Mt. Gox Bitcoin investors voice anger after creditors meet

Mt. Gox Bitcoin investors voice anger after creditors meet

Summary: Investors from failed Bitcoin exchange express anger following the first creditors meeting in Tokyo where questions remain unanswered over how US$500 million worth of the digital currency went missing.

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TOPICS: Banking, Legal
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Investors from failed Japanese Bitcoin exchange, Mt. Gox, are livid following the first creditors meeting Wednesday in Tokyo, where questions remain unanswered over the loss of some US$500 million worth of Bitcoins. 

A group of more than 100 investors were present at the courthouse meeting to quiz Mt. Gox CEO Mark Karpeles about how the digital currency could have been lost. "They are very careful about giving out any information at this stage, it seems," Tokyo-based IT engineer Kim Nilsson told AFP. "We were hoping for more, obviously."

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Kolin Burges, an investor from London, expressed anger at the lack of transparency regarding the missing Bitcoins: "I felt that they didn't give out the answers they should have done."

Karpeles and a court-appointed lawyer overseeing Mt. Gox's bankruptcy proceedings were unable to provide a clear explanation about what happened to the investors' money. Once a leading online exchange, handling some 80 percent of Bitcoin transactions worldwide, Mt. Gox froze all accounts and shuttered in February following years of undetected leaks that resulted in the theft of 750,000 customer-owned Bitcoin, as well as the exchange's store of roughly 100,000 coins. In total, an estimated US$500 million was lost. System design flaws, hackers, and poor accountancy practices were blamed for the massive financial loss.

Karpeles later revealed the company had recovered around 202,000 Bitcoins still in its possession, about 200,000 of which had been held in "certain old-format wallets" and had escaped the theft. The CEO in April had refused to travel to the U.S. to answer questions about the financial losses.

Investor Toshiya Takahashi told AFP: "The [creditors] meeting was designed to discuss the bankruptcy process itself and they separated that from what happened to Bitcoin. What people wanted to know was what happened and why."

Karpeles has reportedly refused to travel to the United States, where he was being asked to appear for questioning in connection with MtGox's collapse. There have been calls in Japan for a criminal investigation.

The next creditors meeting is scheduled to take place on November 26.

The European Banking Authority (EBA) recently recommended financial institutions avoid Bitcoin until regulatory systems were put into place. A document prepared by the EBA for address to the European Commission and European Parliament sets out the regulatory body's opinion (.PDF) on virtual currency such as Bitcoin, Litecoin, and Peercoin.

Despite the apparent risks, IT vendors such as Dell and Apple in the past month have accepted the currency and Bitcoin apps on its online stores and App Store, respectively. 

Topics: Banking, Legal

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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3 comments
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  • That makes me laugh

    Someone invests in an obvious Ponzi scheme and then gets angry when it crashes and burns. They should take it as a life lesson not to be suckered again.
    Buster Friendly
    • A Bitcoin exchange is not a Ponzi scheme

      We're talking here about what was a real live business that provided an actual service to real live customers (however foolish those customers might have been). If Mt. Gox misappropriated its investors' money and as a consequence couldn't pay its debts, then the creditors have every right to be angry.

      Things aren't looking at all happy for Mark Karpeles. If he's not careful, he might find himself booked for a long stay at the Japanese equivalent to Club Fed.
      John L. Ries
      • Is it?

        Is a business based on a sham really a business? Should you be surprised people running such a business might not be the most ethical?
        Buster Friendly