Goodbye Mt. Gox: The Bitcoin Exchange's Plans to Rebuild Were Denied
All that's left, unless a buyer appears, is for Mt. Gox to disburse whatever assets remain.
Mt. Gox, once the world's largest bitcoin exchange despite originally being a trading hub for Magic: The Gathering, has just seen its hopes of rebuilding dashed by a Japanese court. Instead, Mt. Gox has filed for liquidation, which will be the last dying gasp of the company after the mysterious disappearance of half a billion dollars' worth of bitcoin earlier this year.
In February, when Mark Karpeles, CEO of the Japan-based firm, took to the Japanese media to admit that the bitcoins were all gone, he was resolute in his explanation that the disappearance of 850,000 bitcoins wasn't Mt. Gox's fault, but Bitcoin's.
"We have lost Bitcoins due to weaknesses in the system," Karpeles said at the time, according to the AFP's translation. "We are really sorry for causing trouble to all the people concerned."
While it was clearly a move to save face, Karpeles's attempt to deflect blame from Mt. Gox was done in hopes of the exchange making a comeback. But according to Reuters, a Tokyo court "dismissed the company's bid to resuscitate its business." The Wall Street Journal reports that the company has instead asked the court to approve a plan for liquidation, which would effectively bring the company to an end.
In an announcement today, Mt. Gox's provisional administrator, Japanese lawyer Nobuaki Kobayashi, confirmed the news. "The future outlook is that, although it is subject to the decision by the Tokyo District Court, it is expected that the commencement of bankruptcy proceedings will be ordered," he wrote.
The Journal's Takashi Mochizuki and Katy Stech also note that the company, which has previously filed for bankruptcy protection, filing for liquidation "usually means [creditors] will recoup less of their investment." All's not lost for people who had money in Mt. Gox—the company could still be bought by a third party, and the recent discovery of 200,000 lost bitcoins will help balance Mt. Gox's debts, assuming they can be sold off satisfactorily—but I wouldn't get my hopes up.
Japanese authorities are expected to investigate Karpeles for liability, and if it's found that he's at fault for the company's collapse, it does open the possibility for civil litigation. But any sort of suit against Karpeles and Mt. Gox for lost assets—especially since we're talking a volatile cryptocurrency—would take years. Regardless, filing for liquidation is pretty much the nail in the coffin for Mt. Gox. All that's left, unless a buyer appears, is for Kobayashi to disburse whatever assets are left.
"I, as the provisional administrator, will administer the assets of the Company under the supervision of the Tokyo District Court. I will strive to fairly and equitably administer the Company’s assets, both domestically and internationally, by attempting to utilize certain foreign procedures, including a Chapter 15 filing in the United States of America," he wrote in the announcement.
As Kobayashi hinted at, Mt. Gox also still has big legal issues to clear up in the US. In addition to filing for Chapter 15 bankruptcy, the US Treasury's financial crimes unit, FinCEN, earlier this week demanded that Karpeles testify at a hearing this Friday. According to Forbes, Karpeles is "not willing" to appear in the US yet, and will not testify before American authorities until his legal team finalizes a strategy for US bankruptcy proceedings.