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Report: Hedge Funds are Buying Customer Claims of Mt Gox Bitcoin Payout

Last Updated March 4, 2021 4:54 PM
Samburaj Das
Last Updated March 4, 2021 4:54 PM

Hedge funds in Japan and the United States are reportedly buying and offering to buy claims from thousands of account holders of the now-defunct bitcoin exchange Mt Gox, the world’s biggest bitcoin exchange at a time, before its downfall.

The Financial Times  cites sources to reveal that at least four hedge funds have begun the process of buying or offering to buy claims from account holders at 15 percent of the yen value of the claim, in cash.

The hedge funds are betting on bitcoin gaining value, which it has, considerably since the claims were lodged in the aftermath of Mt Gox’s failure. The hope is to strike a lucrative windfall when the process of distributing payouts to claimants begins.

Nearly 850,000 bitcoins disappeared from Mt Gox’s storage, worth beyond $475 million at the time when bitcoin was valued over $450 to the dollar.

On last count, the Mt Gox estate holds a little over 202,185 bitcoins salvaged from a recovery effort following the bankruptcy investigation. In today’s prices, that’s valued at a little over $201 million. A total of 24,750 creditors have filed claims to date, all of which had been reviewed by the Tokyo court-appointed Trustee in May 2016.

The value of the claims, when lodged in 2014, were calculated to the corresponding exchange rate at the time, of around $440 per bitcoin. As things stand, the near-25000 claimants will not see over a quarter of the missing bitcoins and cash, which could leave some claimants open to selling their claim.

As reported by FT, Daniel Kelman, a Mt Gox creditor and an attorney for claimants in the case stated:

The peculiarities of the situation – in which creditors may not be paid out for at least another year…along with the striking rise in the market price of bitcoins since the exchange rate was calculated with respect to the claims, means that a fund willing to take the risk of a long wait could be betting on a payout with huge upside.

Kelman has also set up mygoxclaim.com, a portal that links claimants with hedge funds interested in buying the reimbursement claims.

Meanwhile, Mt Gox CEO and founder Mark Karpeles, who has been released on bail from a Tokyo detention house, will see a pre-trial hearing of prosecutors’ criminal case against him tomorrow, February 14.

The complete list of claims, both accepted and rejected, can be found here.

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