Despite the fact that he oversaw the period when Mt. Gox went from the world’s largest Bitcoin exchange to a bankrupt and damaged company, CEO Mark Karpelès could stand to profit hundreds of millions of dollars.

According to The Wall Street Journal, because the value of claims by people who had bitcoins stored at the Tokyo-based site are calculated in the April 2014 exchange rate between bitcoins and Japanese yen, those creditors may miss out on Bitcoin’s meteoric rise over the last year.

Karpelès is currently on trial on embezzlement charges in Japan. He's also the CEO of Tibanne, the company that now "mostly owns" Mt. Gox, and has a cache of 200,000 bitcoins according to WSJ. So if that pool ends up being used to pay out claims, creditors fear Karpelès may get to do so at 2014 rates instead of 2017 rates.

Back to 2014

In addition to Karpelès' legal troubles, Tibanne is currently undergoing bankruptcy proceedings. Mt. Gox is 88-percent owned by Tibanne, while the remaining 12 percent is held by Jed McCaleb, a San Francisco-based programmer.

To date, Karpelès has denied any wrongdoing and lamented Mt. Gox's 2014 massive breach and rapid fall. After the site went bankrupt in March 2014, Karpelès told the public and a Japanese bankruptcy court that he had suddenly discovered that cache of 200,000 bitcoins. At present exchange rates, those are worth approximately $1.3 billion, and they comprise the majority of Mt. Gox’s remaining assets.

As Ars reported in March 2014 , Mt. Gox said previously that it had lost 750,000 bitcoins (at the time, worth around $412.5 million) belonging to customers and more than 100,000 bitcoins (at the time, worth around $55 million) of its own money. The site suddenly shut down in February 2014 after weeks of sustained DDoS attacks and "transaction malleability" problems , which led the company to halt withdrawals entirely. (That problem was patched shortly after Mt. Gox collapsed.)

At current exchange rates, 750,000 bitcoins are worth nearly $5 billion, at about $6,500 per bitcoin. By comparison, if they are paid out at the approximate April 2014 rate of around $440 per bitcoin (or its equivalent in yen), it would only yield $330 million.

That drastic difference is why creditors are concerned that even after paying out their claims in yen, Karpelès will come out financially on top.

"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 (worth around $2.3 million today), told the WSJ. "So that seems incredibly unfair."

Burges has led the public charge against Karpelès since 2014, famously holding up a sign outside his offices, demanding: "WHERE IS OUR MONEY?" He has since been spearheading a "universal creditor committee" to possibly revise the Japanese bankruptcy proceedings. Burges noted on his website that this surplus profit question was made official at a creditors' meeting in late September 2017.

"If we can manage to get a committee formalised and approved, we will wield a significant degree of influence over the bankruptcy," Burges wrote on October 18. "The main thing which is hobbling the creditors right now is that any proposal to the court, or to the trustee, which deals with the bitcoin surplus is likely to be thrown out."

Neither Karpelès nor Burges immediately responded to Ars’ request for comment.

"If ultimately I do end up netting money from Mt. Gox, I'll try to figure out a way to give it to the Mt. Gox creditors," Jed McCaleb, who still holds his 12-percent stake, e-mailed Ars. "If that isn't possible, at least [I'll donate] to something that benefits the Bitcoin ecosystem."

UPDATE 5:05pm ET: In an e-mail to Ars, Karpelès wrote that the "proposition" that he could stand to gain a lot is "based on laws."

"Basically bankruptcy laws in most jurisdictions (I do not believe Japan is an exception there) say that a bankrupt entity debts are frozen as of the time the entity enters bankruptcy, and are valued in currency," he said.

"It means all of Mt. Gox's debts were frozen as of April 24th 2014. Creditors, when filing with the bankruptcy, had to convert any amount to [yen]—which makes sense in a purely legal term, as it'd be impossible for anyone to proceed with a bankruptcy if debts had to be re-calculated all the time and could change over time."

He noted that the bankruptcy trustee still has to formally sell the 202,000 bitcoins that remain part of the Mt. Gox estate, and until that happens "there is now way to tell how things will end."

Karpelès also said that "nobody" could have known that Bitcoin's price would rise so dramatically.

"The bankruptcy also shouldn't have lasted that long," he continued. "Maybe we wouldn't have been there if CoinLab hadn't been trying to get a claim on $75M from MtGox while having failed to perform on every point required of them. Some creditors have also organized themselves, and have been obtaining legal advice from Japanese lawyers in order to find alternatives to this situation. As to my current situation, I am currently employed as a software engineer/architect, currently working on products completely unrelated to Bitcoin."

UPDATE 7:45 pm ET: Paul Church writes: “There are a large number of us Mt. Gox creditors gathering at www.mtgoxlegal.com and are going to fight back against this injustice.“