Defunct crypto exchange, Mt Gox has found itself at the forefront of a technical and potentially legal dilemma after unintentionally distributing double payments to customers affected by its 2014 Bitcoin hack.
Bitcoin Refund Fiasco
After almost 10 years of waiting, victims of the Tokyo-based Bitcoin exchange, Mt Gox implodement are finally receiving due compensation. However, the Bitcoin distribution process has taken an unexpected turn.
On Tuesday, December 21, a member of the X (formerly Twitter) community enthusiastically announced that Mt Gox had finally initiated the overdue payment to their account.
“I was reimbursed by Mt.Gox! Since I chose the final payment, I believe it is an interim payment. It took exactly 10 years,” the X user stated.
Despite the exuberance surrounding the long-awaited reimbursement process, Mt Gox has disclosed a severe dilemma in its payment procedure. Reports from a Reddit user revealed that the bankrupt crypto exchange has acknowledged an unintentional double payment to a large range of users.
The crypto exchange made compensatory payments through traditional bank transfers and PayPal. However, Mt Gox announced recently that various customers who were paid through PayPal have experienced duplicate transactions.
The crypto exchange has issued an “urgent request” encouraging users to refund the duplicate payment, stating that the initial transaction was the official compensation while the second was due to a technical error.
“The Rehabilitation Trustee has transferred money to you via PayPal Pte. Ltd. (“PayPal”) as the first repayment in the civil rehabilitation proceedings of MtGox Co., Ltd. However, due to a system issue, the transfer of money to you was inadvertently made twice,” Mt Gox stated.
Please note that you are not authorized to receive the second transfer and are legally obligated to return the above amount to the Rehabilitation Trustee. Therefore, we request that you immediately refund the above amount from your PayPal account to the following PayPal account of the Rehabilitation Trustee using PayPal’s ‘Refund’ feature.
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Recap Of Mt Gox Collapse
At the height of its success, Mt Gox, a crypto exchange created by US programmer Jed McCaleb, handled a staggering 70% to 80% of the total Bitcoin transactions globally. However, its large-scale popularity and success became a prime target to hackers.
In early February 2014, the crypto exchange experienced a fatal attack and suspended all withdrawals after claiming to have noticed suspicious activities in its digital wallets. In the months leading up to February 2014, the crypto exchange had also experienced deficiencies in network protocols and various security issues.
Later on, the company revealed that it had been hacked, resulting in more than 740,000 Bitcoin stolen from Mt Gox customers and 100,000 BTC stolen from the company. The value of the stolen Bitcoins at the time was estimated at around $460 million.
Currently, with the crypto exchange finally initiating its reimbursement process, the duplicate transaction error is perceived as a major inconvenience and a display of incompetence to past users.
Numerous victims of the exchange’s collapse have expressed their frustration via Reddit regarding the inconvenience of the additional fees required to process the refund. Some users criticize the crypto exchange and state that the duplicate payment may be an attempt to buy more time.
Featured image from Moneycontrol, chart from Tradingview.com