ndy Pag, founder and co-ordinator of Mt. Gox Legal (MGL) resigns with an announcement made via a letter posted to the MGL contributor forum on April 4th. Pag cited an extended time frame for payouts and mistrust of former Mt. Gox. CEO Mark Karpelès.
Around Fall 2017, Pag started MGL in order to advocate for the reimbursement of creditors. However, earlier this month, he discussed his view new developments and an altered expected timeline in a private forum and told creditors he would no longer stand as the co-ordinator of MGL.
MGL was the largest group of creditors of the defunct BTC Mt. Gox, a cooperative of creditors and claims that have been reported to total more than 125,000 BTC.
Reports circulated saying users could get paid as early as this year, but Pag believes that the dramatically over-sized 16 billion dollar claim of start-up incubator CoinLab will derail any chance of quick proceedings.
CoinLab’s legal actions have met with heavy criticism before. In 2013, CoinLab sued Mt. Gox for 75 million, claiming breach of contract.
This move was already seen as over-sized by some.
Kraken CEO Jesse Powell said in 2013:
“People are having a hard time getting their heads around the seventy-five million plus claim given that common perception is that CoinLab never performed and owes five million plus back to Mt. Gox.”
When the 16 billion dollar increase to the claim surfaced late January of this year, Pag had posted a tweet on his feed calling out co-founder and CEO of CoinLab, Peter Vessenes.
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Hi Peter <a href="https://twitter.com/vessenes?ref_src=twsrc%5Etfw">@vessenes</a>, Did you submit a $16bn claim in the Mt Gox Civil Rehabilitation? 0.3% of Japanese GDP? Looks like this was done pruposefully just to block any creditor pay outs? Care to clarify how this claim is justified?</p>— Andy Pag (@andybutshorter) <a href="https://twitter.com/andybutshorter/status/1090235709963886593?ref_src=twsrc%5Etfw">January 29, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Peter did not respond to the call out and his twitter account has been inactive since August 2018. Compounding this, the largest delay stems from the inability of Mt. Gox trustee, Nobuaki Kobayashi to attribute fair voting rights due to CoinLab’s claim.
The normal process taken by Kobayahsi would be to give voting rights to creditors in accordance to the size of their claim, but this cannot be done while a claim is disputed.
It could take the bankruptcy judge almost a year to assess the claim.
If the claim is rejected, they can litigate it in court and that could add another year to the process. If the court rejects the claim again, they can appeal, further delaying the timeline. In all, Pag estimated two years of proceedings in his forum post citing his reasons for stepping down.
Until then, with no resolution to the claim, the start of the civil rehabilitation will be stalled.
“We’ve started that process, but it’s not finished, and it’s not confirmed, it’s not confirmed that we’re in civil rehabilitation until the creditors vote on a civil rehabilitation plan.” - Said Pag.
Currently, Mt. Gox Legal’s board has begun the process to replace him.
During this time, Pag expects that the group will likely shift into a hibernation state, since the entire civil rehabilitation process is on hold until the legal claims are sorted out in court.
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Many newcomers to the crypto space get discouraged. They shouldn't....<br><br>Here are 3 Tips for the Beginner <a href="https://twitter.com/hashtag/Crypto?src=hash&ref_src=twsrc%5Etfw">#Crypto</a> Investor.<a href="https://twitter.com/hashtag/cryptocurrency?src=hash&ref_src=twsrc%5Etfw">#cryptocurrency</a><a href="https://twitter.com/hashtag/cryptotwitter?src=hash&ref_src=twsrc%5Etfw">#cryptotwitter</a><a href="https://twitter.com/hashtag/btc?src=hash&ref_src=twsrc%5Etfw">#btc</a><a href="https://twitter.com/hashtag/altcoin?src=hash&ref_src=twsrc%5Etfw">#altcoin</a><a href="https://t.co/Jud4WwsOfp">pic.twitter.com/Jud4WwsOfp</a></p>— ReadBTC (@readbtc) <a href="https://twitter.com/readbtc/status/1116140159228174338?ref_src=twsrc%5Etfw">April 11, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
However, contrary to the outlook expressed by Pag this month, Karpelès believes CoinLab’s claims will be handled with a degree of urgency by the Tokyo District Court. He also says that CoinLab never really did anything for Mt. Gox.
CoinLab however argues that the courts would have dismissed the original lawsuit if it had been entirely invalid.
“Courts are likely to consider CoinLab’s case with some matter of urgency today and will likely try to get things handled quickly, but CoinLab has likely no interest of bringing a losing battle to its conclusion and will likely try to extend the process as much as possible.”
Yet rather than wade deeper through the legal quagmire, Pag has sold all his claims for $600 per bitcoin to a New York-based investment firm he has declined to disclose. As a result of selling his claim, Pag no longer feels he can run Mt. Gox Legal, saying, “without owning a claim, I don’t think I’d carry support to run the group.”
For his actions and the actions of MGL, Pag did receive some criticism, with some claiming MGL and Pag achieved nothing but, “spend 200k.” Despite these criticisms, Pag resolves to move on with his life and put the entire ordeal behind him.
Pag said, “Do I want to be right, or do I want to be happy? I’ve decided I’d rather be happy and get on with my life.”