Hedge Funds Buying Out Claimants Of Mt. Gox Betting Bitcoin Will Go Up

Four or more hedge funds in the U.S. and Japan are making a bet that the price of bitcoin will go up, buying or offering to buy claims from the thousands of former trading account holders who saw their bitcoin holdings evaporate when Mt Gox, one of the world’s biggest bitcoin exchanges at the time, filed for bankruptcy in Feb. 2014.

According to a report by Financial Times, which cited people with direct knowledge of the situation, while none of the roughly 24,000 claimants expect to get back more than about a quarter of the lost bitcoin in the form of cash, the payout will eventually come all from bitcoin. Because of that, the hedge funds are making bets that the price of bitcoin will increase, making them a fortune. The report noted that it’s not clear how long it will take for the claims to be settled, but it could take another year or more. The hedge funds, noted the report, are providing claimants with a way to sell their claim now instead of waiting it out, and in exchange, they get 15 percent of the yen value of each claim in cash.

In Feb. 2014, Mt. Gox shuttered its business after a mysterious “glitch” caused $500 million worth of bitcoin to go missing. Those bitcoin — or at least most of them — have remained missing ever since. As for the exchange itself, it eventually went bankrupt, its owner is waiting in Japan for his criminal trial and a whole slew of legal issues has come cascading down around him — and it. The trustee hired to find the missing money has concluded two things: The $500 million valuation of the missing bitcoin is accurate, and that he’s been able to find only $91 million of it.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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