A Japanese court came to a surprising conclusion, ruling that bitcoin is not a tangible property worthy of legal protection, which stands in contrast to rulings in the United States and elsewhere which have determined that bitcoin is a valuable commodity worthy of legal protections. While the ruling will affect only Japanese bitcoin users, at least for now, it’s an important development and one that people need to keep an eye on.
The judge in the case, Masumi Kurachi, ruled that because bitcoin is handled by third parties and is an intangible asset, it cannot be covered under existing laws. This means that plaintiffs in the infamous Mt. Gox collapse will not be able to sue to recover lost bitcoin funds, at least not unless the ruling is reversed or overturned by a higher court.
The comments came during a case in which a resident of Kyoto was suing Mt. Gox to recover his 458 bitcoins, which were lost when the exchange collapsed. The bitcoins would be worth $130,000 dollars at today’s exchange rates. In early February of 2014, in the days before the collapse of the exchange, bitcoins were worth over $800 dollars a piece, meaning the losses were, in fact, much more substantial for the plaintiff.
It’s unclear whether this ruling will have an affect on other bitcoin- Mt. Gox cases being brought to court, and likely the judge’s ruling won’t be the final say in the matter. The Mt. Gox collapse remains the biggest single collapse in bitcoin’s history, resulting in as much as $450,000,000 dollars worth of bitcoins being lost.
After the collapse Mt. Gox had assets worth about only $11 million dollars, which will likely be divided up among plaintiffs who lost money when the exchange folded. As a result plaintiffs will likely only receive a tiny fraction of the funds they lost, if they receive any money at all.
Over the past few weeks Mt. Gox has once again found itself in the spotlight. Once the world’s largest bitcoin exchange, the exchange collapsed in February of 2014. Now former Mt. Gox CEO Mark Karpales is being accused of stealing bitcoins for his own personal gain. This should come as no surprise as rumors have long swirled that the Mt. Gox collapse was an inside job.
Mt. Gox was one of the first fully functional bitcoin exchanges and at its peak handled roughly 80 percent of all bitcoin trading, making it by far and away the largest exchange. Bitcoin prices have never fully recovered from the Mt. Gox collapse, which saw prices tumble from over $800 dollars to less than $300.
It turns out that Mt. Gox had actually run out of funds six months earlier, but continued to run on fumes in the months leading up to its collapse. Even before the final collapse on February 25th, rumors had been swirling around that the exchange was in serious trouble. Within days legal challenges and lawsuits were filed against Mt. Gox, and by the 28th of the same month the company was forced to file bankruptcy.
Since the collapse various legal proceedings have continued. These proceedings will likely result in important precedents being made in regards to bitcoin, which is still a gray area as far as the law is concerned. Any decisions made now could have a big impact on bitcoin in the future, setting precedents for the emerging area of bitcoin law.
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