From the fall of his former company Mt Gox to the bankruptcy of FTX, Mark Karpelès gives a great interview to BFM Crypto.
Mark Karpelès’ speeches in the French media are rare. The former boss of the Mt Gox cryptocurrency exchange platform, which fell in 2014, returned to the situation of his company as well as the procedure for the refund of his customers that will take place in 2023. Almost ten years after the collapse of Mt Gox, the The latter intends to return soon to the front of the stage by launching a rating company for trading platforms. As Mark Karpelès experienced the collapse of his own company, the interview took on its full meaning in the context of the fall of the giant FTX.
You were the boss of Mt Gox, considered one of the biggest cryptocurrency exchanges when it went bankrupt in 2014. What was your state of mind at the time?
Inevitably, I was angry. During 3 years of managing Mt Gox, I have a certain confidence in my abilities to run a secure platform. In 2014, 80% of bitcoins were stolen from Mt Gox, which managed 850,000 bitcoins at the time of its bankruptcy. I did everything possible to protect the system and the fact that it was hacked was a shock that made me question many things. I lost all confidence and moreover I received many insults or even death threats which did not help. At the time of its bankruptcy, Mt Gox had over 1 million customers and 100,000 people had deposited bitcoins or funds on our platform.
What is the status of Mt Gox now?
Mt Gox has the equivalent of approximately 500 million dollars in yen and approximately 141,000 bitcoins to be redistributed to creditors during 2023. The Japanese liquidator will decide when the exact payment happens, it doesn’t depend on me. If all customer payment information is collected by January 10, the payment process can begin. It can be paid by bank transfer in fiat currency or in cryptocurrencies. Since the deadline for providing contact details is January 10, the liquidator is under pressure to return enough bitcoins before people change banks or contact details. I hope that the “early” and “final” payments will happen at least by the end of 2023. Likewise, if the trial of Alexander Vinik, who is suspected of stealing 550,000 bitcoins out of 850,000 bitcoins from Mt Gox, should be succeed (the test is still ongoing, editor’s note), these bitcoins can also be added and distributed to everyone.
How many people are affected by the reimbursement?
There were 23,267 creditors on October 1, 2019, but since then many people have sold their claims. According to the information I used, between 10,000 and 20,000 creditors are waiting to recover their bitcoins now. For my part, I will not receive any bitcoin, which is excluded in the context of bankruptcy.
Mt Gox went bankrupt in 2014, the payment will happen almost 10 years later. Why does the procedure take so long?
Several elements make the method longer. On the one hand, Mt Gox is in a process with the American company Coinlab, which is trying to recover funds from Mt Gox. He will receive 11 million dollars by leaving this procedure. In addition, in 2017, the price of bitcoin has increased significantly since 2014 and Mt Gox has 200,000 bitcoins. The liquidator sold 60,000 bitcoins with the aim of raising approximately $500 million in yen, which matched the amount of Mt Gox’s debts in 2014. rehabilitation (reimbursement and payment plan, editor’s note). In 2017, there were about 141,000 bitcoins left on Mt Gox that needed to be redistributed to customers. So even if the price of bitcoin falls, customers will receive at least an amount equal to the value of bitcoin in 2014 and a fraction of what Mt Gox had in 2017. This is a guarantee that the liquidator saw so that clients receive at least the amount they lost. I see it in a positive light, because people expect not receive. There, with the increase in the price of bitcoin, we are talking about 5 times the initial stake or more. For example, if a person has one bitcoin in 2014, in 2023 they will receive approximately 0.15 bitcoins, according to the calculations that can be done on this site.
Can we expect a chaos in the crypto market when 141,000 bitcoins are distributed, with many sales, for example, which can cause prices to fall?
It won’t happen. We’ve seen companies selling a lot of bitcoins, I don’t see any reason to worry too much. Similarly, the sale of 60,000 bitcoins to the liquidator in 2017 did not cause any turmoil in the market. The liquidator will do everything possible to distribute everything at once. I think those who own a lot of bitcoins have no intention of selling them. The American company Fortress, which bought the debts of customers of Mt Gox, is now the largest creditor of the company.
How are you doing now?
When it was all over for me as far as Mt Gox was concerned, I was still in Japan and preparing to start the company UnGox. We intend to investigate all companies related to cryptocurrencies, from centralized exchange platforms (CEX, editor’s note) to other affiliated projects. The idea is to create a score that corresponds to the risks associated with these companies. I’ve been investigating old platforms like Coinbase, Kraken, Binance but I’ve also been investigating FTX for months, and I’ve noticed anomalies. Since the company went bankrupt, I have known companies that were on the verge of bankruptcy as well. This is a case that starts heavy, the internal management is not good.
When do you plan to launch UnGox?
From a technical point of view, everything is ready, I want to synchronize the launch of the platform with the funds returned (as part of the Mt Gox rehabilitation plan, editor’s note). But due to the fall of FTX, I hope to launch UnGox in early 2023. I have investigations to publish and I want to recruit a special team (due diligence, risk analysis, etc.) for this surveys. In the context of FTX, if the company is perceived as unreliable, customers may place a lower value. We will provide free general information that will inform you if a platform is dangerous, and there is also an offer of 5 euros per month for exclusive information.
Since the FTX bankruptcy, the need for global and stricter regulation has emerged. What do you think?
Creating a single regulation does not always cover all scenarios. FTX has a US license and they went bankrupt. FTX in Japan is also licensed, and customers should get refunds, so it depends on the country. Japan’s regulations are stronger and better protect customers but completely prevent the creation of new technologies, pushing innovators to move to other countries such as Singapore. Regulations are necessary to protect investors who are new to the market, but it is important to also leave room for innovation.
With the bankruptcy of FTX, the CEX model was called into question. Do you understand this?
Indeed, but CEXs remain the easiest way to access cryptocurrencies. As many people have cold wallets, trade on decentralized platforms (DEX) but they remain linked to CEX, they use stablecoins that are highly centralized and represent a significant risk. There are no trusted CEXs in the world, every CEX is a target, including hackers. When we hear that Coinbase has 2 million bitcoins, for some countries, this is an amount that can be justified to go to war.