Mt. Gox files for bankruptcy in U.S.

Mt. Gox files for bankruptcy in U.S.

Summary: The Japan-based Bitcoin exchange files Chapter 15 bankruptcy paperwork in the U.S. in efforts to protect its remaining assets, while opening up international channels of co-operation.

TOPICS: Tech Industry

Bitcoin exchange Mt. Gox has filed for Chapter 15 bankruptcy proceedings in the United States.

The once-dominant Bitcoin trading post filed for Chapter 15 in the U.S. on Sunday. This particular chapter of the U.S. bankruptcy code deals with insolvency cases that spread across more than one country.

On 28 February, Tokyo-based Mt. Gox filed for bankruptcy protection in Japan. However, by filing for Chapter 15 in the United States, foreign debtors and parties are able to use the U.S. Bankruptcy Courts and systems. This means that Mt. Gox's insolvency now reaches beyond the confines of Tokyo, and the U.S. is able to work with other countries and connected parties around the world in order to better solve the case and protect the interests of all creditors as well as Mt. Gox and its remaining assets.

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The Mt. Gox bitcoin debacle: Bankruptcy filed, customer bitcoin lost

The Mt. Gox bitcoin debacle: Bankruptcy filed, customer bitcoin lost

UPDATE: Mt. Gox has closed the bitcoin exchange and filed for bankruptcy in Japan.

As Mt. Gox accounts for investors worldwide, it makes sense that this secondary bankruptcy filing has occurred. Through Chapter 15, the U.S. Bankruptcy Court will generally defer to the actions of a foreign court -- in this case, in Japan, as the primary place for bankruptcy procedures. However, when circumstances do not violate laws or public policy in the U.S., Chapter 15 also allows aid to be offered to the foreign company filing for bankruptcy protection.

The Bitcoin exchange shut down abruptly last month, closing its Twitter feed and rendering itself mute for over a week before announcing that Mt. Gox was closing its doors. In total, according to Mt. Gox's announcement that it was filing for Japanese bankruptcy protection (.PDF), approximately 750,000 Bitcoins deposited by users and 100,000 Bitcoins belonging to Mt. Gox disappeared, which is worth roughly $500 million in today's trading rates.

Mt. Gox CEO Mark Karpeles said the loss -- taking place over several years -- was due to "weaknesses in the system" which allowed cyberattacks and Bitcoin theft to occur.

Over the weekend, anonymous hackers claimed to have broken in to Mt. Gox systems and lifted apparent evidence that customer investments were not the target of theft, but instead are still being held at the exchange as part of a fraudulent plot by Mt. Gox management. 

Topic: Tech Industry

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  • Bwaahahahahahahahahahahahahahaaaaaaa!

  • "weaknesses in the system" ?

    that should read " "weaknesses in OUR system".

    Remember, you don't need to give your bitcoin addresses to anyone. If you do your money could be stolen.

    Mt.Gox's system was badly implemented and removed security that is inherent within Bitcoin. It is correct that it dies, and other, better, systems become dominant.
    • "It is correct that it dies, and other, better, systems become dominant."

      Unless you have REAL money tied up in Mt. Gox or the other two "banks" that have gone bust recently, then the folks who do/did, probably aren't subscribing to your thoughts.

      And no, I'm not one of them, fortunately. I look upon this as "monetary social networking", and since I have no use for Farcebook, or any of the other social networking sites around (and it seems like their "security" is just about as good), I'll not be a part of it thank you very much...ever.
  • WOW

    850,000 bitcoins = 500 million, Really ? So a bitcoin is worth more than US dollars?,
    • That's been true for a while

      Whether it continues to be true remains to be seen.
      John L. Ries
    • Any thing speculative can do that.

      Bitcoin should be treated as a collectable, or a commodity, where the value is worth what someone is willing to pay for it.

      You could substitute comic books for bitcoin, trading a comic for services, while still selling it outside the "comic trading circle" to an investor for cash, at a cash price they are willing to buy it for.
      • The advantage of comic books is...

        ...that even if you lose money on them, you can still read the stories.
        John L. Ries
        • Read 'Em and Weep

          As you point out comics can still be read, whereas with Bitcoin you can only read about them ;-)

          It's unfortunate to see such a nice little piece of experimental applied cryptography taken for something it was never meant to be and then go awry but it's certainly not surprising.
  • so much for the world currency...