Many years after the 2014 MtGox historic hack, it was seen as nearly impossible for the exchange to make creditors whole again. According to reports, over 850,000 Bitcoins were stolen in what is considered as the largest crypto hack in history. After the hacking incident, MtGox filed for financial bankruptcy and creditors lost hope of ever recovering their money. However, it is like a dream that a repayment process has begun which has started reimbursing those people who had MtGox balances at the time of the hacking incident.
The ability of Mt.Gox to trace and return funds even after many years speaks volumes regarding accountability and transparency within cryptospace. This shows that there is still trust when a major exchange close down but remember its customers with reimbursement making this technology offering more protections than traditional finance.
The long way to repayment
MtGox went bankrupt in 2014 after which the remaining assets were held by bankruptcy trustees whose main goal was to secure as much recovery money as possible for creditors. In fact, it was later found that about 2,000 bitcoins had been left in some old MtGox wallets. This finding became important because without these reserves, no funds could be refunded.
Just before the hack, many of the exchange’s hot wallets are believed to have been ordered by MtGox CEO Mark Karpeles to be shifted into bigger cold storage. This is what helped part of the funds evade the hacker’s hands. Thereafter, platform Admins managed to trace these “cold wallets” slowly through forensic accounting and blockchain audit.
Additionally, several of MtGox assets like domains and logos were sold over a number of years raising around $1 billion in crypto savings that have been growing along with the market. Others state that Karpeles might have also gotten some funds for himself before the hack.
A perplexing question that requires some answer
Many people have wondered about how MtGox can pay back the creditors after a massive hack that would seem to make it impossible for recovery to happen. Even if the market price goes up, this doesn’t mean that 1 BTC will therefore be equal to 2 as to cover up all the stolen BTC. Something is not clear here.
There might be hidden things taking place with regards to repayment which are unknown by the public. Some of these may include;
Secretive Buying and Selling: Karpeles or any other person could have been secretly making deals with cold wallets over the years in an attempt to regain holdings and take advantage of market rises. It could give a clue on why there were more coins over the years.
Insurance: There might be crypto policies covering MtGox that helped reduce its losses although nothing is known about this so far.. My guess though.
Investor Funding: Over time Karpeles or others may have made secret investments towards contributing into the reimbursement fund.
Asset Inflation: The stolen numbers might be inflated and some were non-existent at all. This can be unethical. Moreover, we cannot rule out the possibility of assets that were forgotten by their owners due to missing the time to sign in for the reimbursement agreement.
The modes with which MtGox got the reimbursement money is not known because there is no report of any information regarding the activity of MtGox over the years. More research could possibly help to answer some of these questions. However, the creditors are relieved that at least payments are being made even though how the stolen money were recovered are not known. The most important thing is that finally, creditors have been made whole.