Advocate for Mt Gox Creditors Quits, Saying Bitcoin Payouts Could Take Years

The head of the largest organized creditor group representing the former users of failed bitcoin exchange Mt. Gox is stepping down amid what he described as a protracted legal quagmire that could take years to resolve completely.

Y Pag, the founder and coordinator of Mt. Gox Legal, told CoinDesk in an exclusive interview this week that he now believes ongoing legal issues - in particular, a single massive claim by startup incubator and former Mt. Gox partner Coinlab - may hold up the crypto exchange's civil rehabilitation process for up to two more years.

Pag, who started Mt. Gox Legal roughly 18 months ago with the intent to advocate for the reimbursement of creditors, first revealed his opinion of the expected timeline in a private forum post last week, obtained by CoinDesk, which told creditors he would be stepping down from his role as coordinator at the end of the month.

Partly due to the massive increase in price between 2014 and 2017, Mt Gox went from a bankruptcy proceeding to a civil rehabilitation process that remains ongoing.

Under civil rehabilitation, the customers will actually receive the amount they lost in bitcoin instead. When the Tokyo District Court, which is overseeing the case, first announced that Mt Gox would enter civil rehabilitation last June, claimants expected that they may receive their missing bitcoin as soon as this year.

Coinlab sued Mt Gox in 2013 alleging that the exchange had failed to honor the agreement and asking for $75 million.

The first problem stems from the fact that the Mt Gox trustee, Nobuaki Kobayashi, normally attributes voting rights to creditors based on the size of their stake.

In an email former Mt Gox CEO Mark Karpeles told CoinDesk that Coinlab performed "Close to zero" work for the exchange.

Mt. Gox Legal is, in Pag's words, the largest creditor group for Mt Gox.

"It started around 18 months ago when it became clear that the price of bitcoin was rising and the assets of the Mt Gox trustee was going to be more than the liabilities," Pag explained.