The coordinator of Mt Gox Legal (MGL), a group of investors seeking redress following the loss of funds on now defunct early Bitcoin exchange, Mt Gox, has sent a letter to fellow investors stating that he stepping down and is selling his claim for $600 per Bitcoin.
Andy Pag says a recent trip on behalf of the investors to meet with trustees has made him realize that the case could drag on for another 18-24 months, or possibly longer.
Mt Gox collapsed in 2015 after $500 million in bitcoins disappeared off the exchange.
Aggrieved investors and people directly involved at Mt Gox have long claimed that Mt Gox CEO Mark Karpeles’s negligence and incompetence led to the hack.
Karpeles beat extraordinary odds (a 99%+ conviction rate) in Japan in March of this year when he was found not guilty of embezzling the coins himself.
Karpeles was convicted of a lesser charge relating to falsifying data and was sentenced to time served plus about a year of monitoring by Japan authorities, which amounts to about 4 years in total.
Pag had choice words for Karpeles in his parting letter to fellow investors: “Mark is scheming again…” he writes in one of the bullet points highlighting the letter’s contents.
In addition to meeting with trustees appointed by Japan courts to sort out settlements, Pag says he met with Karpeles, “for a couple of hours.”
During that time, Pag determined that “(Mark) wants me to help him with a plan to help bring Tibanne (Mt Gox parent company, owned by Karpeles) out of bankruptcy. He says he can then fight CL in the courts and if it wins then CL will have to drop their case against Mt Gox. I think this is what he pitched to Brock (Pierce) too. To me this plan looks like an elevator of manure: it’s shit on every level.”
“CL” refers to CoinLab, another entity pursuing a compensatory settlement from Karpeles. Pag says the trustees in Japan told him that the case with CoinLab was delaying the MTL settlement.
Pag says Karpeles told him he owes $500 000 USD in general business expenses (“He can get this from his employer who thinks he’s great.”); owes money to CoinLab, a problem he hopes to dispose of by having the case moved to the US with MGL’s help; owes $7 million to a Japanese Mt Gox investor; and owes money to Mt Gox investors (“Presumably he’s expecting that to evaporate following re-assessment”).
Pag rejected Karpeles proposals:
“What if his lawsuit in the US fails? Then he’s off the hook with another bankruptcy, but we’re in a worse position than before. And how long will all this take? Years. Maybe longer than CL will take to settle in Mt Gox. So how does it help us? I don’t see that it does, it just helps Mark…”
He also expressed dismay:
“But there’s a bigger take home here. What really pisses me off about this is after all the scheming and conniving he did between 2011-14 which led to this mess, trying to co-opt co-conspirators to rob Peter to pay Paul.”
He also expresses doubts about Karpeles character:
“I don’t think he’s malevolent, but I got a glimpse at our meeting of someone who is ruthless, and I suspect is only interested in helping creditors if it helps himself. I feel this verdict (not guilty of embezzlement) has emboldened him to go back to being the wheeler dealer who lost $500 million of our money.”
Pag says the decision to take a buyout of $600 USD per bitcoin amounts to a 33% increase over a year upon his initial investment, and that the next best offer available is $400 per bitcoin. Bitcoins are trading today for around $5200 USD.
He says the decision to take a buyout means MGL should find another coordinator. “I was looking forward to the day we all celebrated victory together, but I can’t visualize what that day looks like any more…”
Pag says to has opted to move on with his life:
“I have discussed this with Julie and (I never thought I would say this) I’ve decided to sell my claim do we can start actually living the dreams we were waiting for…I’ve had to readjust to…smaller dreams. But they are still going to be awesome dreams.”