It was the Lehman Brothers of blockchain. 850,000 Bitcoin disappeared when cryptocurrency exchange Mt. Gox imploded in 2014 after a series of hacks. The incident cemented the industry’s reputation as frighteningly insecure. Now a controversial crypto celebrity named Brock Pierce is trying to get the Mt. Gox flameout’s 24,000 victims their money back and build a new company from the ashes.
Pierce spoke to TechCrunch for the first interview about Gox Rising — his plan to reboot the Mt. Gox brand and challenge Coinbase and Binance for the title of top cryptocurrency exchange. He claims there’s around $630 million and 150,000 Bitcoin are waiting in the Mt. Gox bankruptcy trust, and Pierce wants to solve the legal and technical barriers to getting those assets distributed back to their rightful owners.
The consensus from several blockchain startup CEOs I spoke with was that the plot is “crazy”, but that it also has the potential to right one of the biggest wrongs marring the history of Bitcoin.
The Fall Of Mt. Gox
The story starts with Magic: The Gathering. Mt. Gox launched in 2006 as a place for players of the fantasy card game to trade monsters and spells before cryptocurrency came of age. The Magic: The Gathering Online eXchange wasn’t designed to safeguard huge quantities of Bitcoin from legions of hackers, but founder Jed McCaleb pivoted the site to do that in 2010. Seeking to focus on other projects, he gave 88 percent of the company to French software engineer Mark Karpeles, and kept 12 percent. By 2013, the Tokyo-based Mt. Gox had become the world’s leading cryptocurrency exchange, handling 70 percent of all Bitcoin trades. But security breaches, technology problems, and regulations were already plaguing the service.
Then everything fell apart. In February 2014, Mt. Gox halted withdrawls due to what it called a bug in Bitcoin, trapping assets in user accounts. Mt. Gox discovered that it had lost over 700,000 Bitcoins due to theft over the past few years. By the end of the month, it had suspended all trading and filed for bankruptcy protection, which would contribute to a 36 percent decline in Bitcoin’s price. It admitted that 100,000 of its own Bitcoin atop 750,000 owned by customers had been stolen.
Mt. Gox is now undergoing bankruptcy rehabilitation in Japan overseen by court-appointed trustee and veteran bankruptcy lawyer Nobuaki Kobayashi to establish a process for compensating the 24,000 victims who filed claims. There’s now 137,892 Bitcoin, 162,106 Bitcoin Cash, and some other forked coins in Mt. Gox’s holdings, along with $630 million cash from the sale of 25 percent of the Bitcoin that Kobayashi handled at a precient price point above where it is today. But five years later, creditors still haven’t been paid back.
A Rescue Attempt
Pierce had actually tried to acquire Mt. Gox in 2013. The child actor known from The Mighty Ducks had gone on to work with a talent management company called Digital Entertainment Network. But accusations of sex crimes led Pierce and some team members to flee the US to Spain until they were extradited back. Pierce wasn’t charged and paid roughly $21,000 to settle civil suits, but his cohorts were convicted of child molestation and child pornography.
The situation still haunts Pierce’s reputation and makes some in the industry apprehensive to be associated with him. But he managed to break into the virtual currency business, setting up World Of Warcraft gold mining farms in China. He claims to have eventually run the world’s largest exchanges for WOW Gold and Second Life Linden Dollars.
Soon Pierce was becoming a central figure in the blockchain scene. He co-founded Blockchain Capital, and eventually the EOS Alliance as well as a much-derided “crypto utopia” in Puerto Rico called Sol. His eccentric, Burning Man-influenced fashion made him easy to spot at the industry’s many conferences.
As Bitcoin and Mt. Gox rose in late 2012, Pierce tried to buy it, but “my biggest investor was Goldman Sachs. Goldman was not a fan of me buying the biggest Bitcoin exchange” due to the regulatory issues, Pierce tells me. But he also suspected the exchange was built on a shaky technical foundation that led him to stop pursuing the deal. “I thought there was a big risk factor in the Mt. Gox back-end. That was my intuition and I’m glad it was because my intuition was dead right.”
After Mt. Gox imploded, Pierce claims his investment group Sunlot Holdings successfully bought founder McCaleb’s 12 percent stake for 1 Bitcoin, though McCaleb says he didn’t receive the Bitcoin and it’s not clear if the deal went through. Pierce also claims he had a binding deal with Karpeles to buy the other 88 percent of Mt. Gox, but that Karpeles tried to pull out of the deal that remains in legal limbo.
The Supposed Villain
Sunlot has since been trying to take over the rehabilitation proceedings, but that arrangement was derailed by a lawsuit from CoinLab. That company had partnered with Mt. Gox in 2012 to run its North American operations but claimed it never received the necessary assets, and sued Mt. Gox for $75 million. Mt. Gox countersued, saying CoinLab wasn’t legally certified to run the exchange in the US and that it hadn’t returned $5.3 million in customer deposits. For a detailed account the tangle of lawsuits, check out Reuters’ deep-dive into the Mt. Gox fiasco.
This week, CoinLab co-founder Peter Vessenes increased the claim and is now seeking $16 billion. Pierce alleges “this is a frivolous lawsuit. He’s claiming if [the partnership with Mt. Gox] hadn’t been cancelled, CoinLab would have been Coinbase and is suing for all the value. He believes Coinbase is worth $16 billion so he should be paid $16 billion. He embezzled money from Mt. Gox, he committed a crime, and he’s trying to extort the creditors. He’s holding up the entire process hoping he’ll get a payday.” Later, Pierce reiterated that “Coinlab is the villain trying to take all the money and see creditors get nothing.” Industry sources I spoke to agreed with that characterization
Mt. Gox customers worried that they might only receive the cash equivalent of their Bitcoin according to the currency’s $483 value when Gox closed in 2014. That’s despite the rise in Bitcoin’s value rising to around 7X that today, and as high as 40X at the currency’s peak. Luckily, in June 2018 a Japanese District Court halted bankruptcy proceedings and sent Mt. Gox into civil rehabilitation which means the company’s assets would be distributed to its creditors (the users) instead of liquidated. It also declared that users would be paid back their lost Bitcoin rather than the old cash value.
The Plan For Gox Rising
Now Pierce and Sunlot are attempting another rescue of Mt. Gox’s $1.2 billion assets. He wants to track down the remaining cryptocurrency that’s missing, have it all fairly valued, and then distribute the maximum amount to the robbed users with Mt. Gox equity shareholders including himself receiving nothing.
That’s a much better deal for creditors than if Mt. Gox paid out the undervalued sum, and then shareholders like Pierce got to keep the remaining Bitcoins or proceeds of their sale at today’s true value. “I‘ve been very blessed in my life. I did commit to giving my first billion away” Pierce notes, joking that this plan could account for the first $700 million he plans to ‘donate’.
“Like Game Of Thrones, the last season of Mt. Gox hasn’t been written” Pierce tells me, speaking in terms HBO’s Silicon Valley would be quick to parody. “What kind of ending do we want to make for it? I’m a Joseph Campbell fan so I’m obviously going to go with a hero’s journey, with a rise and a fall, and then a rise from the ashes like a phoenix.”
But to make this happen, Sunlot needs at least half of those Mt. Gox users seeking compensation, or roughly 12,000 that represent the majority of assets, to sign up to join a creditors committee. That’s where GoxRising.com comes in. The plan is to have users join the committee there so they can present a united voice to Kobayashi about how they want Mt. Gox’s assets distributed. “I think that would allow the process to move faster than it would otherise” Pierce says. “Things are on track to be resolved in the next three to five years. If [a majority of creditors sign on] this could be resolved in maybe 1 year.”
Beyond providing whatever the Mt. Gox estate pays out, Pierce wants to create a Gox Coin that gives original Mt. Gox creditors a stake in the new company. He plans to have all of Mt. Gox’s equity wiped out, including his own. Then he’ll arrange to finance and tokenize an independent foundation governed by the creditors that will seek to recover additional lost Mt. Gox assets and then distribute them pro rata to the Gox Coin holders. There are plenty of unanswered questions about the regulatory status of a Gox Coin and what holders would be entitled to, Pierce admits.
Meanwhile, Pierce is bidding to buy the intangibles of Mt. Gox, aka the brand and domain. He wants to then relaunch it as a Gox or Mt. Gox exchange that doesn’t provide custody itself for higher security. Despite the recent crypto recession with prices at multi-year lows, he believes there’s room for another exchange with a brand tied to the early heyday of Bitcoin.
“We want to offer [creditors] more than the bankruptcy trustee can do on its own” Pierce tells me. He concedes that the venture isn’t purely altruistic. “If the exchange is very successful I stand to benefit sometime down the road.” Even if the revived Mt. Gox never rises to legitimately challenge Binance, Coinbase, and other leading exchanges, Piece believes it’s all worth the effort. He concludes, “Whether we’re successful or not, I want to see the creditors made whole.” Those creditors will have to decide for themselves who to trust.
Audio-Technica true wireless earbuds case recalled over fire risk
Audio-Technica, a company known for its high-end personal audio devices, has recalled the charging cases for its ATH-CK3TW true wireless earbuds after receiving multiple reports of overheating ‘incidents.’ The recall was recently highlighted by the US Consumer Product Safety Commission (CPSC), which notes that consumers who own the case can get it replaced for free.
The Audio-Technica ATH-CK3TW true wireless earbuds were announced in September 2019. As with other true wireless headphones on the market, the product involves two individual earpieces, as well as a charging case that contains a battery for recharging the earbuds. Consumers charge the case using a USB cable.
In a new post on its website, the US CPSC reports that about 7,450 charging cases sold as part of the ATH-CK3TW model have been recalled due to a risk of overheating, which may lead to a fire. These cases are made of plastic and sold in multiple colors; Audio-Technica will replace regardless of the shade, though.
Consumers who own a pair of true wireless Audio-Technica earbuds can check the model number on the back of the charging case. Assuming you have a recalled unit, you should stop using it immediately and get in touch with Audio-Technica, which will provide you with a prepaid shipping label to return the case to the company.
Once the case is received, the company will ship the consumer a replacement case that’ll work with their earpieces. Though there haven’t been any injuries reported in association with this recall, the company notes that four cases of overheating happened outside of the US and that damage to both the charging surface and case resulted.
Oculus Quest subscriptions roll out for games and apps
Oculus today announced that it’s now allowing developers to offer subscriptions to their apps. While perhaps not the best fit for gaming – which Oculus was centered around at the beginning of its life – the company says that by offering subscriptions, it can offer monetization options that make Quest a better fit for other types of apps. Obviously there’s no one-size-fits-all solution for subscription offerings, but in today’s announcement, Oculus listed several different apps that will offer them to start.
There are six different apps that are adding subscriptions today: FitXR, Rec Room, Tribe XR, TRIPP, vSpatial, and VZfit. Oculus says that content you’ve previously purchased in these apps will continue to be accessible after these subscriptions go live, so it sounds like developers won’t be allowed to remove content that’s already been paid for and stick it behind a subscription.
In FitXR, for instance, Oculus says that subscribers will get a new instructor-led class from the existing Box and Dance studios and the upcoming HIIT studio each day, along with access to multiplayer. Those who already purchased FitXR will keep the content they’ve paid for (which includes Add-On packs). While newcomers to the app will get a seven-day free trial to the FitXR subscription service, those who already own the app will get a 90-day trial.
With Rec Room, we see something entirely different. While the base app will continue to be free, a subscription called Rec Room Plus will be offered as something of a premium tier for those who want it. The monthly subscription will net users 6,000 tokens each month – which translates to $10 of real world cash – along with weekly four-star items and access to a special section of the store that’s reserved for subscribers.
Ultimately, what you get with a subscription depends on the app – some might require a subscription to access the app, while others might just offer the subscription as a bonus for those interested in getting some extra content. Oculus says that you’ll be able to cancel subscriptions at any time. To read more about the subscriptions being offered by these initial six apps, check out today’s blog post on the Oculus website.
Apple Fitness+ adds workouts for beginners plus older and pregnant users
Apple Fitness+ is gaining new workouts today, adding specific sessions for pregnancy and that target older adults and beginners. It’s part of a workout boost for the Apple Watch-centered subscription fitness system, and will also include a new Time to Walk session with Jane Fonda.
Announced last year, Fitness+ opened up its guided sessions in December 2020. It relies on exercise tracking through the Apple Watch, with tutorials and classes delivered via a variety of the company’s screens, such as Apple TV, iPad, and iPhone.
One of the challenges early-adopters have found, particularly those just getting into fitness, is trying to get up to speed. That’s something Apple is addressing today, with new workouts for beginners. Offered across the Yoga, Strength, and HIIT workout types, they consist of low-impact exercises and spend more time on how to perfect form to build good habits.
Much in the same way, the new workouts for older adults focus on the specific needs of older people trying to get – or stay – fit. They center on strength, flexibility, balance, coordination, and mobility, Apple says, with a series of eight sessions led by trainer Molly Fox, with guest appearances by Gregg Cook for Strength, Dustin Brown for Yoga, Bakari Williams for HIIT, and Jhon Gonzalez for Dance.
Each workout is 10 minutes long, and many can be completed with either bodyweight or a light dumbbell, Apple says. Alternatively, they may use a chair or involve leaning against the wall. They can also be combined with other Fitness+ workouts, carrying those modifications over.
Finally, there’s a new workouts for pregnancy series. 10 sessions – covering Strength, Core, and Mindful Cooldown – will be led by Betina Gozo alongside trainers Emily Fayette and Anja Garcia, each 10 minutes in length. They’re designed, Apple says, to suit any stage of pregnancy along with any fitness level. Again, as with the older fitness sessions, they also include suggestions on how to modify the more general Fitness+ workouts in ways to accommodate those who are pregnant.
Beyond the three specific categories, there are now two new trainers: one in the Yoga section, and the other in HIIT (High Intensity Interval Training). From April 19, meanwhile, Jane Fonda’s Time to Walk session will be added. That takes the form of an audio interview with paired walking instructions.
Apple Fitness+ is currently available in the US, Australia, Canada, Ireland, New Zealand, and the UK. Three months access is bundled with a new Apple Watch Series 3 or later, while existing owners can try it free for a month. After that, it’s $9.99 per month or $79.99 per year – for up to six family members to share – or bundle as part of the $29.95 Apple One Premiere plan.
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