Tokyo Court Orders Bankruptcy Trustee to Begin Mt. Gox Liquidation Process

Tokyo Court ordered liquidation of bitcoin exchange Mt Gox after the firm collapsed in February.

Bitcoin exchange Mt. Gox, whose spectacular collapse in February this year hammered the virtual currency's reputation, is to be liquidated after a Tokyo-based court ordered bankruptcy proceedings on Thursday, April 24th, 2014. Photo: Sam Howzit/Flickr

Bitcoin exchange Mt. Gox, whose spectacular collapse in February this year hammered the virtual currency's reputation, is to be liquidated after a Tokyo-based court ordered bankruptcy proceedings on Thursday, April 24th, 2014. Photo: Sam Howzit/Flickr

Tokyo bitcoin exchange Mt Gox is set to be liquidated after a Japanese court issued an order to start bankruptcy proceedings, said the company on Thursday.

Mt Gox, the largest bitcoin exchange in the world, filed for bankruptcy on February 28 after it had lost 850,000 coins estimated at about USD 500 million. Moreover, the sum of USD 27 million was stolen from its banks accounts.

The company filed for protection in the US in the beginning of March. The firm said a software bug had made the exchange vulnerable to theft. At the same time around 200,000 of missing Bitcoins were then found in an electronic wallet.

Nobuaki Kobayashi, an attorney, will lead bankruptcy proceedings, in which the assets of the exchange will be converted into cash.

The creditors’ meeting will be held on July 23, 2014. There are also no guarantees that the investors would return their money back.

The bankruptcy trustee and certain experts will investigate the total amount of bitcoins and cash of the exchange. The investigation would be carried out with the help of the police authority in case such cooperation is necessary.

The liability of Mark Karpeles, Mt Gox’s chief executive, would be also investigated. He refused to travel to the US, where he was asked to appear for questioning regarding exchange collapse. He is still the registered owner of the Mt Gox website.

The Tokyo District Court ruling spells the end for Mt Gox, which was responsible for approximately 80% of the world transactions in the virtual currency.

Bitcoins, which are generated by chain of interactions among a network of computers all over the world, are not supported by any central bank or government.

A group of investors called Sunlot Holdings tried to stop Mt Gox from being liquidated in the middle of April. They intended to take over the exchange in an attempt to retrieve the digital currency.

The Japanese government last month said that bitcoin was not a currency and the transactions with the use of the cryptocurrency should be subject to taxation. The banks in Tokyo are not allowed to open accounts holding bitcoin or broker transactions with the digital currency.

Janet Wellen, a head of the US Federal Reserve, admitted that central bank could not control bitcoin as the currency exist only virtually and is not regulated by central authority.

A number of countries, among which China and Russia, imposed certain restrictions on the usage of bitcoin.

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