Brock Pierce, the founder of Blockchain Capital, recently revealed plans to try to revive the Mt. Gox cryptocurrency exchange. He announced the move last week, adding that it would be an opportunity for all those who lost funds to finally receive closure – and compensation. The former childhood Hollywood star has a reputation for eccentricities and going over the top, and his idea most likely won’t sit well with Japan’s Financial Services Authority (FSA).
The FSA has become strict with license approvals. Coincheck, the exchange that lost more than $600 million was hacked in January of last year, had to submit to a grueling process that took over 12 months for it to become operational again. The Mt. Gox debacle is considerably worse than what Coincheck experienced.
Pierce wants to distribute $1.2 billion in crypto held by Mt. Gox to creditors in order to allow the exchange to get back on its feet and restart operations. However, with a lawsuit worth an estimated $16 billion still pending, the payout is merely a drop in the bucket of what could ultimately could be owed.
That lawsuit was filed against Mt. Gox creditors by CoinLab, who are suing for breach of contract. In addition, there is also pending litigation against Mt. Gox in various other jurisdictions.
Using the Coincheck licensing scenario, a Mt. Gox reboot would most likely take at least a year – partly because of the FSA’s involvement and partly because of the ongoing lawsuits. Pierce has also indicated that, once customers are paid off, he would introduce a new Mt. Gox coin called the Gox Coin, which would give creditors a stake in the exchange’s success. This is most likely going to be another obstacle, given the retreat seen in the markets and a decrease in exchange activity.
Outside of the regulatory implications, though, Pierce has seen a generally positive reaction to his plan from the crypto community. One crypto insider, Vaultoro J. Scigala, believes that he could help Pierce with his plan (or was just looking for a cheap plug) and reached out to him on Twitter, stating, “Hey @brockpierce My losses from MtGox [sic] inspired me to create the glass books transparency protocol in 2014 and then launch http://Vaultoro.com to be the most transparent exchange in the world. If you want help in the resurrection let’s talk…”
12 months or 24 months is a long time to wait to be able to launch a new crypto exchange. Anything can – and will – happen in that timeframe that could completely alter the crypto landscape. Pierce may find some success with the community, but most likely not so much with regulators.
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