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U.S. Firm Offers to Buy up Mt. Gox Creditors at Reduced Price – Report

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U.S. private equity and hedge fund firm Fortress Investment Group is intensifying efforts to take over creditor claims from the defunct cryptocurrency exchange Mt. Gox. Earlier this month, the New York-based company sent letters to the exchange’s creditors, offering to buy up their claims, but at 70% of their account value, proposing a reduced price compared with its previous offer.

Mark Karpeles, the former CEO of Mt. Gox. Source: a video screenshot.

Mt. Gox filed for bankruptcy in 2014 after some 850,000 Bitcoin (BTC) went missing. The submitted proposal tells its creditors that lawsuits filed against the Mt. Gox Estate “threaten to delay and dilute distributions on your claim,” according to a document obtained by Bloomberg.

Since the Japan-based crypto exchange went bankrupt, numerous bitcoins have been found, but the majority of the missing crypto are yet to be recovered. The process is slowed down by two lawsuits filed against Mt. Gox that “are each expected to take 1-2 years for an initial ruling by a judge,” the letter says, adding that both “litigants would then have an option to appeal, which could take an additional 2-3 years.”

Under the offer, which is valid until 31 December, Fortress Investment Group is to pay about USD 778 per bitcoin, which represents a sharp decrease from the company’s previous offer of USD 900 per bitcoin, but also a mere fraction of the cryptocurrency’s current value. The investment firm claims payment will be made within three days following claim transfer.

Meanwhile, the latest legal developments related to Mt. Gox provide little consolation to the victims. On 28 October, Mt. Gox’s Rehabilitation Trustee announced that, contrary to its earlier statement, it was not possible to submit a rehabilitation plan by that deadline. Due to this, the Tokyo District Court issued an order to extend the deadline to 31 March 2020 on the trustee’s request.

Set up in 1998, Fortress says it had some USD 41.5 billion of assets under management as of 30 September 2019, operating on behalf of more than 1,750 institutional clients and private investors from a range of credit and real estate, private equity and permanent capital investment strategies.