Former world’s biggest Bitcoin exchange Mt. Gox has been put in administration by a Japanese court.
Mt. Gox announced in February that hackers had stolen hundreds of thousands of Bitcoins from it, worth about $500 million.
It later said that it had found a substantial number of the Bitcoins and had hoped to find a way to continue as a business and pay back customers.
But the court dismissed this plan and appointed an administrator.
In a statement on Mt. Gox’s website the administrator said that bankruptcy proceedings were likely to follow.
Mt. Gox has been put in administration by a Japanese court
This would involve Mt. Gox customers being asked to make any claims through the court, although the administrator pointed out that there was no time frame for this process at the moment.
Customers can continue to check the balance of any Bitcoins they have with Mt. Gox but are warned that this is not necessarily the amount they would receive as the result of a claim.
Mt. Gox said at the time it went offline that the Bitcoins had been stolen from its system by hackers who exploited a loophole in the software that oversaw the Bitcoin system. The administrator said that it plans to investigate the missing Bitcoins as part of its role.
The founder of Mt. Gox, Mark Karpeles, refused a request by a US court to attend a hearing this week to answer questions about the collapse of the exchange. He has not been charged with any crime.
Bitcoin is currently trading for around $500, down from a high of more than $1,100 last year.
Bitcoin exchange Mt. Gox has given up plans to rebuild under bankruptcy protection and has asked a Tokyo court to allow it to be liquidated, the Wall Street Journal reported, citing people familiar with the situation.
The source cited the complexity of the procedure and the lack of realistic rehabilitation plans for the Tokyo-based exchange as reasons for the move, the newspaper said.
Bitcoin exchange Mt. Gox has given up plans to rebuild under bankruptcy protection and has asked a Tokyo court to allow it to be liquidated (photo Getty Images)
Mt. Gox, once the world’s biggest Bitcoin exchange, filed for bankruptcy protection in Japan last month, saying it may have lost some 850,000 Bitcoins – worth around $454 million at today’s rates – due to hacking into its computer system. It has since said it found 200,000 of those Bitcoins.
Mt. Gox’s lawyers declined to comment on the matter.
Mt. Gox CEO Mark Karpeles won’t travel to the US to answer questions about the Bitcoin exchange’s US bankruptcy case, the company’s lawyers told a federal judge this week.
MtGox Bitcoin exchange has won a temporary bankruptcy protection in the US.
A judge in Dallas, Texas, agreed to protect MtGox’s assets and temporarily halt two US lawsuits while bankruptcy proceedings occur in Japan.
MtGox filed for bankruptcy in Japan in February after losing about $473 million worth of customers’ Bitcoins to what it says was a hacking attack.
The company is scheduled to return to court on April 1 to extend the protections.
MtGox filed for Chapter 15 protection in the US late on Sunday.
The filing asks the US bankruptcy court to recognize MtGox’s bankruptcy in Japan and protect its US assets.
MtGox Bitcoin exchange has won a temporary bankruptcy protection in the US
And it gives MtGox a temporary reprieve against two US lawsuits: one a class-action suit in Chicago filed by an Illinois resident, and another a $75 million breach-of-contract case filed in Seattle by Coinlab Inc.
At the time of the MtGox theft, about 750,000 customer Bitcoins were stolen as well as close to 100,000 of MtGox’s own bitcoins.
That amounts to about 7% of all the Bitcoins in existence.
Steven Woodrow, the lawyer leading the Chicago class-action suit, told Judge Harlin Hale that the case was a “massive fraud”.
MtGox’s attorney, David Parham, denied there was any fraud and said the company and its founder, Mark Karpeles, were complying with the terms of the Japanese bankruptcy proceeding.
The web accounts of Mark Karpeles – boss of the troubled MtGox Bitcoin exchange – have been attacked by hackers.
The attack on Mark Karpeles accounts seems to have been motivated by growing frustration over the actions of MtGox.
Last month MtGox stopped trading and filed for bankruptcy after finding out that $465 million in Bitcoins had been lost via a security bug.
Many have called on the exchange to release more information about what happened to the lost Bitcoins.
The attacks were mounted on the personal blog and Reddit account of Mark Karpeles and left the hackers in charge of both social media accounts.
The attack on Mark Karpeles accounts seems to have been motivated by growing frustration over the actions of MtGox
Hackers used their access to grab detailed information about trading activity at MtGox. They then shared their findings by posting a 716MB file containing much of what they had found.
The material posted included an Excel spreadsheet of more than one million trades, entries from MtGox’s business ledger and information about its back-office administration software.
“It’s time that MtGox got the Bitcoin community’s wrath instead of [the] Bitcoin community getting Goxed,” wrote the hackers in a message accompanying the data dump. The word “Goxed” has been used to describe the sudden interruptions in trading MtGox imposed when it was going through technical problems before its final closure.
According to Forbes writer Andy Greenberg, although $465 million in Bitcoins (approximately 744,000 coins) had supposedly gone astray from MtGox, no activity suggesting they had been traded had been seen in the blockchain – the central list of buying and selling that underpins the entire Bitcoin network.
MtGox chief executive Mark Karpeles has quit the board of the Bitcoin Foundation, which oversees and develops the virtual currency software.
It comes shortly after Bitcoin exchange MtGox halted transfers of the digital currency to external addresses after it spotted what it called “unusual activity”.
The halt resulted in a sharp decline in the value of Bitcoins.
Last week, MtGox – one of the largest Bitcoin exchanges – said customers should be able withdraw funds “soon”.
Meanwhile, all tweets on MtGox’s Twitter account have also been deleted.
The Bitcoin Foundation said that Mark Karpeles’s resignation would be “effective immediately”.
MtGox chief executive Mark Karpeles has quit the board of the Bitcoin Foundation
It is the foundation’s second high-profile resignation in the past month.
Another board member, Charles Shrem, stepped down in late January after being arrested and charged with money laundering in connection with his Bitcoin company.
Charles Shrem, the chief executive of New York-based Bitcoin exchange BitInstant, has pleaded not guilty.
The issues with MtGox had sparked a dispute between the exchange and the Bitcoin Foundation.
The Tokyo-based firm said that its investigation into the unusual activity revealed a loophole that could be exploited to fool the transaction process into sending double the correct number of Bitcoins.
It also left it vulnerable to attacks, which slowed down the rate at which coins could be bought and sold.
As it halted the withdrawals, MtGox had suggested that a flaw in Bitcoin’s underlying software was to blame for the problem.