved with this theft ?

According to another report that I read, Kraken will not even be allowed to directly interview Mark Karpeles, who probably knows more than anyone about what happened. They must submit all questions through Mr. Kobayashi. This doesn't pass the smell test, and doesn't sound like a very serious investigation coming so late in the game--nine months after Mt. Gox collapsed.

This one is much more interesting: https://www.mtgox.com/img/pdf/20141126_announcement.pdf