Fortress Investment Group, a New York-based private equity firm, has offered to pay Mt. Gox creditors for their claims as a means of offering them instant liquidity from the long-trapped funds. Fortress sent letters to Mt. Gox creditors stating that they would pay $900 per BTC to claimants, who are waiting to hear from a Tokyo court whether they are going to receive their portion of the settlement in BTC or the cash value at the time it was lost.
Double the Bankruptcy Rate on Offer
In the letters (shown below), Fortress state that they are offering “roughly 200% of the bankruptcy value” of $451, a bid that is designed to tempt creditors who will receive the lower figure if the cash settlement is awarded. This may sound like a generous offer, but when it’s compared to the cash value of what creditors would receive if they held out and were awarded the BTC (currently some 1,258% more than Fortress’ offer) it pales in comparison. Of course, some creditors who are due to be awarded huge amounts of BTC in restitution may consider the offer if they need money now, but otherwise it’s an offer that only benefits one party, and it’s not the creditors.
Fortress’ Win-Win Deal
Fortress, whose former CIO is famed Bitcoin price predictor Mike Novogratz, have been involved in the Bitcoin game since 2013, before the Mt. Gox collapse, which suggests that they know a thing or two about the space, and will have contacts in high places. That in itself should ring alarm bells for those considering this offer – would Fortress really be making this offer if they didn’t know something about how the court proceedings might turn out? Companies with $40 billion worth of assets under management don’t tend to make bets they aren’t very sure they will win. Fortress are only offering this ‘generous’ deal because they are fairly sure the Bitcoin will be awarded, which means they win handsomely on every single purchase. And let’s say they lose, and each claim is only worth half of what they paid out, they can write the loss off to tax and take the hit without it impacting their bottom line whatsoever.
The Mt. Gox reconciliation is due to be finally resolved later this year, and creditors have until the end of July to accept Fortress’ offer.