Mt. Gox Bankruptcy - Sell Your Claim or Wait For Final Payment

The Mt. Gox saga, a defining chapter in crypto's early history, is finally approaching a resolution. As specialists in distressed assets, we've been monitoring this situation closely. The proposed Civil Rehabilitation plan offers creditors a path to recovery, but it's complex and presents a critical choice. This memo summarizes the situation and highlights the opportunity for creditors seeking immediate liquidity. Our partner, Thomas Braziel, was one of the first distressed investors who looked into the opportunity.

A Quick Recap: From Bankruptcy to Rehabilitation

When Mt. Gox collapsed in 2014, it entered bankruptcy. Creditor claims for Bitcoin were valued in Japanese Yen (JPY) at the prevailing (and now minuscule) 2014 exchange rate. As the Japanese Trustee's crypto holdings skyrocketed in value, a bizarre legal quirk emerged: after paying off the low, fixed-JPY claims, the massive surplus would have gone to shareholders, not the creditors who lost the actual Bitcoin.

To prevent this, the process was shifted to a Civil Rehabilitation. This allows for a more equitable distribution of the estate's considerable assets (approx. 141,686 BTC, 142,846 BCH, and ¥68B) directly to creditors. While claims are still valued in JPY for accounting purposes (what the plan calls "goxyen"), the key takeaway is that all remaining crypto assets will be distributed among crypto creditors.

The main obstacle delaying a final payout is the massive, multi-billion dollar lawsuit from CoinLab, which could drag on for several more years.

The Payout Plan: A Fork in the Road

The Trustee's plan is designed to start distributing funds despite the ongoing legal battles. After some initial "base payments" (covering small claims up to ¥200,000 and certain legacy fiat claims), creditors face a crucial decision.

Option 1: The Early Lump-Sum Payment

This is the fast-track option. Creditors can choose to receive an immediate payout at a fixed rate of 21% on their remaining claim.

• Pros: Speed and certainty. You get your money (a mix of JPY, BTC, and BCH) soon and eliminate all future risks associated with the CoinLab litigation and other claim disputes. This payout represents over 90% of the absolute best-case scenario without the multi-year wait.
• Cons: You forgo a potentially higher payout. The final rate could, in a perfect scenario, be slightly higher.

Option 2: The Final Payment

This is the long-game option. Creditors wait until all legal disputes are fully resolved.

• Pros: Potential for a slightly higher return. The best-case scenario projects a final payout rate of around 23.6%.
• Cons: Extreme uncertainty and delay. The wait could easily be another 3-5 years. Worse, if legal disputes go unfavorably, the final rate could drop below the 21% offered in the early payout, meaning you would have waited years only to receive less.

Our Proposal: Sell Your Claim for Immediate Cash/BTC

The Final Payment option is a significant improvement for creditors. However, for those who want to cash out completely, avoid the complexities of the Trustee's distribution process, or desire even faster liquidity, there is a better way.

As investors specializing in such situations, we are actively purchasing Mt. Gox claims. We offer a straightforward, all-cash or Bitcoin buyout, allowing you to liquidate your position immediately and move on.

If you are a Mt. Gox creditor and wish to explore selling your claim for a competitive cash offer, please reach out to our team. We can provide a valuation and help you bypass the remaining uncertainty and administrative hurdles.

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