Proposal to Redirect Stolen BTC Rejected

Proposal to redirect $5B from 2011 MtGox address rejected by Bitcoin Core community. Technical details and initial reaction discussed.

Proposal for Hard Fork Rejected

Mark Karpelès, former CEO of MtGox and operating under his GitHub handle MagicalTux, submitted a pull request to the Bitcoin Core project on February 25th. The proposal aimed at redirecting approximately 79,956 BTC from an address since 2011. At current prices, this amounts to roughly $5 billion in value that has remained stagnant for over 15 years.

Technical Details of the Proposal

The pull request proposed a narrow change with around 60 lines of code. It sought to implement a consensus rule adjustment by substituting one public key hash for another during transaction validation from the theft address, thereby allowing the MtGox trustee to spend these coins and incorporate them into Japan's court-supervised rehabilitation process.

Community Reaction

The proposal faced immediate criticism. Matt Corallo, a prominent figure in Bitcoin development, noted on Twitter that the appropriate forum for such discussions was not GitHub but rather platforms like bitcointalk or the official mailing lists. Some users suggested Karpelès should have first proposed this as an official Bitcoin Improvement Proposal (BIP).

Stakeholder Reactions

Even those who were intended to benefit from the proposal rejected it. Several MtGox creditors expressed their opposition on X, stating that rewriting Bitcoin's rules was unacceptable. They emphasized that the network’s principle of private keys equating to ownership took precedence over recovering the funds.

Legal and Philosophical Implications

Karpelès anticipated these objections in his proposal, acknowledging the unambiguous nature of the theft and the existing legal framework for distribution. However, he argued that once Bitcoin redirects coins for any reason, it sets a precedent for future actions. This could potentially affect other victims like Bitfinex and DeFi hack victims.

Conclusion

The pull request was eventually closed. The $5 billion in BTC remains frozen at its original address from 2011. The creditors who might have benefited chose to uphold the network's fundamental principle over a potential payout, affirming the ethos of "code is the law" within Bitcoin.

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