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Former Mt. Gox CEO Seeks Bitcoin Hard Fork to Reclaim $5.2B in Stolen Cryptocurrency

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Former Mt. Gox CEO Seeks Bitcoin Hard Fork to Reclaim $5.2B in Stolen Cryptocurrency

TLDR

  • Mark Karpelès, who previously led Mt. Gox, has floated a Bitcoin hard fork idea aimed at retrieving approximately 80,000 BTC taken during a 2011 security breach, currently valued above $5.2 billion.
  • His plan would enable these funds to transfer without accessing the lost private key, through implementing a specialized consensus mechanism for one specific wallet.
  • The draft was posted to GitHub as an exploratory discussion rather than an official Bitcoin Improvement Proposal.
  • Detractors believe this creates a risky precedent that could undermine Bitcoin’s foundational immutability principle.
  • These stolen coins exist separately from the approximately 200,000 BTC currently undergoing distribution to Mt. Gox claimants, with that process scheduled through October 2026.

Mark Karpelès, who formerly ran the defunct Mt. Gox Bitcoin exchange, has unveiled a draft plan advocating for a Bitcoin hard fork. His objective centers on retrieving approximately 79,956 BTC taken during a security breach over 15 years ago.

These digital assets remain locked in one specific wallet, representing more than $5.2 billion based on current market valuations. The funds have remained untouched since their theft in June 2011.

Bitcoin’s existing protocol requires the original private key to authorize any transaction. That critical key was never retrieved.

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Karpelès uploaded his proposal to GitHub last Friday. His suggestion involves creating a novel consensus mechanism enabling fund movement to a designated recovery wallet without needing the missing key.

Source: Github

This rule would exclusively target that particular wallet address. Network-wide adoption would trigger activation at a predetermined future block height.

Karpelès showed transparency regarding the proposal’s nature. “I want to be upfront: this is a hard fork,” he stated.

He positioned this submission as a solution to an ongoing impasse. Nobuaki Kobayashi, serving as the Mt. Gox trustee, has refused to pursue blockchain-based recovery without guaranteed community support for such a protocol modification.

Why Critics Are Pushing Back

The suggestion has triggered substantial opposition, primarily focused on Bitcoin’s unchangeable nature. Bitcoin operates on the principle that confirmed transactions cannot be reversed or altered.

Numerous community members contend that modifying ownership protocols for a single address, regardless of theft circumstances, establishes dangerous precedent. Bitcointalk forum participants cautioned this might encourage comparable requests following future security incidents.

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The proposal recognizes this concern directly. It notes: “If it can be done once, the argument goes, it can be done again.”

Governance concerns also emerge. Bitcoin lacks established procedures for determining which past thefts warrant protocol rule modifications.

Successful hard fork implementation requires widespread approval from miners, node operators, and trading platforms. Throughout Bitcoin‘s history, achieving consensus on divisive modifications has proven exceptionally challenging.

How This Fits Into Broader Mt. Gox Repayments

The 80,000 BTC held in the compromised wallet exist independently from funds presently distributed to creditors. Current repayments originate from a distinct reserve of roughly 200,000 BTC retrieved following the platform’s 2014 shutdown.

Creditor distributions commenced during mid-2024, with the completion deadline now pushed to October 2026. The stolen coins remain completely beyond trustee jurisdiction.

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Mt. Gox declared bankruptcy in Tokyo on February 28, 2014, following the loss of approximately 750,000 customer bitcoins. During its operational prime, the platform processed 70% of worldwide Bitcoin transactions.

Certain creditors have expressed approval for this initiative. One individual identifying as a creditor mentioned receiving roughly 15% of their Bitcoin through bankruptcy proceedings and would endorse a legal mandate to recover the remaining stolen assets.

The proposal currently exists as a preliminary discussion draft without official endorsement or implementation schedule.

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BTC tries to reclaim $64,000 as funding rates hit three month low

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BTC Open Interest (Coinglass)

Bitcoin is looking to reclaim $64,000 on possible short squeeze after earlier falling to as low as $63,000 following U.S. and Israeli strikes on Iran.

At the same time, perpetual futures funding rates dropped to -6%, according to CoinGlass, marking the second lowest level in the past three months. The last time funding was this negative was on Feb. 6, when bitcoin bottomed near $60,000.

Perpetual funding rates represent the periodic payments exchanged between traders in perpetual futures markets. When rates are positive, traders holding long positions pay those holding shorts. When rates turn negative, shorts pay longs.

Deeply negative funding typically signals aggressive short positioning and bearish sentiment, as traders are willing to pay a premium to maintain downside bets.

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Meanwhile, coin margined open interest rose from 668,000 BTC to 687,000 BTC over the past 24 hours.

Measuring open interest in BTC terms removes the distortion caused by price swings. Rising open interest alongside negative funding suggests growing participation, with an increasing share of traders positioned for further downside.

In the past 24 hours, more than $500 million in crypto positions have been liquidated, according to CoinGlass data. The bulk of those liquidations were long positions, which accounted for over $420 million, highlighting the scale of forced selling as prices moved lower.

BTC Open Interest (Coinglass)
BTC Open Interest (Coinglass)

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Tether Freezes $4.2B in USDT Linked to Crime in 3 Years: Report

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Tether Freezes $4.2B in USDT Linked to Crime in 3 Years: Report

Stablecoin issuer Tether has reportedly frozen roughly $4.2 billion worth of its USDt tokens connected to suspected criminal activity over the past three years.

Most of the blocked funds were restricted since 2023, as regulators and law enforcement agencies intensified scrutiny of crypto-related fraud and sanctions evasion, the El Salvador-based firm reportedly told Reuters on Friday.

Tether’s dollar-pegged USDt (USDT) token is the largest stablecoin in circulation, with more than $180 billion outstanding, up sharply from about $70 billion three years ago.

Tether can freeze tokens directly on the blockchain by blacklisting wallet addresses when requested by authorities.

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Related: Tether-backed Oobit adds crypto-to-bank transfers for local payment networks

Tether helps governments freeze funds

On Tuesday, Tether announced that it has assisted the US Department of Justice in seizing nearly $61 million in USDt tied to “pig-butchering” scams, a scheme in which criminals build relationships with victims before persuading them to send money.

Earlier this month, the company also froze approximately $544 million in cryptocurrency at the request of Turkish authorities, blocking funds tied to an alleged illegal online betting and money-laundering operation.

According to blockchain analytics firm Elliptic, by late 2025, stablecoin issuers Tether and Circle had blacklisted around 5,700 wallets holding about $2.5 billion, with roughly three-quarters of the addresses containing USDt when they were frozen.

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Related: Tether USDT supply set for biggest monthly decline since 2022 FTX collapse

USDt supply shrinks

As Cointelegraph reported, USDt is on track for its largest monthly supply drop in three years, with circulating supply falling about $1.5 billion in February after a $1.2 billion decline in January, according to blockchain data. The contraction echoes the period following the FTX collapse in late 2022 and may point to tighter liquidity in crypto markets.

USDt market cap drops in past month. Source: CoinMarketCap

Tether said the figures reflect short-term distribution changes rather than weakening demand, noting USDC (USDC) also saw a multibillion-dollar reduction during the same period.

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