Plans are afoot to rejuvenate the Mt. Gox cryptocurrency exchange that crashed into obscurity five years ago following a series of damaging security breaches. The cyber-attack was considered the “Lehman Brothers of blockchain” in terms of its far-reaching impact on cryptocurrencies. Some 850,000 Bitcoins were lost in 2014 in a host of hacks on the exchange, raising security concerns about the industry as a whole that still linger today.
Now, however, well-known unconventional cryptocurrency celebrity Brock Pierce has mooted plans to rebuild the exchange from its ashes, whilst returning funds to all 24,000 victims of the Bitcoin fraud in 2014. Pierce revealed his “Gox Rising” plan recently to TechCrunch and said that he intends to breathe new life into the platform to help it challenge the likes of Binance exchange and the Coinbase platform for cryptocurrency exchange supremacy once again.
Introducing a new Civil Rehabilitation Plan
On the microsite discussing the Gox Rising plan, a “unified Civil Rehabilitation Plan” is described, designed to “maximise creditor recovery” to the tune of $1.2 billion in assets – a plan which would see the reborn exchange recover and redistribute missing Bitcoins online. Mr Pierce confirmed there are 150,000 Bitcoins sat within the Mt. Gox bankruptcy trust, worth up to $630 million to the affected crypto owners. The exchange filed for bankruptcy in the US and Japan after the disastrous events of 2014, with the platform’s former CEO, Mark Karpeles, arrested by the Japanese police and charged with data manipulation and embezzlement.
In order to right the wrongs of the asset losses, Pierce requires at least half of the 24,000 victims seeking financial compensation to sign up to a creditors’ committee. Pierce believes this would be the best way to ascertain a unified way forward on the redistribution of Mt. Gox’s assets in the eyes of Mt. Gox’ trustee Nobuaki Kobayashi. This is a process that Pierce says could be resolved “in maybe one year” if the majority of creditors agreed to sign on.
Pierce also plans to distribute a new “Gox Coin” to original creditors, giving each of them a stake in the reborn exchange. Pierce is firmly of the belief that there is still plenty of room for another cryptocurrency exchange, despite the recent crypto recession of 2018. Nevertheless, he said that his driving motivation is to “see the creditors made whole”.
How would a reborn Mt. Gox affect the price of Bitcoin?
The price of Bitcoin was altered by the collapse of Mt Gox in 2018
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What would the knock-on effect of a Mt.Gox revival have on Bitcoin? You only have to look back to 2018 when Mt. Gox trustee, Kobayashi sold just under 25,000 Bitcoins and over 25,000 Bitcoin Cash coins at a fiat cost of $230 million. This mass-dumping of Bitcoin back into the ecosystem sparked a downward spiral for the crypto asset’s value over a three-to-four-month period. The very thought of all former Bitcoin owners receiving their assets back from the reborn Mt. Gox would see supply outstrip demand even further, which would almost certainly cause another Bitcoin price plunge within its bearish market.
Nevertheless, the retrieval and redistribution of Bitcoin lost is secondary to the ownership battle ensuing between Karpeles and Pierce. The latter claims Karpeles sold his 88% share in Mt. Gox to Pierce for a single Bitcoin, although Karpeles vehemently denies this. However, Pierce insists that he has a letter of confirmation asking him to rescind the initial sale agreement “shortly after signing”. Pierce may well have good intentions to protect the cryptocurrency community, but this legal battle will continue to rumble on for some time.
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