Mt. Gox, the once-dominant cryptocurrency exchange that famously collapsed in 2014, has recently encountered a new hurdle in its efforts to repay creditors. Reddit users are now reporting a payment error stemming from what the exchange describes as a “system issue” during the ongoing civil rehabilitation proceedings.
On December 26, a Reddit user shared what appeared to be an official email from the Rehabilitation Trustee overseeing the creditor repayments. According to the email, funds were transferred via PayPal as the initial step in the civil rehabilitation process for Mt. Gox.
However, later that day, Mt. Gox experienced a significant issue in the fund distribution process. The email stated,
“Due to a system issue, the transfer of money to you was inadvertently made twice.”
The exchange admitted to making a transaction error by transferring funds twice. The official message urged recipients to promptly check their PayPal accounts to verify the amounts involved, emphasizing that the second transfer was an inadvertent mistake while the first transfer constituted the legitimate repayment.
Recipients were explicitly informed that they are not authorized to keep the funds from the second transfer and are legally obligated to return the amount to the Rehabilitation Trustee. The communication provided specific details about the amounts involved, offering transparency about the error.
Affected users are now encouraged to initiate the refund process using PayPal’s “Refund” feature. In cases where this feature is unavailable, an alternative solution is proposed, requesting the return of the amount directly to the Rehabilitation Trustee’s PayPal account through a manual transfer.
This latest incident adds a new layer of complexity to Mt. Gox’s efforts to settle its outstanding debts and underscores the challenges associated with reviving a defunct cryptocurrency exchange. The community is closely watching how Mt. Gox and the Rehabilitation Trustee handle this unexpected glitch in the creditor repayment process.
Mt. Gox Creditor Repayments Spark Concerns as Users Report Double Payments and Debate Refund Returns on Reddit
The issue of double payments in Mt. Gox’s creditor repayments has gained traction on Reddit, with multiple users sharing their experiences and concerns.
The responses among users were varied. One user, u/lukhaz, reported receiving an email from Mt. Gox requesting a refund for a duplicate transfer. Another user, u/CaptainValor, humorously noted the double payment, suggesting it could be a belated Christmas present.
While some users claimed to have promptly returned the additional funds, acknowledging that mistakes can happen, others expressed skepticism. One user, u/PPvotersPostingLs, stated, “I sent it back. We all make mistakes; don’t be too hard on [Mt. Gox Trustee Nobuaki Kobayashi].”
On the contrary, some users questioned whether the trustee deserves the money back, considering the historical difficulties creditors faced in recovering their funds from Mt. Gox.
User u/JALEW mentioned returning the funds, but with conditions, suggesting a Know Your Customer (KYC) process and a waiting period of ten years.
Despite jokes about not returning the funds, some users cautioned against such actions, citing a case in 2022 where a couple in Melbourne was arrested for not returning over $10 million accidentally sent by Crypto.com. This highlights the potential legal consequences of not complying with repayment requests, even if the error is on the part of the sender.
Last month, the exchange outlined plans to start repaying creditors in cash during the 2023 calendar year, continuing into the next year due to the large number of creditors. Mt. Gox, once a major cryptocurrency exchange, faced significant issues after a 2011 hack and ultimately collapsed in 2014.
Despite the collapse, the exchange managed to recover about 20% of the stolen funds. The hack affected around 24,000 customers, leading to losses of approximately 850,000 BTC, now valued at over $31 billion based on the current price of Bitcoin.
Nearly a decade after the Mt. Gox hack, the exchange has reportedly begun repaying customers who lost 850,000 bitcoins. Some users in the mtgoxinsolvency subreddit group have reported receiving payouts in Yen through PayPal, while others who opted for cash into bank accounts have not observed any inflows.