Mt. Gox: Karpeles Set to Profit Near $1B Post-Bankruptcy

Mt. Gox Head Mark Karpeles May Gain Almost $1 Billion Despite Bankruptcy

Mark Karpeles, who was the head of Mt. Gox and lost over 744,000 Bitcoins belonging to users, now stands to gain over $900 million as liabilities will be marked at 2014 values, when Bitcoin was worth under $500.

Mark Karpeles is infamous in Bitcoin and cryptocurrency circles thanks to the 2014 Mt. Gox collapse, which saw over 744,000 Bitcoins being lost to hackers. In an ironic twist, he now stands to gain almost $1 billion despite all the losses suffered by Mt. Gox users and creditors.

The Japanese exchange was the biggest Bitcoin market in the world, handling around 70% of all Bitcoin transactions until things turned ugly in 2014, when users started facing withdrawal delays. It turned out that Mt. Gox had been insolvent and the management, in gross misconduct, has been covering up the losses for over two years.

Mt. Gox had been compromised and hackers had been siphoning off users’ Bitcoins for years while the management, led by Mark Karpeles, was either too ignorant, or complicit. Karpeles was later charged and arrested for fraud and embezzlement, and Mt. Gox filed for bankruptcy.

Now, Mt. Gox, which is in possession of over 200,000 Bitcoins, is due to settle its liabilities, but as per Article 124 of the Japanese bankruptcy code, the liabilities will be calculated according to Bitcoin’s price at the time when proceedings were initiated, i.e. April 2014. Back then, Bitcoin was nowhere near its current price, and was trading at under $500.

Currently Bitcoin is valued over $6,400, which means Mt. Gox is in possession of over a billion dollars in the cryptocurrency. Since creditors will be paid at 2014 rates, the total loss, which was around 744,000 Bitcoins, amounts to roughly $370 million – leaving Karpeles to gain over $900 million in profits.

This essentially means, that when the dust settles, despite criminal negligence, the Mt. Gox head may net around a billion dollars while users bear the brunt of the losses. One creditor, who lost 311 Bitcoins in Mt. Gox, stands to get only $130,000 in the settlement, while Mt. Gox will make just under $2 million from his loss.

Commenting on the situation, the user said:

“When it’s all sorted out, Karpeles would pretty much get the vast majority. That seems incredibly unfair.”

Even worse is the fact that these calculations are based on Bitcoin’s current price, which has dropped from its recent high of over $7,700. Sadly, Mt. Gox users, who were early to the game, will not be gaining anything from Bitcoin’s meteoric rise.