Mt. Gox gets bankruptcy protection, but bitcoin is still hot

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 U.S.

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 bitcoin exchange, which was the largest in the world, then said it found 200,000 bitcoins in a digital wallet it had forgotten about.

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 assets, such as computer servers. In April, Judge Stacey Jernigan in the Northern District of Texas told Karpeles 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, which delayed his court proceedings.

Under the bankruptcy deal approved Tuesday, 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. Mt. Gox gave up on plans to rebuild after a district court in Japan rejected its request for bankruptcy protection.

The Mt. Gox debacle gained international attention, caused the bitcoin’s value to drop and fostered public mistrust of the cryptocurrency. But it didn’t appear to slow down the tech industry’s obsession with bitcoin, as startup bitcoin exchanges and wallets continue to pop up,  and big e-commerce companies are warming to the idea that bitcoin may just be here to stay.

Last month, eBay CEO John Donahoe said he was considering bitcoin integration for PayPal, the company’s online payments division. Online travel agency CheapAir.com started accepting bitcoins to make reservations at more than 200,000 hotels around the world, and allowed customers to book their Amtrak train travel using bitcoins.

On Tuesday, the Argentine startup BitPagos, which processes credit card and bitcoin transactions for retailers and hotels, announced it had raised a seed round of $600,000 led by firms that include Pantera Capital, Tim Draper, Barry Silbert and Boost Bitcoin Fund.

Global banking giant HSBC is also taking bitcoin seriously. The UK-based financial institution has asked applying interns to argue the benefits of bitcoin and take a position for or against it.

And snapCard, a web app that allows customers to make online purchases with bitcoin even if the retailer doesn’t accept it, has promised a prize of 50 bitcoins to any futbol fan who chooses the correct winners from each World Cup game. That’s about $18,200 in today’s exchange rate.

Let’s hope those 50 bitcoins don’t go missing between the couch cushions.

 

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