TOKYO—Creditors of the collapsed Japanese bitcoin exchange Mt. Gox are on course to miss out on the recent surge in bitcoin prices. Instead, it is the exchange’s former chief executive, now on trial for embezzlement, who could turn a handsome profit.

That is because the claims by people who deposited bitcoin at Mt. Gox are calculated based on the yen value of the cryptocurrency at the beginning of Mt. Gox liquidation proceedings in April 2014. Meanwhile, Mt. Gox, which is mostly owned by a company controlled by former chief Mark Karpelès, is sitting on more than 200,000 bitcoins worth 17 times as much today as they were then.

Bankruptcy-court filings suggest Mt. Gox will have hundreds of millions of dollars left over after paying creditors—money that Mt. Gox’s bankruptcy trustee has indicated would belong to the collapsed exchange’s shareholders, with Mr. Karpelès’s company being the biggest.

“When it’s all sorted out, Karpelès would pretty much get [the] vast majority” of the extra value, said Kolin Burges, a creditor who held 311 bitcoins at Mt. Gox which would be worth about $2.3 million today. “So that seems incredibly unfair.”

Mr. Karpelès has denied all wrongdoing in the criminal case. In an email, he said he believed it unlikely he would end up with any money. He said finding bitcoin buyers would be difficult and it was common for bankruptcy assets to be sold at a fraction of their book value.

“[I]n the case these are sold, I do not believe it would realistically fetch any kind of value high enough to make this an actual issue,” he said.


Bitcoin prices rose to ¥836,761 ($7,365.85) on Thursday afternoon in Tokyo, compared with ¥50,058 at the beginning of the liquidation proceedings in April 2014.

Investment manias throughout the centuries have ranged from tulips to tech stocks to housing; is bitcoin different? Illustration/Video: Daniel Epstein

Some lawyers say the Mt. Gox bankruptcy is an example of how existing laws aren’t yet fully adapted to issues involving virtual currencies. When a bank fails, governments and courts have well-established procedures for refunding depositors and apportioning losses if the bank’s assets fall short. But they have little experience when a bitcoin exchange fails, with both assets and liabilities largely in the volatile virtual currency

For anyone who deposited bitcoins at Mt. Gox, “it’s a relatively straightforward reaction to ask for your bitcoins back if any are left,” said Tetsuo Morishita, a professor at Tokyo-based Sophia University Law School. “Under current Japanese statutes, however, you can’t establish ownership well for nonphysical stuff.”

Mt. Gox was once the world’s largest bitcoin exchange. It filed for chapter 11-style bankruptcy protection in February 2014 after finding many of its bitcoins missing. It subsequently said it discovered roughly a quarter of what it had lost, but it was unable to draw up a recovery plan. In April 2014, a court ordered the company to be liquidated. Nearly 25,000 people around the world filed claims.

In 2015, Mr. Karpelès was arrested and charged with embezzlement and creation of unauthorized records at Mt. Gox. He was released pending trial. At the trial’s opening session in Tokyo District Court in July this year, prosecutors said Mr. Karpelès wrongfully spent ¥340 million ($3 million) of customers’ money for his personal use and altered the company’s books to inflate the amount of dollars and bitcoins held by customers.


At the trial, Mr. Karpelès said he was innocent and repeated his contention that the exchange’s collapse was caused by hackers. He said he regretted he was unable to prevent customers’ losses.

The unusual situation of a bankrupt criminal defendant potentially sitting on large gains became apparent at a creditors meeting Sept. 27 attended by about 30 people.

At the meeting, participants say, the bankruptcy trustee, Nobuaki Kobayashi, laid out his thinking, observing that when a bankrupt company turns out to have more assets than liabilities, those surplus assets belong to the company’s shareholders. A representative of Mr. Kobayashi’s law firm declined to make him available for comment.

Mr. Karpelès’s company, called Tibanne, owns about 88% of Mt. Gox.

The bankruptcy estate for Mt. Gox holds 202,185 bitcoins worth about ¥169 billion or $1.5 billion at current rates. Meanwhile, the trustee has recognized claims by exchange customers of ¥46 billion based on the April 2014 bitcoin price, a procedure that lawyers say has a sound basis in bankruptcy law.


After accounting for smaller amounts of nonbitcoin assets and liabilities, Mt. Gox has a surplus on paper of ¥111 billion, or $977 million, that could go to its shareholders, according to a calculation by The Wall Street Journal.

Several conditions have to be met before hundreds of millions of dollars actually make their way to Mr. Karpelès, according to lawyers involved the case. In addition to Mt. Gox, Mr. Karpelès personally and his company, Tibanne, are in bankruptcy proceedings. Trustees handling those cases would have to confirm that the bankrupt entities don’t have significant additional liabilities before Mr. Karpelès receives any remaining assets.

The customary period in which creditors may dispute the trustee’s decisions on claims has ended. Still, some frustrated creditors are talking about ways to get more money—quickly, if possible. “It’s just never-ending,” said Mr. Burges, who flew from London to protest outside Mt. Gox’s Tokyo offices in the weeks leading up to the exchange’s collapse. “We are in a worse position than we were 3½ years ago.”

Mr. Karpelès’s lawyer, Nobuyasu Ogata, agreed on the importance of speed.


“What is most important is to sell the bitcoin before the price falls and ensure that the bankruptcy estate has ample funds,” Mr. Ogata said.

Write to Kosaku Narioka at kosaku.narioka@wsj.com