- Mt. Gox could have been resurrected had Brock Pierce got his way
- Pierce tried to buy Mt. Gox in 2014 and 2019 but failed on both occasions
- Gox Rising would have replaced the old exchange
Mt. Gox is back in the news, with payouts to creditors expected in weeks. However, things could have been very different if an audacious plan from EOS.io founder Brock Pierce had been given the green light…and we could still be trading on Mt. Gox today. Here’s the story of how Brock Pierce nearly raised Mt. Gox.
Sunlot Fails With 2014 Purchase
After its collapse in 2014, Mt. Gox was handed over to the Tokyo District Court and an experienced bankruptcy lawyer Nobuaki Kobayashi. At the same time however, Pierce emerged very early on as a possible saviour, putting together a proposal with a number of other investors from Sunlot Holdings Ltd just a month after Mt. Gox froze withdrawals. The group wanted to buy Mt. Gox from then CEO Mark Karpelès for the princely sum of one bitcoin (about $400 at the time).
Creditors would have the option of receiving payment from the 200,000 bitcoin that had been recovered or receiving the equivalent amount in equity in the new exchange, with the group setting aside 50 percent of its transaction fees to pay back victims and other creditors over time.
A Chicago District Judge Gary granted the initial approval of the terms of the deal in May 2014, and Pierce sent a letter of intent to buy the exchange, but the deal never materialised. This left Pierce and Karpelès at loggerheads over what Brock thought was a legally binding contract and Karpelès knew was not.
Five years later, with the rehabilitation plan in full swing, Pierce tried again. Gox Rising was supposed to be the ‘phoenix from the ashes’ that would see the aged exchange rise again to its former glory. Pierce promised to:
- Value all claims at 100% of their then value
- Explore avenues to recover more of the missing bitcoins
- Fight the a lawsuit from CoinLab
- Distribute any existing funds to creditors
- Relaunch the exchange, with creditors receiving a 16.5% equity stake for free, enabling additional recovery via profits
- Have the entire thing settled in a year
However, not everyone was buying it. Pierce’s promise that, of the still missing 650,000 BTC, “some of it can be found, a lot can be recovered” was seen as bluster with no basis in reality; the CoinLab lawsuit was already being fought; the claims were already at 100%; the repayment plan to creditors was directly comparable to that of the bankruptcy court; and there was not much faith that Pierce could do things any quicker than the Tokyo District Court.
The crux of the issue was that Pierce believed he already owned Mt. Gox thanks to that deal-but-not-a-deal from 2014. A fierce war of words erupted between the pair in 2019, with Karpeles insisting that no deal was done and that a letter of intent is not a legally binding contract to buy.
Last Throw of the Dice
Legal action seemed imminent, especially with some $700 million on the line given the value of the 200,000 BTC (now worth $3.9 billion), but, just when things seemed about to explode…nothing. There was no followthrough, the bankruptcy progressed, and the deal seemed dead.
However, in May 2020, Pierce tried a different tack, offering to purchase claims of creditors that didn’t want to wait for the final outcome of the ongoing litigation, offering $800 per bitcoin – $100 less than Fortress Investment Group had offered 10 months before.
Despite saying that it was investigating potential avenues for bringing better liquidity options to claim holders”, there was no discussion of a new exchange in the press release. Indeed, this communication appears to have been the final honk of the dying swan that was Pierce’s attempt to get his hands on Mt. Gox – something that most in the cryptocurrency community were glad about. The last tweet from the project was in October 2019, and there is no longer any talk of legal action around the letter of intent..
Pierce’s Mt Gox Dreams Gone
The Gox Rising site is still up and offering “liquidity options for Mt. Gox claim holders”, but with claims about to be paid back in BTC, BCH, and cash from sales in 2018 and 2019, it seems that even this aspect of Pierce’s plan has failed.
Mt. Gox will never rise again, and Pierce will never be able to say he has brought the leviathan back to life.