- Mt Gox was the world's biggest bitcoin exchange but collapsed in 2014 after a fatal hack.
- CEO Mark Karpeles took to Reddit on Wednesday to answer questions.
- He pledged to redistribute any bitcoins or the value of bitcoins he may receive once bankruptcy proceedings wrap up.
LONDON — The CEO of collapsed bitcoin exchange Mt Gox said he will do his best to return the hundreds of millions of dollars of cryptocurrency to those who lost out when the exchange blew up in 2014.
Mark Karpeles took to Reddit on Wednesday to do an "as me anything" (AMA) session, answering questions from former customers who had lost out in Mt Gox's collapse.
Japanese-based cryptocurrency exchange Mt Gox was once the biggest bitcoin exchange in the world but collapsed four years ago after suffering a huge hack, losing around 850,000 bitcoins.
Japanese bankruptcy law means that creditors of the bankrupt exchange must log their claims in Japanese yen. Assets of the bankrupt company are then liquidated to pay back creditors and any remaining funds will be returned to the company.
Bitcoin has surged in value since the collapse of Mt Gox, which held around 200,000 bitcoin when it went bust. This holding was worth around $150 million in 2014 but is worth $1.35 billion today.
This means bankruptcy administrators could sell just a fraction of its holdings to repay those lodged claims in yen shortly after the collapse. The remaining bitcoin would be returned to Mt Gox, which is majority owned by Mark Karpeles.
This has angered many of Mt Gox's 24,000 former customers, who will be unable to benefit from the rise in bitcoin's price and feel it is unfair that Karpeles instead will reap the benefit.
Karpeles, who was CEO of Mt Gox at the time of its collapse, took to Reddit on Wednesday to insist: "I don't want this billion dollars. From day one I never expected to receive anything from this bankruptcy."
He called the situation "an egregiously distasteful outcome" and said: "I just want to see this end as soon as possible with everyone receiving their share of what they had on MtGox so everyone, myself included, can get some closure."
Karpeles declarations were part of an AMA (as me anything) session on Reddit on Wednesday. Here are the key takeaways from his long discussion session:
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Karpeles is pushing for 'civil rehabilitation' so he can return bitcoin to customers
Mt Gox is currently in bankruptcy proceedings in Japan but Karpeles said he is pushing to move the company into "civil rehabilitation."
Civil rehabilitation is a little like Chapter 11 bankruptcy in the US. This process would allow Mt Gox to return customers' bitcoins to them rather than liquidating assets to repay debts in yen.
"In Japan, Civil Rehabilitation mostly means plans are submitted to the court, approved plans are submitted to creditors for voting and whatever plan creditors choose is implemented," Karpeles wrote. "The plan can be about re-opening the exchange, merger with another exchange or just straight distribution and closing the company.
"We aren't there yet however since the court still has to approve for MtGox to switch back from bankruptcy to Civil Rehabilitation, which will hopefully happen soon."
Even if Mt Gox can't move into civil rehabilitation, Karpeles said he will personally return any bitcoin he is given to the company's creditors. However, creditors would get less as Karpeles would have to pay tax on any bitcoin he is given.
Mt Gox's bankruptcy administrators have sold $400 million-worth of bitcoin since the end of last year as part of efforts to repay debts. Some market participants have blamed these large sales on the recent bitcoin price crash. Karpeles said he is asking administrators to hold off any further sales for the moment.
Karpeles lost 35 kg in Japanese prison in four months
Karpeles was arrested in early 2015 by Japanese police investigating the collapse of Mt Gox and spent just under a year in jail before being bailed.
He said he "would not recommend" Japanese prison, joking that it had "poor service, bad food."
Karpeles said he "lost 35 kg in 4 months" in jail, adding: "I wouldn't recommend this to anyone."
"Lunch was actually two breads with jam (strawberry, orange, etc so there'd be some variation day to day) and a small extra," he wrote.
The case against Karpeles is still ongoing but he wrote: "I am innocent. Proving this in front of a Japanese court is a challenge but I'm not giving up."
Silk Road could have been as much as 30% of Mt Gox's traffic
Mt Gox's heyday coincided with Silk Road, the "dark web" marketplace for drugs, weapons, and more that used bitcoin as its main currency.
Silk Road was shut down by the FBI in October 2013 when its founder Ross William Ulbricht was arrested.
Karpeles was asked how big Silk Road's influence over Mt Gox's exchange was, as at the time it was the main exchange to buy and sell bitcoin on.
He wrote: "We didn't have an exact estimate, but following Ulbricht's arrest and shut down of silk road we noticed a drop in activity which allowed put a figure on that at around 20%~30%."
Ulbricht, who was 29 when he was arrested, was sentenced to life in jail for drug trafficking. Asked about the punishment, Karpeles wrote: "Evidence seems clear enough it was him, and there is, of course, a need to make an example of him as first ever such case, but it's sad for someone that young to have to spend life behind bars."
Karpeles was also asked about what Mt Gox did to stop child traffickers who accepted bitcoin through sites such as Backpage.com.
"MtGox cooperated as much as possible with law enforcement when presented with valid requests that did not infringe privacy of the MtGox userbase in general," he wrote.
See the rest of the story at Business Insider