Judge extends Mt. Gox bankruptcy investigation deadline

Judge extends Mt. Gox bankruptcy investigation deadline

Summary: A Tokyo-based judge has extended the time permitted to discover why Bitcoin trading post Mt. Gox failed and why customer funds were stolen.

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TOPICS: Japan, Tech Industry
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Credit: Bitcoin via CNET

A judge in Tokyo has extended the deadline for the investigation into why Mt. Gox failed, and whether it should be resurrected under bankruptcy laws or forced to liquidate.

The deadline, originally set for Friday, has now been extended to May 9, according to the company (.PDF). The Tokyo District Court's March 28 deadline was for Nagashima Ohno & Tsunematsu partner Nobuaki Kobayashi to ascertain why the once-dominant Bitcoin exchange failed, and how it was possible for millions in customer funds to be stolen by cyberattackers.

Mt. Gox closed its doors in February this year without warning. It later emerged that the company's accounting procedures and external cyberattacks had left the exchange in the red, and the firm was forced to file for bankruptcy. The amount of Bitcoin stolen by hackers systematically over several years -- forcing the closure -- was originally thought to be 750,000 customer-owned Bitcoin and 100,000 BTC belonging to Mt. Gox, worth roughly $495 million.

The Bitcoin exchange was granted bankruptcy protection by the Tokyo-based court, and later secured Chapter 15 bankruptcy protection in the United States. Mt. Gox's U.S. protection allows foreign debtors and parties to use U.S. Bankruptcy Courts and systems, rather than stay reliant on Tokyo-based courts.

Since the filing, Mt. Gox 'recovered' 200,000 Bitcoin thought to be lost due to system errors and security flaws, stating that the recovered funds were in an "old format" wallet thought to be out of use. Originally, it was believed that 750,000 BTC belonging to customers were stolen, but this figure has now been revised to 650,000 BTC.

According to Reuters, Kobayashi requested the extension, citing the heavy workload to confirm Mt. Gox's financial situation as well as the involvement of multiple investigatory agencies as reasons for the judge to grant extra time.

The results of Kobayashi's investigation will decide whether Mt. Gox will be permitted to restructure and attempt to salvage its business, or whether the company will be forced into liquidation.

Mt. Gox is not the only exchange that has faced negative press recently.

Beijing-based cryptocurrency trading post Vircurex recently admitted that cyberattacks last year and recent "large fund withdrawals in the last weeks" have left the company in the red -- as it dipped in to cold storage to compensate users after security breaches. Now, the company can either try to find a fix and way to boost its bank balance, or close entirely. Until a potential solution is found, customer accounts have been frozen, leaving users without the option to withdraw their digital funds.

Topics: Japan, Tech Industry

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2 comments
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  • I'm surprised the judge hasn't yet ordered liquidation

    I assume that Kobayashi is the trustee, but the article doesn't say so. In any case, if Mt. Gox does survive this it would have to be under new management, as the existing managers have lost all credibility.
    John L. Ries
  • Bitcoins

    I'm surprised the judge hasn't ordered criminal proceedings against Mt. Gox! Once the investigation begun all of a sudden Mt. Gox finds millions of dollars of bitcoins...LOL.
    Sounds like Mt. Gox got caught with their hands in the cookie jar.
    electric800