Andy Pag, the founder, and coordinator of Mt Gox Legal (MGL) has resigned from his position and decided to sell his Bitcoin (BTC) claim to the highest bidder.
Pag leaves MGL at the end of April. In connection with his resignation, he said he foresees that Mt Gox payout settlements will not be distributed for another 18 to 24 months, although he personally feels this could take even longer. Pag attributes the delay to ongoing legal issues, especially the single $16 billion claim made by former Mt Gox partner, Coinlab.
In 2014, cryptocurrency exchange Mt Gox, once the world’s largest, was bankrupted after hackers stole 850,000 BTC, affecting around 24,000 creditors.
Pag set up Mt Gox Legal in 2017 to represent some 1,000 creditors claiming over 150,000 BTC ($543.8 million) – the largest group of its kind, he claims. The intent was to advocate for the reimbursement of creditors in Mt Gox’s transition from bankruptcy proceedings to civil rehabilitation (CR).
This transition in legal proceedings is noteworthy because it came about last year after huge fluctuations in Bitcoin prices in the last few years. Mt Gox customers under bankruptcy proceedings would have received the fiat equivalent of their holdings at the time the exchange entered bankruptcy. However, under civil rehabilitation, they will receive the amount they lost in BTC instead.
Nonetheless, with the transition to CR, creditors had initially hoped they could start receiving settlements sometime this year, or at least by the end of this year. Coinlab’s claim, however, is being seen as holding this up.
The American Bitcoin incubator had partnered Mt Gox in 2012 to act as the exchange’s US branch but sued it a year later claiming breach of contract and asked for $75 million in damages – an amount Coinlab maintained in its creditor filing when Mt Gox initially went into bankruptcy.
“Coinlab put in a bankruptcy claim originally of $75 million which people thought was excessive … When we went to civil rehabilitation, everyone refiled the same claim, but Coinlab filed $16 billion,” Pag explained.
He fears that CR will be delayed “until the Coinlab case is settled, and that means not just assessment, but through however many rounds of litigation they take it to.”
On his decision to leave MGL and sell his claim, he said, “The more Bitcoin’s price goes up, the more vultures are circling around. My personal worry is that we’re just going to be bogged down in litigation. For me personally, and it’s a personal decision, it makes more sense to sell my claim.”
“I had to ask myself how far do I stand on principle? When do I say enough is enough. Do I want to be right, or do I want to be happy? I’ve decided I’d rather be happy and get on with my life.”
CoinDesk noted that an unnamed New York-based investment firm will purchase Pag’s stake at $600/BTC.
Meanwhile, controversial crypto figure Brock Pierce, who leads the “GoxRising” movement, has come forward claiming he can restart Mt Gox and speed up creditor payouts.