Mark Karpeles — the former CEO of the now-defunct Bitcoin (BTC) exchange Mt. Gox — has refuted controversial crypto figure Brock Pierce’s claims he can reboot the trading platform and accelerate compensation for Mr. Gox’s creditors. Karpeles made his remarks in private correspondence with CryptoNewspeople Japan on Feb. 12.
As reported, Pierce — a crypto entrepreneur who co-founded Blockchain Capital, Block.one and EOS Alliance — is attempting to galvanize a “GoxRising” movement, purporting that creditor recovery would be speedier if certain legal and technical barriers were to be overcome. The plan also includes creating a united, tokenized foundation for creditors.
His long-term aim is avowedly to reboot the platform — which notoriously suffered a hack in 2011 and subsequently collapsed in early 2014, resulting in the loss of 850,000 BTC valued at roughly $460 million at the time and about $3 billion at press time.
In recent comments to CryptoNewspeople, Karpeles challenged Pierce’s legitimacy in claiming he has the rights and ability to relaunch the exchange. The dispute hinges on a letter of intent to acquire Mt. Gox that was sent from Pierce’s company Sunlot Holdings Ltd. to Karpeles back in 2014. Given that no final agreement was reached, the letter was duly rescinded. As Karpeles has clarified to CryptoNewspeople:
“The letter of intent is a proposal, which was supposed to result in an agreement within 45 days, on condition of approval by the court, the trustee and/or anyone the court appoints.
As far as I know no agreement was reached within 45 days, nor did the court and the trustee approve such an agreement. We were working with our lawyers at the time in good faith to follow the terms defined there but failed to hear back from Sunlot after they assured they were working on this, including assisting in getting approval from the court.”
Karpeles’ second contention was with Pierce’s claims that his initiative could expedite creditor recovery. Pierce has allegedly claimed it could be settled within a year, rather than the 3-5 years it is currently estimated to take under the stewardship of Tokyo attorney Nobuaki Kobayashi. The attorney was appointed by a Japanese court to act as civil rehabilitation trustee for Mt. Gox’s bankruptcy estate. In response to Pierce’s claims that the process could be expedited, Karpeles said:
“As to distributing assets faster than the trustee, I haven’t heard at this point anything that would make this possible from Gox Rising [sic]. The published plans seem to imply reviving Mt. Gox and creating a lot of complex legal structures which may take time to happen.”
As reported, Pierce’s plans hinge on his success in galvanizing around half of the exchange’s creditors — 12,000 out of 24,000 individuals — to join GoxRising. On this aspect, Karpeles remarked:
“I do not believe ‘presenting a united front’ would help things much, and if anything any attempt to push things against the advice of the court as Brock has done before would likely result in further delays. More than anything I do not believe at this point all creditors would align behind him, so it would likely result only in more divisions.”
As reported in December, Karpeles pleaded not guilty in the final argument for his ongoing trial. Karpeles was charged with embezzlement of approximately 340 million yen (about $3 million) from Mt. Gox and manipulating the exchange’s ledgers to inflate its cash balance. Prosecutors are seeking a ten-year prison sentence for Karpeles, the final ruling for which is reportedly set to be delivered on March 15, 2019.