Former Mt. Gox CEO proposes hard fork to recover 80,000 BTC…community backlash spreads

Mark Karpelès, former CEO of the bankrupt bitcoin exchange Mt. Gox, has proposed a Bitcoin hard fork to recover 79,956 BTC (about $5.2 billion) stolen in a hack more than a decade ago.

According to Cointelegraph on the 28th (local time), Karpelès disclosed on GitHub a proposal to add specific consensus rules so the bitcoins can be transferred to a recovery address without the original private key. The coins in question have been held in a single wallet for more than 15 years without moving, which he described as “one of the most well-known UTXOs in Bitcoin history.” If recovered, he said they could be distributed to creditors through the civil rehabilitation process currently underway under the supervision of a Japanese court.

Karpelès acknowledged that “this is a hard fork, making valid a transaction that previously wasn’t valid.” All nodes would need to upgrade, with the change taking effect after a specified block height. He stressed the proposal is not an attempt to bypass the development process, but a starting point to begin discussion. Currently, Mt. Gox trustee Nobuaki Kobayashi is said not to be pursuing formal procedures because on-chain recovery of the assets is uncertain.

However, strong opposition has continued within the Bitcoin community. On online forums, critics said that “changing consensus rules every time a hack occurs undermines the concept of Bitcoin.” Another user argued that “Bitcoin must remain independent of law-enforcement judgments.” Karpelès also acknowledged that the risk of setting a precedent is the main argument against the plan.

Meanwhile, some Mt. Gox creditors support the proposal. Creditors who have already received partial repayments through the bankruptcy process said that “if those coins move in any way, they will claim their share.”

Mt. Gox was the largest exchange, handling about 70% of global bitcoin trading from 2010 to 2014. But after major losses stemming from a 2011 security vulnerability and accumulating operational errors, it filed for bankruptcy in February 2014. At the time, losses were reported to include about 750,000 BTC in customer assets and 100,000 BTC held by the exchange itself.