Mt. Gox has received bankruptcy protection in the US

Mt. Gox, the Tokyo-based bitcoin exchange that went belly up and lost hundreds of millions of dollars belonging to the site’s users, on Tuesday received approval to begin bankruptcy proceedings in the US. Reuters reports that Mt. Gox, which was operated by chief executive Mark Karpeles, was granted approval from a Dallas court to begin Chapter 15 proceedings as it awaits a settlement with U.S. customers and the sale of its business. In February, the online exchange lost about 750,000 bitcoins belonging to users, and another 100,000 of the company’s own bitcoins, in what appears to have been a long-running theft. The company froze users’ accounts and customers lost more than $450 million at current bitcoin valuation.

The failed Tokyo-based bitcoin exchange, Mt Gox, received court approval on Tuesday to begin Chapter 15 bankruptcy proceedings in the United States as it awaits approval of a settlement with U.S. customers and a sale of its business. Mt Gox was once the world’s leading exchange for trading the digital currency, but shut its website earlier this year after saying it lost some 850,000 bitcoins – worth more than $500 million at current prices – in a hacking attack. It subsequently said it found 200,000 bitcoins. The company filed for Chapter 15 bankruptcy protection in March to prevent U.S. customers who had filed a class action lawsuit from seizing its U.S. assets, such as computer servers, and demanding evidence and access to Mt Gox executives. Since then, the company and the class action plaintiffs reached a settlement, which is awaiting final approval by a federal court in Chicago. Judge Stacey Jernigan of the U.S. Bankruptcy Court in Dallas granted recognition of the Chapter 15 case, which allows Mt Gox’s foreign representative to file lawsuits and pursue potential funds to repay creditors. Under the deal, U.S. and Canadian customers will split the 200,000 bitcoins held by Mt. Gox and share in a 16.5 percent stake after Mt. Gox is sold.

By Rocco Penn

A tech blogger, social media analyst, and general promoter of all things positive in the world. "Bring it. I'm ready." Find me on Media Caffeine, Twitter, Facebook, and Google+.

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