Audio interview transcription — WBD077 Note: the following is a transcription of my interview with Daniel Kelman, a lawyer and creditor of Mt. Gox. I have reviewed the transcription but if you find any mistakes, please feel free to email me . You can listen to the original recording here . You can subscribe to the podcast and listen to all episodes here . In the third part of my series of interviews relating to Mt. Gox, I talk with the lawyer, Daniel Kelman, the architect of the civil rehabilitation plan for Mt. Gox creditors. We discuss this as well as the claims from Brock Pierce and Peter Vessenes. <a href="https://medium.com/media/df3b3927dfc2d17bcc83c75a9684352b/href">https://medium.com/media/df3b3927dfc2d17bcc83c75a9684352b/href</a> Connect with What Bitcoin Did:Listen: | | | | | Follow: | | | | | | iTunes Spotify Stitcher SoundCloud YouTube TuneIn Website Email Blog Twitter Medium Instagram YouTube Interview Transcription Tuesday 12th Feb, 2019 Interview Date: “When this all happened I hated Mark, but now I don’t because I understand a lot more about what went on.” — Daniel Kelman Good evening, Daniel. How are you doing? Peter McCormack: Doing pretty well. How are you Peter? Daniel Kelman: Doing very well. Thank you for staying up late for me. It’s pretty late where you are, right? Peter McCormack: Yeah, pretty late. But thank you for having me. It’s really a pleasure to be here. Daniel Kelman: Not a problem. So you’re aware, my awareness of Mt. Gox is probably not as much as everybody who was fully embedded in Bitcoin in 2013 and 2014. I’m much more of a last two year’s person and you know, fully aware of what happened and the impact on people. But based on recent interviews, I’m going down a rabbit hole that gets deeper and deeper. I’ve got no idea what it’s like for somebody on the inside. But I think a really good starting point, Daniel, is for you to introduce yourself and explain your role in the Mt. Gox story. Peter McCormack: Sure, my name is Daniel Kelman and I was someone who purchased Bitcoin and traded at Mt. Gox and had my funds there and they wouldn’t give them back because I wasn’t KYC’d or all these things. It took them months to finally tell me they would give them back and by then of course Mt. Gox was offline and no one could get funds out. Daniel Kelman: So I ended up going into the Mt. Gox chat room and in the chat room everyone was just pissed off, angry and I came up with this idea for a debt equity swap where creditors would give up their debt they were owed for Mt. Gox for stock and maybe we could recapitalize the new exchange that had 70% of the volume of the world. An investor liked it, a guy by the name of Olivier Janssens and he sent me to Japan, hired lawyers and we started looking into it. It didn’t really pan out well, but I ended up in Japan and I kind of just stuck with it and stuck with the case and kept following it. It became a real interest of mine. I met a lot of people in the space and that’s kind of how I ended up in the middle of Mt. Gox. Have you ever publicly disclosed what you lost on Mt. Gox? Peter McCormack: I think I have somewhere, I think I had about 44.5 Bitcoin, which to me at the time was a lot of money and now it’s not nothing, but I’ve kind of written it off and moved on with my life in terms of finances, but I would certainly like to have it back. Daniel Kelman: Yeah. I guess one of the things that I’ve noticed or one of the things I became aware of is trying not to reflect on Mt. Gox 2014 with Bitcoin 2017, 2018, 2019 eyes, because whilst it was a lot of money for people and a lot was lost, there is a very different feeling around a $20,000 Bitcoin and a $200 Bitcoin. Do you feel that happens? Peter McCormack: Yeah, it happens and people who were involved in the space back then, if they stayed in the space, many of them did very well. So people moved on with their life and maybe have a different perspective about where the industry’s going. But, if you were involved in Mt. Gox and you were taking it very seriously and very interested in what happened and your reputation was tied up in it, you really want to see it through to the end. There’s a number of people in this, in the same position. Daniel Kelman: Well, there’s a lot to unwrap here. I haven’t stopped reading and as I said to you on Telegram, every time I find one thing to read, I discover five more things to read. Finding truth is very hard because there’s lots of conflicting opinions. So we’ll unwrap these, but just firstly it would be very good to hear from someone like yourself, what it was like back when the hack happened. Talk me through the kind of the days of when there was kind of a bit of suspicion that something had gone wrong and then the news came through, that there had been a full hack. Can you talk me through that from the eyes of somebody who had Bitcoin on the exchange? Peter McCormack: What I remember was, there were rumours in the chat that people couldn’t get their money out and this kind of spread and it spread to people actually only in Japan being able to get their money out. Then there was this Mt. Gox premium where Mt. Gox Bitcoin was worth more than Bitcoin on any other exchange because people were paying a premium to withdraw funds in Bitcoin. Right; I want my funds to be safe, I’ll pay more for this Bitcoin just to get it off. Daniel Kelman: So that was a sign to everyone and there were a lot of people like myself who just, who had funds and they wouldn’t give them that for months and people were pretty furious. I remember I was kind of in denial, but I’m like, they’ll give it back, it’s not all going to implode and sure enough it did. When it did, it was just total pandemonium. People took over the Mt. Gox IRC channel, which is where they did all their customer relations and it was all over the news, like mainstream news. It was a really, really big deal. Well it was the world’s biggest heist at the time right? Peter McCormack: Yeah, it may still be the world’s biggest heist. Daniel Kelman: Yeah, I think that was one, a NEM hack last year that might have been bigger, I’m not too sure. Then obviously over the years there’s been different information about what happened prior to Jed selling to Mark, what happened in the handover process and obviously, there’s quite a bit of work done by Kim Nilsson in analyzing forensically what had happened. As more kind of news has come to fore. How do you feel about it all? The reason I ask this is, there are a number of exchanges now that have been created. But at the time it was the first exchange and I wonder do we look back at it with too kind of a harsh lens, because I wonder if people really understood what they were dealing with at the time. Peter McCormack: I don’t think people did. Mt. Gox was totally different than any exchange today. By way of example, for the longest time Jed McCaleb banked all the Mt. Gox customers out of his own personal bank account at JP Morgan Chase in New York. Just think about that. Think about any exchange, even trying to get a bank account today. It’s really hard. This guy was banking everyone out of a personal bank account. It was the only exchange in the world that was charging fees that were like 0.6%. Exchanges now will charge like 0.1% and it was totally immature, by comparison to what we have today and it was a totally different world. Daniel Kelman: And how do you feel about Mark now? Peter McCormack: Well, when this all happened, I hated Mark. I didn’t know who he was. I wanted to go to Japan and find him and probably punch him if I could. But now I don’t, I understand a lot more about what happened and I believe that people, when they make mistakes, there has to be a punishment for people doing things wrong. But there’s also mitigation. People can do things to mitigate what they did wrong. Mark has done a lot in the past few years to try to mitigate what he did that was wrong. I’ll give credit where it’s due for that and that doesn’t fix everything that happened, but there is certainly some credit to be given there. Daniel Kelman: I also believe that in this story, Jed created the exchange and it had already been hacked once and Mark gets it and Mark’s trying to fix it. Mark has taken all the blame for it, whereas Jed has gotten out from under the entire thing. I’m not trying to throw Jed in the mix or labeling, but it’s much more complicated than I think everyone kind of understands. Yeah. I think that’s a fair point. So we’re nearly five years on now. But for a long time we’ve been aware that there are funds that were discovered; the 200,000 Bitcoin. You’re in a process, a civil rehabilitation process, which is managed by a trustee. How do you feel about the whole rehabilitation process and can you talk through it, what the process has been like for a creditor? Peter McCormack: Yes. So, about civil rehabilitation process, I feel fantastic, but you have to understand where we’ve been and what we went through to get to where we are, in order to understand why I feel that way. So the way bankruptcies work, there’s two types of proceedings. Daniel Kelman: There is liquidation and there is rehabilitation. Liquidation is where you just sell off everything and whatever’s left you give it back to the people who are owed money; the creditors. Rehabilitation is where the courts take certain steps to try to help the company get back on its feet so it can resume business and then be able to pay people back out of the future profits that it makes. Most bankruptcies start off in civil rehabilitation and it fails and they go into liquidation. This happened to Mt. Gox. They started off in civil rehab, we’ll call it rehab 1.0 and that failed very quickly for various reasons and then they were in liquidation. Then in liquidation, everyone had to file a claim. Importantly, at the first creditors’ meeting, all the shareholders told the trustee, please do not sell the Bitcoin. We were terrified that he would sell the Bitcoin and tank a very immature market that had just gone through this massive hack. To our surprise and to his credit, he listened. He didn’t sell them. This was in summer 2014. So for years, people had to file a claim in 2014 and then the trustee investigates claims and approves or denies them. There was one claim that was rejected, but that wouldn’t go away and that’s Coinlab and we’ll get into that. But because of Coinlab, 2014, 2015, 2016, 2017, no one can get paid out anything because we can’t resolve this claim. Then in 2017 the price of Bitcoin goes from under $1000 to $20,000 and this was incredibly significant for the Mt. Gox bankruptcy and liquidation proceeding. For this reason, when the case went into liquidation, people were no longer owed Bitcoin. They were only owed a certain value that was assigned to a Bitcoin. This is called “mark to market”. So the trustee took the value of every Bitcoin on the day of liquidation. That’s to do with Japanese law, right? Peter McCormack: This is to do with Japanese law, but I think any country will do the same thing. You file for liquidation and you have all these assets, you have to assign a price to them. So the trustee assigned a price of $483 per Bitcoin. So the value of the estate was just the number of Bitcoins multiplied by $483 and the trustee wasn’t paying people back Bitcoins they were owed. He was just paying them back that value. Daniel Kelman: So when the price of Bitcoin went to $20,000, we ended up with the absurd result that Mark Karpeles was going to become a billionaire and all of that money that was originally creditor’s money, those Bitcoins that we convinced the trustee to hold and not sell in 2014, were not going to benefit those creditors. This is an absurd result. It never happens in bankruptcy, right? Because, since when do you have a company, that has some asset that goes up by several thousand percent and the company becomes solvent. It just doesn’t happen. But it happened. So we had to figure out a way to fix it and we did fix it and we can discuss that as well, but that’s why I’m incredibly happy with the rehabilitation because it means that all those surplus funds are going to creditors. They’re not going to shareholders, they’re not going to Mark or anyone else who claims to be a shareholder. That’s all been fixed. Mark has never wanted that money though and neither has Jed right? Peter McCormack: No, they never wanted it. They both came out and claimed publicly that they don’t want it. Mark especially, he just wants this to go away and to get on with a normal life. Daniel Kelman: Quite interestingly, I read through his entire Reddit AMA, the other night and despite what anyone may think of him, he seems to be very humble, apologetic and wanting to do the right thing. Actually there was very little anger towards him in the Reddit AMA. There were plenty of people who lost money on Mt. Gox who were in the Reddit AMA, who actually said to him, “do you know what, I don’t hold any grudge against you.” Peter McCormack: Yeah, I think he came out of his shell I think in 2016 or so and started to engage people and it couldn’t have been easy to do, but time heals wounds and he made a mistake and has to move on from it and people have to move on from it. That’s where we are and good for him. Daniel Kelman: So have you received your dollar value of what you lost already? Peter McCormack: No, no one has received anything back yet. Daniel Kelman: So this is this all being held up by Coinlab? Peter McCormack: Yeah, Peter Vessenes. There are a few other minor issues, some related to the civil rehabilitation, but more or less, this would have all been done by now. I feel confident saying this would be completed by now if it weren’t for Peter Vessenes. Daniel Kelman: So what’s his claim? Peter McCormack: His claim is based on a lawsuit. To understand this lawsuit, you have to go back in time to the early days of Mt. Gox when Jed ran it. One of the first people to contact Jed was Peter. Peter was very interested in Mt. Gox and he emailed back and forth with Jed and I believe at one point went to meet him in Costa Rica where they discussed him becoming a partner and he turned it down. Daniel Kelman: Then Jed sold it to Mark and Bitcoin went from under a dollar to $30 and then Peter came back asserting a fresh claim to ownership and Mt. Gox from his previous discussions with Jed and this gets turned away. Then Peter goes away and thinks up a new strategy, to takeover Mt. Gox and get what he wants with his company, Coinlab and Coinlab is going to be the US partner of Mt. Gox, because at this time there was no Coinbase. No one had figured out how to tackle the US market. Peter had in his mind figured this out and he cut this deal with Mt. Gox where Coinlab was going to get 90% of all the income from the US business and Mt. Gox 10%. They had an agreement, I think it was entered into in November/December 2013, something like that. The agreement gave Coinlab 4 months I believe, to be in compliance with all applicable law. At the beginning of this period, it was pretty clear that among lawyers in the US who were anti-money laundering specialists, that you needed a money service license to do business from FinCen from elsewhere. So a couple of months go by and Peter doesn’t get this license and then FinCen clarifies you need this license. Peter still doesn’t get it. The period lapses. Mark and Mt. Gox don’t want to give him the customer database, don’t want to onboard Coinlab and the whole thing ends up in litigation. Right as litigation is kicking off, Mt. Gox collapses. So Peter’s entire vision, his third bite at getting Mt. Gox failed, when Mt. Gox failed and this turned into his lawsuit and he tried to justify, originally damages of around a $100 million based off the liquidated damages clause and also using Coinbase as evaluation saying he would have been Coinbase. In the rehabilitation when everyone had to file a new claim, Peter filed a claim that’s the equivalent of $16 billion dollars saying that he would have been, more or less the new Coinbase. So to be fair, do you give any value to Peter’s claim? Peter McCormack: No. In fact, I give it negative value because Peter owed money to Mt. Gox. He started onboarding customers and I believe he had at one point $12 million. When the bankruptcy was filed in Japan and then recognized by the US, he was supposed to give that entire $12 million back, but he only gave back $7 million. So he still owes $5 million. His legal claim, as far as I’m concerned, is extremely weak because he was required to be in compliance with all applicable law for the whole US and he clearly wasn’t. Not only that, he wasn’t even close, he didn’t have any of the state licenses that he needed. Daniel Kelman: So what is the legal status of the Coinlab claim and how long could this drag on for? Peter McCormack: So in Japan bankruptcy, I don’t know the Japanese word, but in English we’ll call it “assessment”. There’s this special procedure called “assessment” where it’s not in court yet, but it’s between the bankruptcy trustee and the claimant and they create a record of submitting expert opinions and all this different evidence. The hope is that they come to a settlement or they develop a record for court. In the liquidation, this record was very well developed and now civil rehabilitation is new and they’re developing it fresh again. Daniel Kelman: But, to my knowledge, Peter Vessenes has filed with the court to have that record sealed, claiming that his life is being threatened and that sort of thing. So, that’s where we are. I understand the trustee wants to take this to court in Japan and even though it’s an issue of US law, have a judge in Japan decide it and Peter, from what I understand, wants the case to be sent back to the US, where a US court will rule on it and I’m not sure when that gets finished, hopefully soon. I don’t think anyone is really sure at this point. But I’m assuming you don’t want the trustee to settle? Peter McCormack: No, the trustee should not settle. Daniel Kelman: Because you don’t believe Peter has a claim to anything? Peter McCormack: I think he has a very weak claim and I think the trustee’s right that a Japan court will dismiss it quicker than the US. I think Japan is going to look at this more black and white. Okay, it said you had to be in compliance with the US law, you didn’t have the license, throw it out. Daniel Kelman: But it seems to me that you’ve been pretty impressed with the trustee so far? Peter McCormack: Some things I’m impressed with, something I’m not impressed with. We can get into Bitpoint and that stuff in a minute. But most other things, he’s listened to creditors, he’s been methodical and taken his time to do things right. He listened to us when we didn’t want them to sell Bitcoin. So aside from the whole Bitpoint thing, I think he’s been pretty good. Daniel Kelman: He did sell a bunch of Bitcoin in 2018 right? Peter McCormack: Yes, that was Bitpoint. So in 2018, people noticed the trustee was moving Bitcoin out of the Mt. Gox wallets. You could all see it happening and people said, “hey, the trustee’s selling and that’s what caused the market to tank in January”, and the trustee correctly pointed out that, just because he’s moving coins out of a wallet, doesn’t mean he’s selling them, you don’t know when he’s selling them. He did later announced that he sold, I believe 35,000 Bitcoin and then 25,000 Bitcoin, but he didn’t say how or who, or when, because he may want to sell again Daniel Kelman: So recently a website, Gox Dox, retrieved documents from Tokyo District Court and in these documents from Tokyo District Court, which any creditor can go and view, was a bank book, that was the trustee’s bank book that records all the money he receives and sends out, managing the Mt. Gox estate. The bank book, if you look at the website, it starts on February 23rd, so pretty much at the end of when the trustee said that he sold the 35,000 Bitcoin, there’s no real deposits in March or April. Then May 1st he starts getting a deposit almost every day from a company called Bitpoint and Bitpoint between May 1st and June 4th sent 22 wires, very large wires to the trustee. Gox Dox reasons that the reason he was receiving a wire every single day was because the trustee wants to reduce counter-party risk. He told Bitpoint, the moment you have my Bitcoin and the moment you sell it, I want my Yen. So that if you get hacked, I don’t have to worry about the Yen you’re holding for me, being a part of your bankruptcy. So based on this, they looked and saw that the price of Bitcoin in May when the trustee was selling really fell and fell like a lot, like from $10,000 to $7,000 / $6,500. Based on that, it looks pretty likely that the trustee sold on the market, as opposed to selling at an auction or OTC as he was suggested to do by Jesse Powell, who was his original advisor. Yeah. Jesse’s quite tied to this, right? Peter McCormack: Yes. Jesse’s role goes way back. When Mt. Gox was hacked before the big one in 2014, he went to Japan from California and helped them harden their system and fix it. Then when the big hack happened, Jesse and his exchange Kraken became the official advisor for the trustee and he’s very passionate about making sure that this works out well for everyone. Daniel Kelman: So was the trustee advised to sell using an OTC desk? Peter McCormack: Well we don’t know. We just know what Jesse told him, cause Jesse said publicly that he told the trustee not to sell. If he is going to sell, please consult Kraken and Kraken would arrange an auction. What we now know from the bank book, is that he went to this company Bitpoint, which has their own exchange and Bitpoint may have sold on their own exchange or they may have arranged OTC. Daniel Kelman: But, if they were doing OTC, it looks like whoever bought it, may have dumped it right away. Perhaps they sold at some really low price that allowed the OTC buyer to then turn around and flip it for a quick profit. Outside of that though, you’re pretty happy with the performance of the trustee? Peter McCormack: Yeah, pretty happy so far. Daniel Kelman: What are the next steps for the trustee and how does the trustee also communicate with you, the creditors? Peter McCormack: Well, he doesn’t really communicate with us that much. Every now and then, every six months, there’s a creditor’s meeting and anyone can show up, but obviously it’s in Japan, in Japanese, so only a few people do. I go sometimes. I’ll probably go to the next one. He distributes materials in English and he posts them at mtgox.com and that’s how we communicate with him. His next big hurdle is in the rehabilitation and it’s how to distribute the remaining Bitcoin. He sold some and those Bitcoins that he sold and the Japanese Yen that he now has, is a sufficient sum to cover what was the value of the Mt. Gox estate and liquidation. Daniel Kelman: So the only way we’re going back to liquidation, from what I see, is if Bitcoin goes to zero and there’s no point in distributing anything. So it looks like we’re in rehab and the trustee doesn’t really understand how to distribute Bitcoin as Bitcoin. He’s soliciting I believe and from who I’ve talked to, other licensed Japanese exchanges to help him figure this out. I believe Kraken wanted to do this, but legally Kraken doesn’t have the license that was issued by Japan to do cryptocurrency business. So there’s an issue for the trustee that it might be actually negligent to take the advice or to allow Kraken to distribute these coins, even though they may well be the most qualified party to do it. So now we have Gox rising, enter Brock Pierce. I’ve actually seen mixed views on this, but mainly negative. Can you tell me your view on this and then we’ll go into the details? Peter McCormack: I’m not really impressed and I’ll explain to you why. So Brock actually came to me very early on about this in mid-January and he added me to a group called Project Phoenix with a few other people. I started asking for details and they didn’t want to give me details. They just wanted me to give an endorsement for a speech Brock was giving in 24 hours, which I obviously didn’t do. Daniel Kelman: He came back again wanting more advice, I think early February and consultation and wanting me on board. I would listen and I still didn’t get a lot of details and the more I looked into it, the more I was confused and didn’t think this was a good option for two broad reasons. One, it became clear that Brock believed he actually owned Mt. Gox based off of a letter of intent that he signed with Mark back in 2014, when Mt. Gox was in Rehab 1.0. This letter of intent, which we can get into in a minute, is completely unenforceable and there’s no way it’s enforceable. It’s on even weaker legal footing than Coinlab’s claim to give some perspective. Two, Brock doesn’t seem to understand the significance of civil rehab. He steps in making claims about how he doesn’t want to claim the surplus assets. He just wants to give them back to creditors. This is factually incorrect and ignores the fact that creditors fought this long, painful battle to convert the case from liquidation into rehabilitation, which by the way, was the first time it ever happened in Japan So it was a total Hail Mary and Brock could have, if he truly believed this letter of intent was authentic, he could have stepped in and sued on it during the liquidation, when there was a lot of surplus assets and save us from having to do that. But he didn’t. So when confronted with this, he kind of got very angry with me and accused me of being a secret agent for Mark Karpeles, which makes no sense because he’s accusing Mark of wanting to pocket the surplus assets and me having some backroom deal with him. When I’m in fact the architect of the civil rehabilitation plan that made sure those assets wouldn’t go to Mark. I saw an uncomfortable few tweets that came out, between Brock and Mark, but also where Brock brought you into it. Peter McCormack: Yes, I guess he’s just upset about the way things went and perhaps he’s got to be a little bit desperate, having the internet cheer Mark Karpeles instead of him in a Twitter battle. So I don’t know, I think what he said was actually libelous, because I’ve never represented Mark Karpeles and have never been hired by him, I’ve never had any loyalty to him. The only time I’ve worked with him, the only way I would work with him, is if our interests were aligned. Daniel Kelman: So for him to say that I’m his secret agent and been representing him for five years, is completely false, designed to hurt my reputation and actually perhaps actionable. So I wish he would issue an apology for that. When you talk about having your interests aligned with Mark, your interest are really the interest of the creditors. Peter McCormack: That’s correct. To the extent that anyone is owed money from Mt. Gox and wants to get it back as Bitcoin and not have it sold and get Japanese Yen back. I think we’re in perfect alignment of our interests. Daniel Kelman: Well let’s give Brock the benefit of the doubt for a moment and then and then you can give me your kind of arguments against his proposal. But just for people who don’t know or not aware, what is the proposal on the table from Brock. Peter McCormack: He has a broad range of ideas. He wants to create a new exchange with the Mt. Gox brand and he wants to give creditors 16.5% of it and he wants to do an ICO. This ICO will be like a debt recovery token, where he’ll fund some legal team and this legal team will go out and try to recover coins. So I recover the lost Mt. Gox Bitcoin or sue people to get money back for the holders of these tokens. Daniel Kelman: But the important thing to note about all these ideas, is that while they may sound good, they’re actually not necessary. There’s no reason to involve these ideas in the civil rehabilitation. He could just make a bid on the Mt. Gox domain and trademark and then start his own exchange and do all this on his own. Why even involve yourself in Mt. Gox in the civil rehab that is going on. So that part is not clear and into the specifics of his plan, and you can talk to Kim Nilsson, who was probably the foremost expert on this, those coins are not coming back. They’re totally gone. Ideas I’ve heard from his team, like going after people who got their money out in the three months before Mt. Gox went under, make absolutely no sense. Why would you Gox, some class of OG Bitcoin user that got their money out three months before it. I think it’s just, an idea that’s not so well thought out. What do you think Brock’s incentives are? Peter McCormack: I think, one, he wanted to bootstrap a new exchange with a whole bunch of people who are old school Bitcoin users and get them incentivized to have this exchange do well. Two, he wanted to look like he was giving away all these surplus assets that he had a rightful claim to. But I don’t think he understood that that problem had already been fixed by creditors. Daniel Kelman: I’m of the understanding that there’s a telegram group? Peter McCormack: Yes Daniel Kelman: I’ve not been in that. I’ve decided to stay away from it because I think that’s an extra rabbit hole I don’t need to go down, but I’m under the impression that Brock has been advised by many people in that group to back off as there is no support for his plan. Peter McCormack: That’s correct. There’s a Mt. Gox legal telegram group, which kind of evolved from the Mt. Gox IRC group back in the day. These people are probably some of the most, hard to win over people because they’ve been screwed over so many times by Mt. Gox and they’ll call bullshit the moment they see it and they’ll research everything very thoroughly and that’s exactly what happened here. Daniel Kelman: They boil down everything Brock wants to do to its essence and said, you don’t need to control civil rehab to do everything you want to do. So what are you really doing? When they didn’t get answers, they got kind of annoyed with him threatening to sue over that letter of intent and hold up the civil rehab proceedings even further. So he is threatening to sue? Peter McCormack: According to what I’ve seen on Twitter, yes. According to my conversations with him, I asked repeatedly “are you going to do it? Can you vow that you’re not going to do it?” He never said he wouldn’t? I believe he intends to, which to me is insane because that letter of intent is totally not binding. What he may be doing is just trying to use it as some kind of leverage to negotiate with the trustee, I don’t know. But that threat of litigation has to be off the table for anyone in that Mt. Gox legal creditor group to even consider supporting what he wants to do. Daniel Kelman: I mean, is there any support? Is there anyone you have noticed saying, you know what, let’s give him a chance. Let’s hear what he has to say? Peter McCormack: At first everyone listened and everyone talked about it all and considered. But they realized, wait a second, why is this guy laying claim for the entire surplus of assets? Either he didn’t understand the current posture of the case and the significance of civil rehab or he did and he was just lying about it. So that hasn’t been cleared up in that group and Brock, hasn’t really addressed that. Daniel Kelman: Frankly, from what we’ve seen, I don’t think he really cares that much. I think he cares more about what the media and what people who don’t really understand much about the case think, because that plays perhaps more to the reputation and goodwill angle, looking like he’s giving away all these Bitcoins, when in fact he doesn’t even have a claim to them and that problem’s been fixed. Right? So I guess the hope now is that Brock backs off from this? Peter McCormack: Look, if he wants to not sue on the letter of intent, if he just does that and says, “guys finish civil rehab on your own, it’s going well, you’ve done a great job. I’m going to build my exchange over here and I’m going to just give you equity. I’m going to make a bid on the Mt. Gox IP, the domain name, all those things”, it doesn’t affect his plan at all, he could do that. I think if he did that, people wouldn’t have a problem with it because he wouldn’t be interfering in what people have been fighting for five years. Daniel Kelman: But instead, he comes along and says he’s been doing this longer than anyone and that he knows more than anyone and he clearly doesn’t or is lying. It really rubbed everyone the wrong way, who had to fight against all odds to get the surplus assets away from shareholders and back to creditors. They feel like they’re being given no credit for that and Brock is asking for a pat on the back for giving people what’s already coming to them. I guess and I’m putting words in Brock’s mouth or ideas in his head, but I’m guessing if he was to separate building the exchange from the whole civil rehabilitation process, there’s less of an incentive for him to have the ICO, which goes to look for the funds and there’s less of an incentive for him to give a percentage of the company to the creditors, because essentially he’s just buying a brand to launch an exchange. But then he’s launching an exchange under a name, which is hugely tainted, by a person who does have a questionable reputation in certain areas. So I guess he’s probably and I’ll ask him this myself, but I guess he probably thinks it’s more viable having all these OGs kind of looped into some kind of procedure. Peter McCormack: Yeah, I think that’s the case. He gets all of these crypto OGs on his exchange and gives them a stake in it so they want to see it succeed. The name is tarnished, but has instant recognition. I mean, we’re talking about Mt. Gox five years later and it’s not even a company that’s around anymore. People hear the name and they know what it is. Trademarks are resurrected all the time and perhaps he sees value in that. Daniel Kelman: Perhaps he also sees value in the story and wants to write himself into the story as someone who stepped in and actually owned Mt. Gox and gave all of his claim away to everyone, is the hero. But the time for him to do that was during the four-year liquidation and he never did and creditors fixed it themselves. For him to try to step in and rewrite history with himself being the hero, when he had the opportunity to do it and didn’t, is kind of dishonest if you ask me. So that’s two things now holding things up. Is there anything else? Peter McCormack: It’s mainly those two things. If he were to give up the letter of intent and if he were to give creditors… If he were to acknowledge that he has… There are no surplus assets that he can claim. Those two things are basically it. I think he’s rubbed a lot of people the wrong way. The third thing I was going to say is maybe he has to, I don’t know, change his demeanour toward the group and the way he acts, but I don’t think that’s a real issue. It’s mainly those two substantive things that has kind of pissed everyone off. Daniel Kelman: All right, so outside of that and outside of the Coinlab claim, what is the current status of everything else? Peter McCormack: Well, outside of Brock and outside of Coinlab, the claims filing process for rehabilitation is almost finished. We did it for liquidation and we had to do it again for rehabilitation. I think, February 14th in like another day or two it ends. Then, the trustee’s going to examine all the claims and make a decision on which ones get rejected, which ones get accepted. Then I believe April 26th is the deadline for people to file civil rehabilitation plans. So anyone who has a plan on how to rehabilitate Mt. Gox can file a plan to do so and the trustee will consider all those and figure out exactly what to do. Then creditors, once all their claims are accepted, the accepted claimants will, I believe, be able to vote on a plan. Daniel Kelman: Certainly the plan is not to actually reopen Mt. Gox for profit. It’s just too open Mt. Gox and let it fund people’s accounts or distribute Bitcoin to them and then put back into liquidation immediately afterwards. The issue is just, what is the best way to give everyone back Bitcoin as Bitcoin. So looking back on the last five years, how do you reflect on it all, because it seems like there must have been times that are quite stressful, but also listening to you, it sounds like you’ve also developed a purpose out of this, some kind of very interesting project to work on. Do you understand my question? Peter McCormack: Yes. So as for my purpose first, going back to when I first learned about Bitcoin, I had just moved overseas and I left my job in New York and was taking a year off to learn Chinese. I discovered Bitcoin then and invested what little money I had right away and I wanted nothing more than to have a career in this space. It’s like all I wanted. All of a sudden I end up losing my money in Mt. Gox and I meet Olivier Janssens in the chat and I’m ending up on a flight going to Japan, right in the middle of this Mt. Gox thing. Daniel Kelman: I say to myself, you would have never expected to have been in this situation a year ago when you first learned about this. I said to myself, whatever happens in Japan, just give it your all and if it doesn’t work out, at least you walk away knowing you did everything you could. So I’m still doing that to this day and really my career and what I’ve built of it, I think came from losing those Bitcoins in Mt. Gox and I really just want to see this play out to a good resolution. Maybe to give something back since as I’ve done pretty well in crypto since then. So did you reinvest it? Peter McCormack: Of course, yeah. I reinvested, I met a lot of people in the space. I kept working in the space. I didn’t want to leave. I was passionate about this and things were rough and in 2015 and 2016, but in 2017 I did very well. I think people who stuck with it, all did very well. So I’m pretty pleased about that. Daniel Kelman: What kind of things are you working on now? Peter McCormack: I’m a lawyer, so in 2017, I had a number of clients in the space who had all these questions about ICOs and I learned about that and I did some ICO investing myself. One of the ICOs I invested in was VeChain, so I ended up on the board of VeChain and I started an exchange with a few friends of mine; my partner Xiaoning Nan in Beijing, we have an exchange OceanEx at oceanex.pro and we’re still in Beta. But we’re launching lots of pairs and I think we have the most volume for any VeChain pairs of exchanges. Daniel Kelman: I still have a law practice, but I gave much of it to my brother who also works in the space and I still work with him on that, but I’m trying to focus mostly on OceanEx and Mt. Gox stuff and you know I’m just really happy that every day I can wake up and do Bitcoin and crypto stuff all day. That’s good that you didn’t become disillusioned with it all? Peter McCormack: No, not at all. I totally got into this because I believed in the idea of decentralized money that’s not controlled by a government. Governments in the past, a few hundred years ago didn’t control money and why do they need to now? The internet’s here and the internet can give us something better. I saw Bitcoin as that and I realized that price may go up, the price may go down, but the idea stays the same. Daniel Kelman: How do you feel about the broad crypto space at the moment? There’s obviously been a crappy bear market, lots of projects haven’t shipped and have gone to the wall. How do you reflect on all of that? Peter McCormack: Well, 2017 was kind of ridiculous. I mean, it was a year when anyone could spin up something on their computer and sell it for millions of dollars. There was a lot of crap and there were a lot of coins that deserve to fail. There were a lot of investors that deserved to lose money, for putting money into it. I think right now we’re seeing the hangover from that. It’s not really a regulated market. I mean governments are trying to regulate it, but they can only do so much. Daniel Kelman: So in a market like this where you have less regulation and more people taking lots of risks, the hangover is going to be bigger. So right now we have a hangover from all this fraud and I don’t want to say fraud. There were a lot of very good projects in 2017, there were some solid projects and I continue to believe that those solid projects have a chance at succeeding. But the ones that didn’t, that crap has to get shaken out. You know, I don’t know how long we have to go, but I do know that crypto is not going away. It’s here to stay. Is Bitcoin king? Peter McCormack: Well that’s a debate. I mean, I like Bitcoin, I like Bitcoin Cash. I like Ethereum and I like lots of coins. Just like in our… You have US dollar, you have Euro, you have lots of different coins that have different uses for different people. Daniel Kelman: Do you have any kind of closing comments? Anything you want to end on? Anything you want to say before we finish up? Peter McCormack: Yeah, I would just say that I think at the end of the day, what I hope the history of Mt. Gox is, I hope Mt. Gox is remembered for, for two things. I hope it’s remembered for being the first time ever that Bitcoin was distributed as Bitcoin by a bankruptcy, by a court order. They didn’t have to sell it off. They could distribute it as it was and it was a tacit endorsement by a government, that Bitcoin is money and can function as money. Daniel Kelman: I think the other piece of Mt. Gox history that I hope gets remembered is that it was really the creditors throughout the whole thing, the people who were passionate about Bitcoin, the Bitcoin OGs who were involved in this from day one, who came together in a decentralized manner, on their own and were able to influence the process to make sure the trustee didn’t sell Bitcoin. To make sure the trustee, for the first time ever took a bankruptcy from liquidation into civil rehabilitation, to fix the process and that it was this decentralized organization of creditors on their own that really pushed the case in the right direction. Okay, man, that’s a great way to end. Well listen, I appreciate your time. I appreciate you coming on and doing this interview. How can people stay in touch with you and do you want to hear from anyone and if so, who and how do they stay in touch? Peter McCormack: Well, I’m on Twitter at @danielkelman. Anyone who wants to follow me or send me a message, more than welcome, look forward to speaking with you. Daniel Kelman: Brilliant. Well, thank you for coming on. Peter McCormack: Okay, thank you for having me. Daniel Kelman: Connect with What Bitcoin Did:Listen: | | | | | Follow: | | | | | | iTunes Spotify Stitcher SoundCloud YouTube TuneIn Website Email Blog Twitter Medium Instagram YouTube
