Mt. Gox heads toward liquidation in Japan

The writing on the wall for Mt. Gox became a bit clearer Wednesday when the defunct bitcoin exchange gave up on plans to rebuild after a district court in Japan rejected its request for bankruptcy protection.

Mt. Gox has agreed with a Tokyo court on the first step toward liquidation after court officials scrapped Mt. Gox’s  request for rehabilitation, which was made on Feb. 28, shortly after the exchange lost 850,000 bitcoins in what appears to be a long-running theft.

“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,” according to a statement posted by attorneys on the Mt. Gox website.

Thee court moved management of the exchange’s assets from Mt. Gox founder and chief executive Mark Karpeles to court-appointed provisional administrator Nobuaki Kobayashi, who will administer any Mt. Gox assets and likely meet with creditors.

The decision by the Tokyo court comes two days after Karpeles refused a U.S. judge’s request to testify in his bankruptcy trial. Mt. Gox received bankruptcy protection from a judge in Dallas after the online exchange lost about 750,000 bitcoins belonging to users, and another 100,000 of the company’s own bitcoins, and froze users’ accounts. Judge Stacey Jernigan in the Northern District of Texas told Karpeles, a French native who lives in Japan, to travel to the U.S. and appear in front of the Department of Treasury’s Financial Crimes Enforcement Network to answer questions about his U.S. bankruptcy case. Karpeles declined, and his attorneys asked to delay proceedings until at least May 5.

However, Mt. Gox currently plans to proceed with the U.S bankruptcy case — assuming Karpeles decides to get on an airplane someday soon.

“We need to maintain the Chapter 15 proceedings in the United States,” according to the statement from Mt. Gox attorneys.

The Wall Street Journal reports that a person close to Mt. Gox said several groups are interested in buying the exchange and creditors may be able to seek repayment from any new owners.

 

Photo: Mark Karpeles, chief executive officer of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo, Japan, on Friday, Feb. 28, 2014. Photographer: Tomohiro Ohsumi/Bloomberg 

Heather Somerville Heather Somerville (210 Posts)

Heather Somerville is a business reporter covering venture capital and startups for the Bay Area News Group.