Bitcoins lost in Mt. Gox debacle ‘not subject to ownership’
japantimes.co.jp
japantimes.co.jp
Suppose you lend (not give or sell) your car to a company that then goes bankrupt with the vehicle in its possession, and you go along to reclaim it.
The officials handling the case might say "Okay, let's check the blue book value of the car and you'll get your pro rata percentage of that money when everything is settled."
To which you can reply "No, you don't understand. I'm not saying the company owes me money. I'm saying that's my car, license number such and such, it doesn't belong to the company at all, so it's not part of the bankruptcy proceedings, it belongs to me and I want it back right now." And assuming you have the documentation to prove it, the law will support your case.
In this case the court has ruled that you can't point to a particular bitcoin and say that's my bitcoin, because bitcoin has the properties of money rather than of particular tangible objects, so all you can say is you are owed a certain amount of bitcoins. And so the owner of such will get his pro rata percentage after everything is settled, instead of getting the whole lot right now.
Am I understanding it correctly?
Bitcoin are inherently bearer instruments. If you can spend the Bitcoin, you own it; if you can't, you don't. MtGOX owned all those Bitcoins, because it had to in order to do anything with them, and its customers owned promises made by MtGOX.
I think the court could have made that a bit more clear in its ruling, but I think there may have been an explicit effort to avoid comparing Bitcoin to banknotes. It doesn't matter if it's tangible or intangible. What matters is that there is no possible evidence of ownership that could be presented to the court to restore the property.
MtGOX customers spent their Bitcoins to MtGOX, and received promises in exchange. It was a nice attempt, but the straws eluded their grasp. They wait and get their pro rata share, just like all the other creditors.
This discussion seems full of misinterpreting a term of art as something closer to colloquial meaning, and then drawing inferences from that. Such inferences by nature will usually be deeply flawed.
Doesn't every Bitcoin have a serial number, similar to the car's license plate?
Here's an example 10BTC transaction assuming no intermediate fees:
A(2) + B(8) ==> X(5) + Y(5)
You can't tell how many of A's bitcoins were sent to X or Y, but you can trace the transactions all the way to the originally mined blocks that each contained 50BTC.
The receivers, who are hired to administer this process, take their pay straight off the top of the money pile. The remaining money pile is divided up among the creditors, depending on how much they've shown they're owed. There isn't enough money to go around (if there was, the company wouldn't be bankrupt) so everyone gets less than they're owed.
When this process is complete the company is gone, and nobody owes anyone anything. This is what "limited liability" means - none of the investors or owners of the company is liable for anything beyond their initial investment.
So if you sold the company a $1000 widget and gave them 90 days to pay, and they go bankrupt in those 90 days, you might only get $10 or $100 back from the receivers.
Just because someone has lost $1000 worth of bitcoins, doesn't mean they'll ever see them again or anyone is legally liable to pay them back - in cash or in bitcoins.
I found this an interesting view of property but I suspect it may need a shift in definition over the next few decades.
See earlier layman's explanation here for more detail, if you're curious: https://news.ycombinator.com/item?id=10018631
You will probably not find wonderful reporting on this subject because the generalist press routinely does not understand complicated specialist subjects (as is readily apparent to technically inclined people any time they stumble their way through our world). "有形固定資産 and 資産権 actually describe two different things" is a bit beyond most reporters trying to work their way through this story, including for the obvious reason.
How do financial instruments (bonds, mutual funds, sporting bets) compare? Surely these would have protection from theft, even electronic versions. But calling Bitcoin a 'Financial Instrument' might open additional problems (regulation?)
I mean, can I not pay for electricity in Japan because I can't handle it, and it can be shared?
Can I steal a few ¥bn worth of electronic bonds, credit swaps, options, futures from a Japanese company then stick them the finger because they didn't really own them as they're all intangible?
Can I not pay for my cell phone service because I can't handle the RF waves?
Can I republish books by Japanese authors abroad and trample copyright, because the words aren't tangible?
I assume media piracy is legal too? No? Shock horror.
I don't know about the tort system in Japan, but if it's anything like most legal systems, this judgment reinforces the law and re-asserts that if you can't physically touch it, you're welcome to steal it.
Oh right, this is actually just the Japanese legal system doing what they do best, and going "corporate entity must be right, be deferential, be deferential!".
There is a reddit comment that clears it up and is extremely fascinating in its own right:
https://www.reddit.com/r/Bitcoin/comments/3fztzt/tokyo_court...
That doesn't make any sense though unless bitcoins can be owned. If you could claim as a creditor for something that was of worth but couldn't be owned then one could say something like "I told Mt.Gox employees a joke, therefore I claim financial remuneration for the value of that experience I gave them.".
If, say, a "sell it on ebay" store went bankrupt, I could say, "those are my Air Jordans", and I would get those particular shoes back. On the other hand, if a bank goes bankrupt, I can't say "I deposited those particular bills with those serial numbers". The court has ruled that bitcoins follow the latter principle, so if each depositor gets back 50% of the deposited bitcoins, I can't get back 100% by pointing to the particular bitcoins I deposited.
To make the analogy to real money, if you put a stack of bills in a security deposit box in a bank, and the bank goes bankrupt, you can get the contents of the box back, because you still own those specific bills. On the other hand, if you write down the serial numbers of the bills and deposit them in a bank account, then the bank goes bankrupt, you can't go into the bank's vault and pick out the bills that match your list of serial numbers. You have to get in line with the other people who have money deposited in the bank, because you don't own those specific bills anymore.
So, basically they just decided that MtGox operates more like a bank account for bitcoins than like a security deposit box for bitcoins.
If half the money is stolen from the bank vault, everyone at the bank has lost half their money (ignoring insurance, etc). If the contents of half the safe deposit boxes are stolen, you don't distribute the remaining safe deposit boxes among all the customers; half lost everything and half lost nothing.
If the bank was merely holding my money in an account balance, then I could not sue in this manner since I would be treated like any other debtor in the bankruptcy proceeding.
Someone tried to sue MTGox to get their money back as if they were in the first situation. The court correctly ruled that the plaintiff was actually in the latter situation and they would have to be treated like a debtor.