Question: Would depositors fare better if Mt. Gox dismissed its bk filing?

DrApricot

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Quote from: snappa4ever on September 21, 2014, 09:08:12 PM

Quote from: DrApricot on September 21, 2014, 05:42:22 AM

Quote from: DrApricot on September 20, 2014, 08:08:51 PM

I have been doing a little bit more reading on Japanese law in this respect, and it would appear two things are necessary to engineer an out-of-court settlement:

Form a creditors committee, and get the Tokyo court to recognize it.
Write a a plan of liquidation and obtain creditor consensus on it.

Once these actions have been taken, then it should be possible to liquidate Mt. Gox under Japan's special liquidation law — which is a sub-part of the Corporation Act — first published in July 2005 and went into effect on May 1, 2006.
At present, the depositors (aka "creditors") have zero representation before the court, and thus exert virtually no influence over its proceedings.

Note, one advantage to forming a creditor's committee could be getting, with court approval, to depose Mark Karpeles and other Mt. Gox personnel regarding the whereabouts of any "missing" Mt. Gox bitcoins and cash. Creditors generally have the right to discover assets the debtor might be hiding.

Deposing Karpeles would only produce potential results in the event that he actually had stolen customer funds himself. Even if he did do this all that could be done is to ask questions and there would be little that could be done if he chooses to lie.

I personally do not think he stole customer money (but rather did not know how to run a billion dollar company) and think that deposing him would only use up valuable resources.

Regardless of whether he stole the coins or not, Karpeles could answer several important questions about hidden assets:

What happened to the $27 million in missing bank deposits?
To which addresses did the rouge traders send the bitcoins?
Who holds them now?

If he isn't involved, then answering these questions should serve to clarify. He would have to answer under oath, so presumably he is intelligent enough not to lie. However, other Mt. Gox executives who also may have relevant information should, if possible, be deposed.

snappa4ever

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Quote from: DrApricot on September 21, 2014, 05:42:22 AM

Quote from: Nagle on September 20, 2014, 11:51:37 PM

Quote from: DrApricot on September 20, 2014, 08:08:51 PM

I have been doing a little bit more reading on Japanese law in this respect, and it would appear two things are necessary to engineer an out-of-court settlement:

Form a creditors committee, and get the Tokyo court to recognize it.
Write a a plan of liquidation and obtain creditor consensus on it.

Once these actions have been taken, then it should be possible to liquidate Mt. Gox under Japan's special liquidation law — which is a sub-part of the Corporation Act — first published in July 2005 and went into effect on May 1, 2006.
At present, the depositors (aka "creditors") have zero representation before the court, and thus exert virtually no influence over its proceedings.

Are there any international lawyers out there up to this kind of challenge?

As far as I know, no creditor of Mt. Gox has ever hired a lawyer in Japan to become involved in the Mt. Gox bankruptcy.

This is surprising, since a lot of people lost money in Mt. Gox and some of them must have substantial assets available for legal action.

Attorney Nobuaki Kobayashi, the court appointed bankruptcy trustee, is no doubt quite serious when he says that he is evaluating alternative takeover deals such as the ones from Sunlot and BitOcean Japan. If depositors want to see a different outcome besides a takeover, then they will need to work together and should possibly be willing to fund a legal team on their own.

Edit: Note, one advantage to forming a creditor's committee could be getting, with court approval, to depose Mark Karpeles and other Mt. Gox personnel regarding the whereabouts of any "missing" Mt. Gox bitcoins and cash. Creditors generally have the right to discover assets the debtor might be hiding.

Deposing Karpeles would only produce potential results in the event that he actually had stolen customer funds himself. Even if he did do this all that could be done is to ask questions and there would be little that could be done if he chooses to lie.

I personally do not think he stole customer money (but rather did not know how to run a billion dollar company) and think that deposing him would only use up valuable resources.

DrApricot

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Quote from: Nagle on September 20, 2014, 11:51:37 PM

Quote from: DrApricot on September 20, 2014, 08:08:51 PM

I have been doing a little bit more reading on Japanese law in this respect, and it would appear two things are necessary to engineer an out-of-court settlement:

Form a creditors committee, and get the Tokyo court to recognize it.
Write a a plan of liquidation and obtain creditor consensus on it.

Once these actions have been taken, then it should be possible to liquidate Mt. Gox under Japan's special liquidation law — which is a sub-part of the Corporation Act — first published in July 2005 and went into effect on May 1, 2006.
At present, the depositors (aka "creditors") have zero representation before the court, and thus exert virtually no influence over its proceedings.

Are there any international lawyers out there up to this kind of challenge?

As far as I know, no creditor of Mt. Gox has ever hired a lawyer in Japan to become involved in the Mt. Gox bankruptcy.

This is surprising, since a lot of people lost money in Mt. Gox and some of them must have substantial assets available for legal action.

Attorney Nobuaki Kobayashi, the court appointed bankruptcy trustee, is no doubt quite serious when he says that he is evaluating alternative takeover deals such as the ones from Sunlot and BitOcean Japan. If depositors want to see a different outcome besides a takeover, then they will need to work together and should possibly be willing to fund a legal team on their own.

Edit: Note, one advantage to forming a creditor's committee could be getting, with court approval, to depose Mark Karpeles and other Mt. Gox personnel regarding the whereabouts of any "missing" Mt. Gox bitcoins and cash. Creditors generally have the right to discover assets the debtor might be hiding.

Nagle

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Quote from: DrApricot on September 20, 2014, 08:08:51 PM

I have been doing a little bit more reading on Japanese law in this respect, and it would appear two things are necessary to engineer an out-of-court settlement:

Form a creditors committee, and get the Tokyo court to recognize it.
Write a a plan of liquidation and obtain creditor consensus on it.

Once these actions have been taken, then it should be possible to liquidate Mt. Gox under Japan's special liquidation law — which is a sub-part of the Corporation Act — first published in July 2005 and went into effect on May 1, 2006.
At present, the depositors (aka "creditors") have zero representation before the court, and thus exert virtually no influence over its proceedings.

Are there any international lawyers out there up to this kind of challenge?

As far as I know, no creditor of Mt. Gox has ever hired a lawyer in Japan to become involved in the Mt. Gox bankruptcy.

This is surprising, since a lot of people lost money in Mt. Gox and some of them must have substantial assets available for legal action.

DrApricot

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Quote from: DrApricot on September 14, 2014, 01:52:01 PM

Quote from: OhShei8e on September 14, 2014, 06:46:20 AM

Quote from: DrApricot on September 13, 2014, 06:07:35 PM

My thumbs are up to independent groups such as gox-self-help that are pushing for a quick resolution of the case and return of available bitcoins.

IMHO the thing is quite simple.

1. Mark is a free man, which now even has his own company again.
2. The declarations from the 28th February and the 20th March are still valid and have been accepted by the court many times since they were given.
See:
https://www.mtgox.com/img/pdf/20140228-announcement_eng.pdf
https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf

No one can keep and eat a cake at the same time. Also not a lawyer or judge. Either MtGox have operated a Ponzi or not. The court has decided many times that everything is in order and granted the legal bankruptcy process under the given conditions. There were no investigations for delayed filing of insolvency like in other cases (the Madoff case for instance). Thus all trades are valid until the 28th February. Accordingly, the remaining Bitcoins and all other assets must be given back to their rightful owners. Anything else would be a clear betrayal of the MtGox customers.

Here's one way to do it, assuming the laws in Japan are not too different:

Quote

Voluntary or out-of-court settlements can be initiated either by a debtor or creditors [emphasis added].

I have been doing a little bit more reading on Japanese law in this respect, and it would appear two things are necessary to engineer an out-of-court settlement:

Form a creditors committee, and get the Tokyo court to recognize it.
Write a a plan of liquidation and obtain creditor consensus on it.

Once these actions have been taken, then it should be possible to liquidate Mt. Gox under Japan's special liquidation law — which is a sub-part of the Corporation Act — first published in July 2005 and went into effect on May 1, 2006.
At present, the depositors (aka "creditors") have zero representation before the court, and thus exert virtually no influence over its proceedings.

Are there any international lawyers out there up to this kind of challenge?

DrApricot

full member

Activity: 238

Merit: 100

Quote from: OhShei8e on September 14, 2014, 06:46:20 AM

Quote from: DrApricot on September 13, 2014, 06:07:35 PM

My thumbs are up to independent groups such as gox-self-help that are pushing for a quick resolution of the case and return of available bitcoins.

IMHO the thing is quite simple.

1. Mark is a free man, which now even has his own company again.
2. The declarations from the 28th February and the 20th March are still valid and have been accepted by the court many times since they were given.
See:
https://www.mtgox.com/img/pdf/20140228-announcement_eng.pdf
https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf

No one can keep and eat a cake at the same time. Also not a lawyer or judge. Either MtGox have operated a Ponzi or not. The court has decided many times that everything is in order and granted the legal bankruptcy process under the given conditions. There were no investigations for delayed filing of insolvency like in other cases (the Madoff case for instance). Thus all trades are valid until the 28th February. Accordingly, the remaining Bitcoins and all other assets must be given back to their rightful owners. Anything else would be a clear betrayal of the MtGox customers.

Here's one way to do it, assuming the laws in Japan are not too different:

Quote

Voluntary or out-of-court settlements can be initiated either by a debtor or creditors [emphasis added]. The debtor in economical problems can avail attorney guidance for this. The assigned attorney initiates a conference with the creditors to discuss the debtor’s economic condition, reasons for the economic crisis, steps adopted to resolve vital problems, the position of secured creditors, suggest payment options or settlement plans, provision for interest on the debt to be settled, any provision of security to creditors, and data regarding continuous business functions, plans and leads.

The significant using of out-of-court settlements is adequate proof of its wide popularity by innovative creditors and lawyers who are dedicated to the law of bankruptcy. The benefits resulting from out-of-court settlements have been recognized in the Bankruptcy Code Section 305, which allows the Bankruptcy Court to avoid an involuntary case in bankruptcy registered against a debtor if the termination would better serve the interest of the creditors and the debtor. A well-constructed out-of-court settlement contract between a debtor and an associate body of its creditors stands a good chance of providing its purpose.
- See more at: http://bankruptcy.uslegal.com/out-of-court-settlements/#sthash.oKF87WZ2.dpuf[/quote]

OhShei8e

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Quote from: DrApricot on September 13, 2014, 06:07:35 PM

My thumbs are up to independent groups such as gox-self-help that are pushing for a quick resolution of the case and return of available bitcoins.

IMHO the thing is quite simple.

1. Mark is a free man, which now even has his own company again.
2. The declarations from the 28th February and the 20th March are still valid and have been accepted by the court many times since they were given.
See:
https://www.mtgox.com/img/pdf/20140228-announcement_eng.pdf
https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf

No one can keep and eat a cake at the same time. Also not a lawyer or judge. Either MtGox have operated a Ponzi or not. The court has decided many times that everything is in order and granted the legal bankruptcy process under the given conditions. There were no investigations for delayed filing of insolvency like in other cases (the Madoff case for instance). Thus all trades are valid until the 28th February. Accordingly, the remaining Bitcoins and all other assets must be given back to their rightful owners. Anything else would be a clear betrayal of the MtGox customers.

DrApricot

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Quote from: OhShei8e on September 13, 2014, 12:35:07 PM

Quote from: zorke on September 13, 2014, 11:01:53 AM

That file also contained bitcoin stealing maleware. I would not trust it for this reason. Also remember that the trading information was public so someone could have simply have been saving all the publicly displayed orders when gox was in operation and published that in a format that make it look like it was stolen from mark

Yes, we should be careful. However, the data contain my exact balance. Many others have reported the same.

My thumbs are up to independent groups such as gox-self-help that are pushing for a quick resolution of the case and return of available bitcoins.

OhShei8e

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Quote from: zorke on September 13, 2014, 11:01:53 AM

That file also contained bitcoin stealing maleware. I would not trust it for this reason. Also remember that the trading information was public so someone could have simply have been saving all the publicly displayed orders when gox was in operation and published that in a format that make it look like it was stolen from mark

Yes, we should be careful. However, the data contain my exact balance. Many others have reported the same.

zorke

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Quote from: DrApricot on September 12, 2014, 06:15:12 AM

Quote from: toleng on September 11, 2014, 10:57:37 PM

Gox had attempted to get a bailout by it's fellow exchanges, and they named this 650k BTC figure in the bailout talks. They would have no reason to over estimate this figure during these kinds of talks.

They may have themselves been fooled at that point. The leaked "trades_summary" file posted to Karpeles' blog in March showed a balance of 951,116 BTC. If this is the kind of management information Mt. Gox had available to it around the time of the closure, it could explain why they were mentioning a much larger number to other exchanges. Who knows where this data came from, or if it is real or fake? The total could have been vastly inflated due to erroneous entries in the Mt. Gox database through an SQL injection attack. This could have been introduced either through break-in or some kind of insider action such as a "janitor attack".

That file also contained bitcoin stealing maleware. I would not trust it for this reason. Also remember that the trading information was public so someone could have simply have been saving all the publicly displayed orders when gox was in operation and published that in a format that make it look like it was stolen from mark

DrApricot

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Quote from: toleng on September 11, 2014, 10:57:37 PM

Quote from: DrApricot on September 07, 2014, 02:19:20 PM

Quote from: itsAj on September 07, 2014, 11:09:57 AM

I don't follow your logic as to how creditors would receive a 100% payout. There was ~650k BTC in customer funds and ~200k BTC in gox funds that are missing. There is only ~200k BTC that gox holds. Even if the gox portion of the lost funds were to be ignored a best case scenario would be a 33% payout.

I am not sure who Kobayashi is or what this story is.

It's only claimed that there were ever 850,000 BTC of which 200,000+ have supposedly been found. This is not a firmly proven and established fact. The media picked up on it, and broadcast this number far and wide, as it makes a great sensational story. Yet, there is virtually no proof at all that there were ever much more being held by Mt. Gox than the 200,000 BTC "found" .

Attorney Nobuaki Kobayashi is the court appointed bankruptcy trustee who has stated that he now holds Mt. Gox's cold storage bitcoins.

There are no other reports that mention any other number. This is also the amount that gox itself has claimed to haev owed customers.

Mark Karpeles stated in his June, 2014 Wall Street Journal interview that he does not believe more than the 200,000 from the old-format wallet will be found. How can he be so sure, unless he knows there were never more than those?

Quote from: toleng on September 11, 2014, 10:57:37 PM

Gox had attempted to get a bailout by it's fellow exchanges, and they named this 650k BTC figure in the bailout talks. They would have no reason to over estimate this figure during these kinds of talks.

They may have themselves been fooled at that point. The leaked "trades_summary" file posted to Karpeles' blog in March showed a balance of 951,116 BTC. If this is the kind of management information Mt. Gox had available to it around the time of the closure, it could explain why they were mentioning a much larger number to other exchanges. Who knows where this data came from, or if it is real or fake? The total could have been vastly inflated due to erroneous entries in the Mt. Gox database through an SQL injection attack. This could have been introduced either through break-in or some kind of insider action such as a "janitor attack".

toleng

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Quote from: DrApricot on September 07, 2014, 02:19:20 PM

Quote from: itsAj on September 07, 2014, 11:09:57 AM

I don't follow your logic as to how creditors would receive a 100% payout. There was ~650k BTC in customer funds and ~200k BTC in gox funds that are missing. There is only ~200k BTC that gox holds. Even if the gox portion of the lost funds were to be ignored a best case scenario would be a 33% payout.

I am not sure who Kobayashi is or what this story is.

It's only claimed that there were ever 850,000 BTC of which 200,000+ have supposedly been found. This is not a firmly proven and established fact. The media picked up on it, and broadcast this number far and wide, as it makes a great sensational story. Yet, there is virtually no proof at all that there were ever much more being held by Mt. Gox than the 200,000 BTC "found" .

Attorney Nobuaki Kobayashi is the court appointed bankruptcy trustee who has stated that he now holds Mt. Gox's cold storage bitcoins.

There are no other reports that mention any other number. This is also the amount that gox itself has claimed to haev owed customers.

Gox had attempted to get a bailout by it's fellow exchanges, and they named this 650k BTC figure in the bailout talks. They would have no reason to over estimate this figure during these kinds of talks.

DrApricot

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Quote from: Nagle on September 09, 2014, 01:03:56 AM

It's way too late for that. Mt. Gox is in liquidation.

You would need a real strong basis to ask a judge to dismiss the Mt. Gox bankruptcy liquidation such as having made fraudulent claims in its original filing specifically to manipulate the court. Whether this is true or not, it would be most difficult to prove. Time to call in "The Innocence Project"?

Nagle

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It's way too late for that. Mt. Gox is in liquidation.

DrApricot

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Quote from: itsAj on September 07, 2014, 11:09:57 AM

Quote from: DrApricot on September 07, 2014, 01:38:12 AM

Quote from: itsAj on September 06, 2014, 10:48:16 PM

Gox running on a fractional reserve system would not work. People would rush to the exits as quickly as possible to withdraw their bitcoin and people who are able to withdraw their bitcoin first would be made whole while people who were delayed in withdrawing would be left holding the bag with nothing.

Even if gox only made 25% of previous customer balances available for withdrawal, then many people would likely want to withdraw this 25% which would open them up to potential security risks of having that much leaving their wallet at one time.

I hear you. Distribution would have to be staged very carefully to prevent as many of these kinds of issues as possible.

It also depends upon about how much of a fractional reserve we are really talking. The original 850,000 BTC number claimed in the end-of-February bankruptcy filing seems pretty dubious at this point. In six months time, virtually no proof has ever come to light that there were more than the 220,000 BTC presently in Kobayashi's wallet. 100% withdrawal of depositors' coins could be a possibility under such a scenario.

I would not be surprised if many people have lost/forgotten their passwords or otherwise do not have access to their account, so I think it would be somewhat difficult to know for sure how to return these people's money if it will be done outside of BK.

Lost passwords at banks and stock brokerages are a pretty common problem, and there are well established methods for their recovery.

Quote from: itsAj on September 07, 2014, 11:09:57 AM

I don't follow your logic as to how creditors would receive a 100% payout. There was ~650k BTC in customer funds and ~200k BTC in gox funds that are missing. There is only ~200k BTC that gox holds. Even if the gox portion of the lost funds were to be ignored a best case scenario would be a 33% payout.

I am not sure who Kobayashi is or what this story is.

It's only claimed that there were ever 850,000 BTC of which 200,000+ have supposedly been found. This is not a firmly proven and established fact. The media picked up on it, and broadcast this number far and wide, as it makes a great sensational story. Yet, there is virtually no proof at all that there were ever much more being held by Mt. Gox than the 200,000 BTC "found" .

Attorney Nobuaki Kobayashi is the court appointed bankruptcy trustee who has stated that he now holds Mt. Gox's cold storage bitcoins.

DrApricot

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Quote from: Rannasha on September 07, 2014, 01:46:56 AM

What would be the point of reviving Gox as an exchange with fractional reserve? In order to make good on their depositors, they'd need to earn back hundreds of thousands of BTC in trade fees. But who is going to trust their money to an exchange that runs on FR with hordes of people trying to get as much money out as possible.

My point was we don't know what that fraction is. It could well be 100%. We only have Mt. Gox's word for the fact that there were ever more than the 200,000 btc recovered in the old-format wallet.

Example: Let's say, Joe borrows $20 from you for lunch. The next day you want it back, but he tells you "I had $80 in an envelope, but the dog chewed that up. I managed to save two $10 bills. How about I give you one, and I'll keep the other one for my lunch today?" Assuming you bought Joe's story about the dog, then you might even believe he was attempting to be fair. (hint: Joe lied)

itsAj

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Quote from: DrApricot on September 07, 2014, 01:38:12 AM

Quote from: itsAj on September 06, 2014, 10:48:16 PM

Gox running on a fractional reserve system would not work. People would rush to the exits as quickly as possible to withdraw their bitcoin and people who are able to withdraw their bitcoin first would be made whole while people who were delayed in withdrawing would be left holding the bag with nothing.

Even if gox only made 25% of previous customer balances available for withdrawal, then many people would likely want to withdraw this 25% which would open them up to potential security risks of having that much leaving their wallet at one time.

I hear you. Distribution would have to be staged very carefully to prevent as many of these kinds of issues as possible.

It also depends upon about how much of a fractional reserve we are really talking. The original 850,000 BTC number claimed in the end-of-February bankruptcy filing seems pretty dubious at this point. In six months time, virtually no proof has ever come to light that there were more than the 220,000 BTC presently in Kobayashi's wallet. 100% withdrawal of depositors' coins could be a possibility under such a scenario.

I would not be surprised if many people have lost/forgotten their passwords or otherwise do not have access to their account, so I think it would be somewhat difficult to know for sure how to return these people's money if it will be done outside of BK.

I don't follow your logic as to how creditors would receive a 100% payout. There was ~650k BTC in customer funds and ~200k BTC in gox funds that are missing. There is only ~200k BTC that gox holds. Even if the gox portion of the lost funds were to be ignored a best case scenario would be a 33% payout.

I am not sure who Kobayashi is or what this story is.

Rannasha

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What would be the point of reviving Gox as an exchange with fractional reserve? In order to make good on their depositors, they'd need to earn back hundreds of thousands of BTC in trade fees. But who is going to trust their money to an exchange that runs on FR with hordes of people trying to get as much money out as possible.

DrApricot

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Quote from: itsAj on September 06, 2014, 10:48:16 PM

Gox running on a fractional reserve system would not work. People would rush to the exits as quickly as possible to withdraw their bitcoin and people who are able to withdraw their bitcoin first would be made whole while people who were delayed in withdrawing would be left holding the bag with nothing.

Even if gox only made 25% of previous customer balances available for withdrawal, then many people would likely want to withdraw this 25% which would open them up to potential security risks of having that much leaving their wallet at one time.

I hear you. Distribution would have to be staged very carefully to prevent as many of these kinds of issues as possible.

It also depends upon about how much of a fractional reserve we are really talking. The original 850,000 BTC number claimed in the end-of-February bankruptcy filing seems pretty dubious at this point. In six months time, virtually no proof has ever come to light that there were more than the 220,000 BTC presently in Kobayashi's wallet. 100% withdrawal of depositors' coins could be a possibility under such a scenario.

itsAj

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Gox running on a fractional reserve system would not work. People would rush to the exits as quickly as possible to withdraw their bitcoin and people who are able to withdraw their bitcoin first would be made whole while people who were delayed in withdrawing would be left holding the bag with nothing.

Even if gox only made 25% of previous customer balances available for withdrawal, then many people would likely want to withdraw this 25% which would open them up to potential security risks of having that much leaving their wallet at one time.

Topic: Question: Would depositors fare better if Mt. Gox dismissed its bk filing? (Read 5034 times)