At last, Mt. Gox users can file claims for lost bitcoins

More than a year ago, the massive bitcoin exchange collapsed. Now users will have a chance to file a claim in hopes of getting their cash back.

Don Reisinger
CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
3 min read

Some people will get at least a portion of their lost investments back. Bitcoin

More than a year after Mt. Gox, once the largest bitcoin exchange in the world, collapsed, former users will have the opportunity to file a claim in hopes of getting their lost cash back.

Mt. Gox bankruptcy trustee Nobuaki Kobayashi said on Wednesday that Mt. Gox users will now be able to file a claim via two online portals. Those who don't have access to the Web or don't have access to the e-mail accounts they previously used on Mt. Gox can also file their claims offline.

Last year, the Japan-based Mt. Gox collapsed after the company revealed that 850,000 bitcoins, worth more than $400 million, had been stolen by hackers. The service, which allowed users to trade in bitcoins, was left insolvent and its executives sought bankruptcy protection. Users who had entrusted their bitcoins to the exchange were out the cash they invested in the crypto-currency.

Since Mt. Gox was granted bankruptcy protection and a trustee was appointed to help affected users, creditors have been lining up to get at least some of their cash back. Meanwhile, the currency continued on in other exchanges, like Coinbase and BitPay.

Bitcoin has gained notoriety in both the tech and finance worlds because it can be used to buy stuff anonymously, without having to go through banks. That means no transaction or credit card fees. And because bitcoins aren't tied to any country or subject to any regulations, international purchases are both easy and cheap. Some people also view bitcoins as an investment, buying them in the hope they will rise in value -- much like gold or silver.

Last week, a Tokyo-based security firm focused on bitcoins, named WizSec, released the results of an investigation into Mt. Gox. The company found that while Mt. Gox collapsed in early 2014 and it was previously believed that the timing of the hack occurred around that time, the cryptocurrency was slowly being siphoned from Mt. Gox as far back as 2011.

The findings compounded concerns over whether the executives running the exchange, including CEO Mark Karpeles, had done enough to secure and properly monitor the service. Karpeles was asked last year to travel to Dallas to answer questions on the Mt. Gox collapse, but he refused, saying through his attorneys that he was "not willing to travel to the US."

To facilitate the onslaught of claims made against Mt. Gox, Kobayashi has enlisted the help of another exchange, Kraken. That company will also offer a claims page where people will be able to submit their claims and, if approved, get back bitcoins deposited into a Kraken account. Kobayashi is currently working with Tokyo authorities to determine whether his office will give bitcoins or cash to those who file claims offline or through the Mt. Gox claims system.

Regardless, those hoping to get all of their investments back shouldn't hold their breath. According to the bankruptcy filings, claims will be calculated at a rate of $483 per bitcoin owned at the time of the Mt. Gox collapse. That figure is above the current exchange rate of $237.69 but far below the $700 to $800 range the currency was trading at near to the time of the Mt. Gox collapse.

Former Mt. Gox users hoping to get at least some of their cash back will need to file their claims by the May 29 deadline. Kobayashi and his team will decide which would-be creditors will qualify for reimbursement by September 9. At that time, the trustee will also set the amount each approved claimant will recuperate.