By 2013 Mt. Gox was the highest volume Bitcoin exchange handling over 70% of all bitcoin (BTC) transactions worldwide.

However, in February 2014, the Japanese bitcoin exchange suspended trading because of 850,000 bitcoins belonging to customers disappeared. But shortly after, 200,000 of them were found in a wallet controlled by Mt. Gox CEO, Mark Karpellas, and the remaining 650,000 are missing.

The exchange filed for bankruptcy, but since the remaining bitcoins have appreciated considerably over the past five years, and since the value is over $2 billion dollars, the exchange transitioned from bankruptcy to civil rehabilitation. Civil rehabilitation will allow Account-holders to recover approximately 17% their bitcoin within a few years.

Japanese security company WizSec concluded that most of Mt. Gox bitcoins were hacked between 2011 and 2104.

BTC-e was a smaller cryptocurrency trading platform that began operations in 2011, allowing trading between the U.S. dollar, Euro, Russian ruble and the bitcoin.

On July 25, 2017, alleged BTC-e operator Alexander Vinnik was taken into custody while vacationing with his family in Greece for a United States Justice Department $110 million 21-count indictment. The primary charge: Money Laundering

Vinnik allegedly laundered over $9 billion in Bitcoin for criminal enterprises, Russian spy agency, and those from the hacking of the Mt. Gox bitcoin exchange.

The speculation is Vinnik can shed light on Fancy Bear, the alias for the Russian military intelligence officers allegedly involved in hacking the Democrat National Congress, stealing and releasing Democrat’s emails, laundered bitcoin through the BTC-e exchange.

France and Russia jumped into the fray and also charged Vinnik with money laundering, but after Vinnik agreed to return to Russia to testify against people for financial crimes, Russia reduced their charge to a $10,000 fraud.

Vinnik’s whistleblowing importance raises the stakes in his all-out extradition tug-a-war between the United States and Russia. Authorities uncovered a plot in 2018 to murder Vinnik in prison.

Greek politician and attorney, Zoe Konstantopoulou is representing Vinnik, has aggressively seeking his return to Russia on humanitarian grounds because of his near-death hunger strikes.

Vinnik’s final extradition custody ends on January 25, 2020, and he’s likely to end up in the United States unless Russia can convince Greece otherwise. Greek’s decision to take into the consideration of how many victims and financial damages may influence the conclusion of Vinnik’s extradition. The question is where will Russia get enough victims to sway Greece?

Alexander Zheleznikov the managing partner of a Russian law firm, ZP Legal, along with an unidentified person from the Russian embassy met with Mt. Gox Trustee, Nobuaki Kobayashi in Tokyo in February 2019 to discuss a very interesting proposal.

Mr. Zheleznikov conveys to the Trustee he has identified suspects in control over 170,000 to 200,000 of Mt. Gox stolen bitcoin, a value of $1.7 to $2 billion dollars, and requests his cooperation. However, the bitcoin recovery narrative has since changed; restitution for the Mt. Gox creditors is in Russian rubles if there is a recovery.

According to Mr. Zheleznikov, the suspects may be in custody for unrelated crimes. Bitcoin does not have legal status in Russia — stealing them is not a crime; however, a new law may pass on October 1, 2019, that will provide bitcoin digital rights.

Mr. Zheleznikov is a defense attorney who has close ties to the criminal underworld and Russian politics represents members of The Night Wolves motorcycle club. The club has close ties to Vladimir Putin and receives funding from the Kremlin.

Since Mr. Zheleznikov’s visit with the Trustee did not produce the outcome he hoped for, he pursued Mt. Gox creditors by recruiting Andy Pag, founder of MtGoxLegal, an informal group representing creditors with approximately 130,000 bitcoin claims, a value of $1.3 billion. Andy Pag sold his claim to Fortress Investments in early 2019, though he is no longer a creditor, he has a significant influence over members of MtGoxLegal.

ZP’s Legal and Mr. Pag unleash their proposal onto MtGoxLegal members with a two-week deadline to decide by September 8, 2019, to sign their 55% to 75% contingency plus uncapped attorney and outside service fee agreement — only crumbs left for the bitcoin victims.

Because of outspoken creditors that goes by the user names Tanko, Laoban, Bkava, and Blowtorch, they challenged Mr. Pag’s predatory motives. MtGoxLegal members fractured into several parties. Tanko and a few MGL members founded a group to investigate the validity of ZP Legal’s proposal and to seek alternative legal representation.

Mt. Gox creditors fear that they are being used in a money-laundering scheme to legitimize their stolen bitcoins for Russian criminals if they agree to Mr. Pag and ZP Legal’s proposal, and they may never see one ruble.

Mr. Pag and ZP Legal sought to gain at least $1 billion dollars in creditor’s claims, but because it fell way below expectation, they postponed the sign-up process deadline to September 22, 2019.

Mr. Pag announced on September 18, 2019, that his enrollment size represents 13,000 Bitcoin, approximately $130 million dollars, or 2% of all claims.

If ZP Legal and Andy Pag can muster enough support for their proposal to overshadow the U.S. Department’s indictment of Vinnik, Greece may grant Vinnik’s wish and send him home to Russia.

It is interesting how much Bitcoin has influence politics and how much of a political impact will have.

Copyright 2019