Fortress Investment Group LLC has rekindled its effort to buyout the creditors of the Mt Gox crypto exchange at a lower price than their initial offer. According to a recent media report, Fortress is offering to pay creditors up to 70% of their account value.
In the buyout that is just a page long, Fortress claims that lawsuits filed against Mt Gox Estate could delay as well as dilute distribution on their claim. Mt Gox, which was based in Japan, was the largest BTC exchange before it collapsed at the start of 2014.
Details of the Offer
Since then, thousands of the stolen coins have been recovered and a trustee is working to reimburse all the creditors of the exchange. However, two lawsuits filed against Mt Gox have delayed the reimbursement effort. It is expected that it could take as long as two years before a judge issues an initial ruling. If the two litigants appeal, it could take a further 3 years to resolve the issue.
To make its offer, Fortress multiplied the number of BTC each person lost by 15%, which is what is available for distribution to the creditors. Fortress then multiplies that figure by the current BTC price, which has dropped drastically in the last six months. Fortress said that their offer was valid until December 31. Initially, Fortress had been offering to pay $900 per BTC. However, that offer has now dropped to $778. The price has shot up to around $7000 today from its price of around $566 when Mt Gox was hacked.
A Lesson for the Crypto Sector
Mt Gox was amongst the first major crypto exchanges to be hacked. Since then, the problem has only gotten worse. It seems that when hackers realized just how easy it was to get away with stealing crypto, they began targeting crypto exchanges.
It is thus important for crypto exchanges to be open about their security situation by subjecting themselves to regular audits. This will help them identify any fatal flaws before they lead to the loss of millions worth of traders’ money.
There is also a need for the crypto sector to work with regulators in the creation of regulation and standards that protect the crypto sector from hackers. A good example to draw on would be the banking sector. While hackers do sometimes manage to get into banking systems, these incidents are rare and when the culprits are caught, the punishment is severe. It is also worth noting that the banking sector has invested heavily in security solutions to keep those who would try to hack their systems at bay.
The crypto industry needs to work more closely with experts who have experience in how to keep online financial systems secure. This will be crucial for the growth of the crypto sector. However, if crypto exchanges focus on making profits at the expense of enhanced security, they will be shooting themselves in the foot. New investors will shy away from the sector due to insecurity, to the detriment of the entire crypto industry.
Image Source: Flickr