Mt. Gox Bitcoin Exchange Files for Bankruptcy, Civil Rehabilitation
Mar. 3, 2014
On Sunday, embattled Bitcoin exchange Mt. Gox broke a three-day silence and posted on its Website its intention to apply for civil rehabilitation. A recent hacking scandal at the company resulted in the loss or theft of nearly 750,000 bitcoins, currently worth nearly $400 million.
The legal gambit follows its bankruptcy filing on Friday and signals management’s intention to remain in control of its assets during liquidation. In the end, the company hopes to settle with its creditors (customers of the exchange who had bitcoins and/or fiat currency held by Mt. Gox in individual accounts) and continue operation. According to the Website of prestigious Japanese law firm Nishimura & Asahi, “In civil rehabilitation proceedings, as a general rule, a debtor continues to have the power to manage its business and dispose of its assets even after an order for rehabilitation proceedings has commenced.”
A class action lawsuit also was filed late last week in Chicago accusing Mt. Gox and CEO Mark Karpeles of consumer fraud, negligence, breach of fiduciary duty, breach of contract and unjust enrichment. While bitcoins were trading on the Mt. Gox exchange for around $130, the currency’s value on most major exchanges was holding relatively steady in the $500 – $600 range.