Mt. Gox Edges Towards Liquidation

Apr 22, 2014 2:00 PM PST

TOKYO — Mt. Gox, the Tokyo-based bitcoin exchange that suddenly declared bankruptcy in February after allegedly losing about half a billion dollars to hackers, signaled in a recent announcement that it will most likely proceed to liquidation.

The statement, posted on the Mt. Gox website, says that the Tokyo District Court has dismissed its request to rehabilitate its business.

Mt. Gox’s former CEO Mark Karpeles has apparently lost his authority over the company’s assets. Attorney Nobuaki Kobayashi has been named the provisional administrator by the court.  

Kobayashi wrote on April 16, “Today, in circumstances in which it would be difficult for the company to carry out the civil rehabilitation proceedings, the Tokyo District Court recognized that it would be difficult for the company to carry out the civil rehabilitation proceedings and dismissed the application for the commencement of the civil rehabilitation proceedings, and at the same time, issued an order for provisional administration by which I was appointed the provisional administrator.”

He adds that he will “strive fairly and equitably adminster the company’s assets, both domestically and internationally” using foreign procedures and a Chapter 15 bankruptcy filing in the U.S.

Conceding that investors and creditors may be inconvenienced by the situation, he asks for understanding “in view of the special circumstances of this matter and the fluid situation.”

The statement also includes an FAQ section for interested parties.

Mt. Gox shuttered in February, claiming it had lost 750,000 of its customers’ bitcoins, along with 100,000 of its own, reportedly amounting to about $500 million. Nothing in the market foreshadowed the collapse, and at the time bitcoin seemed to be gaining traction as a legitimate form of currency in some countries, including the U.S.

Adult companies gravitated towards the anonymity that the cryptocurrency afforded, and the roster of companies that set up a bitcoin payment gateway was long and respectable, including Playboy Plus, MOFOs, Naughty America, Wicked Pictures, Porn.com, Grooby.com, DominicFord.com, ClassyCams.com and MetArt.com and Internet payment service provider Verotel, among others.

Mt. Gox now faces class-action lawsuits in the U.S. and Canada from users who claim fraud by the company.       

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