From 2011 to 2013, the now-defunct cryptocurrency exchange Mt. Gox, had lost 850,000 Bitcoins it had stored on behalf of its clients and traders. At today’s Bitcoin price, the stolen Bitcoins amount to a staggering $8.25 bln.

In 2014, the Japanese government formed a task force and a trustee to extensively investigate into the case of Mt. Gox, as the company filed for bankruptcy. Former Mt. Gox CEO Mark Karpeles was investigated by the Japanese law enforcement, while former Mt. Gox users were promised compensation from the 202,000 Bitcoins Mt. Gox had recovered.

However, it was recently revealed that former users of Mt. Gox will be unfairly credited with the Japanese yen value of Bitcoin they held in 2013, with Bitcoin price hedged to the price four years ago. Given that Bitcoin price has surged by more than 30-fold, creditors of Mt. Gox are understandably infuriated with the bankruptcy proceedings and are investigating methods of legally challenging Karpeles and Mt. Gox for their remaining 202,000 Bitcoins.

Karpeles reveals ICO plans, community outraged

In a blog post, Karpeles completely dismissed the creditors by expressing his intentions to pay out the minimum amount possible and keeping the majority of the 202,000 Bitcoins.

“Mt. Gox’s bankruptcy should have been a rather boring and long process. Long, because there are many creditors (24,750 people submitted claims as Mt. Gox customers) and because some people are trying to get a part of the cake despite having been rejected by the trustee (CoinLab). Now, far from being boring, this bankruptcy is setting a new kind of precedent. Indeed, the assets held by Mt. Gox when it entered liquidation bankruptcy included some 202,000 BTC, which now have a worth at today’s rate much higher than the sum of all non-erroneous claims filed against Mt. Gox,” wrote Karpeles.

In addition to that, Karpeles introduced his plans to conduct an initial coin offering (ICO) to raise $245 mln to “revive” Mt. Gox. The plans of Karpeles are illogical and delusional to a certain extent, given that Korbit, one of the largest cryptocurrency exchange in the world, was recently acquired for $140 mln by $10 bln gaming giant Nexon.

Karpeles coin

Firstly, it is mindboggling that Karpeles believes he needs more capital than the entire market valuation of one of the successful cryptocurrency exchanges to launch and run a simple trading platform. More to that, the plans of Karpeles to launch an ICO to revive Mt. Gox demonstrates his incompetence and lack of knowledge in the ERC token standard.

Contrary to most beliefs, the ERC20 token standard was not designed for organizations to initiate quick cash grabs. It is not a money generating tool. Rather, a standard with which innovative projects can launch crypto-tokens to serve the needs of the cryptocurrency market.

Evidently, Mt. Gox does not need its own unique cryptocurrency to operate, like every other cryptocurrency exchange in the market such as Coinbase, GDAX, Bithumb, Korbit, bitFlyer, Bitfinex, Bitstamp, Kraken and Gemini do not need their unique cryptocurrencies to operate as trading platforms.

“Launch an ICO to raise money to hypothetically revive Mt. Gox. This sounds more challenging, both legally and because there is no guarantee of raising enough to revive Mt. Gox. In case there is not enough raised it could still be locked to be distributed to creditors, which would be better than nothing,” Karpeles wrote initially.

Later, Karpeles updated his blog post, stating that his lawyers have informed him the legal hurdles he will have to solve to launch an ICO campaign.

Karpeles is directly responsible for the theft of $8 bln from Mt. Gox. Creditors of Mt. Gox have not been credited with the bankruptcy proceedings and Karpeles is already looking into ways to create quick cash grabs.