BY Matt Atkins
Mt. Gox, the infamous Tokyo-based bitcoin exchange, has gained court approval to start Chapter 15 bankruptcy proceedings in the US. The development should prove a boost to a Japanese investigation into the loss of 650,000 units of the digital currency, and pave the way for the company to complete the sale of its business.
Once the leading bitcoin exchange, Mt. Gox was forced to cease trading and close down its website in February 2014 when the company lost 700,00 of its customers' bitcoins, along with 100,000 of its own, worth an estimated $473m. Mt. Gox blamed a prolonged hacking attack for the loss, though it subsequently found 200,000 bitcoins in an old-format digital wallet.
Mt. Gox sought court protection in Japan in February. The Japanese court put the company into liquidation in April and appointed a trustee to investigate the disappearance of the bitcoins. The exchange applied for Chapter 15 protection in the US on 19 March to prevent US customers who had filed a class action lawsuit from seizing its US assets and demanding evidence from executives. US Bankruptcy Judge Stacey G. Jernigan said, on 17 June, that she has “ample legal authority” to accept the US filing and recognise Mt. Gox’s Japanese bankruptcy as the foreign main proceeding. US 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 began life as a website for users of Magic: The Gathering Online, allowing them to trade cards like stocks. In July 2010, the site was re-launched as an exchange for trading bitcoin and regular currencies. Its short life was chequered with security breaches, trading suspensions and lawsuits before its eventual collapse.