Here's what I don't understand: I specifically requested to be repaid in BTC at the time, you could state this on the claims form. I even opened an account on Kraken for this? So why would I not get the full amount in bitcoin?
This is true in most countries -- in the United States, if the state for any reason seizes your coins without legal reason, and has time to auction them off before you can prove they had no legal reason to take them, you will be paid back in dollar for the value of the coins on the day they were taken. The state does not owe you the potential increase in value between that day and today.
Where it gets interesting is what would happen if the reverse was true. Let's say your coin gets taken without legal reason in an illegal search today, with the price at $100. Two weeks from now, they get auctioned off after the price collapsed to $80. Four months from now, when your lawyer proves to the court that your coins were legally acquired and there was no basis to the seizure, the price is at $1. What does the government owe you?
So, now, please give me back my fucking bitcoins.
Instead, an incompetent piece of shit, the guy who caused this mess will now supposedly walk away with the majority of those bitcoins.
It's not just and it won't happen. We'll sue him to the end of the universe and back until he pays up. There are other forms of litigation besides Japanese bankruptcy law. And there is funding too. The entire sum I will supposedly get back now, plus a huge bitcoin-denominated bonus will be fully committed to this purpose.
In bankruptcy proceedings, most assets are sold off and the remaining cash is distributed to shareholders and the likes. You're being paid out your Yen amount (just like any other person who had a claim) but converted into Bitcoin (at todays prices, since the Bitcoins are gone / have been liquidated).