Mt. Gox set to liquidate as court denies rehabilitation

Wed Apr 16, 2014 10:18am EDT

Mark Karpeles, chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014. REUTERS/Yuya Shino

Mark Karpeles, chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014.

Credit: Reuters/Yuya Shino

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(Reuters) - Mt. Gox, once the world's biggest bitcoin exchange, is likely to be liquidated after a Tokyo court dismissed the company's bid to resuscitate its business, the court-appointed administrator said on Wednesday.

CEO Mark Karpeles is also likely to be investigated for liability in the collapse of the Tokyo-based firm, the provisional administrator, lawyer Nobuaki Kobayashi, said in a statement published on the Mt. Gox website.

"The Tokyo District Court recognized that it would be difficult for the company to carry out the civil rehabilitation proceedings and dismissed the application for the commencement of the civil rehabilitation proceedings," he said.

Mt. Gox filed for bankruptcy protection from creditors in Japan in late February, 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 later said it had found 200,000 of those bitcoins.

In Wednesday's order for provisional administration, the court put the company's assets under Kobayashi's control until bankruptcy proceedings officially commence and a bankruptcy trustee is named.

"It is expected that, if the bankruptcy proceedings commence, an investigation regarding the liability of the representative director of the company will be conducted as part of the bankruptcy proceedings," it said.

Karpeles did not immediately respond to an email seeking comment.

Kobayashi did not refer to an offer made last month by a group of investors, including former child actor-turned entrepreneur Brock Pierce, to take over Mt. Gox. But he said such offers would be taken into consideration.

The court's decision comes after Karpeles' lawyers told a U.S. federal judge this week that he is not willing to travel to the United States to answer questions about the bitcoin exchange's U.S. bankruptcy case.

(Editing by William Mallard and Ian Geoghegan)

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Comments (3)
JamVee wrote:
I sense some possible slammer-time for Mr. Karpeles!

Apr 16, 2014 11:48am EDT  --  Report as abuse
rvm3 wrote:
The guy stole all the money, but no one yet can say it?

Apr 16, 2014 12:47pm EDT  --  Report as abuse
blath wrote:
It’s commonly believed among the wise that Karpeles made a huge blunder last year when he sold Bitcoins belonging to customer accounts at $10 per Bitcoin to pay for operating expenses and makeup for a liquidity shortfall after the Fed seized a $5 million bank account, planning to pay back the Bitcoins when the price went back down. When Bitcoin rallied to $800 he was caught in a classic short squeeze from which there was no recovery. So he invented a story that the Bitcoins had been stolen by exploiting the malleability bug which has since been debunked by expert analysis of the block chain. He will eventually be convicted of fraud and spend a large part of his young years in prison away from his family.

Apr 16, 2014 1:08pm EDT  --  Report as abuse
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