Last week Reuters reported Mt. Gox, once the world’s biggest bitcoin exchange, had decided as part of their bankruptcy plan to liquidate their assets rather than put together a restructured business plan and continue to operate. This week, however, reports indicate there may be some interest from a group of investors to buy Mt. Gox and prevent the liquidation of their assets. As part of the move, the group has launched a website and is now attempting to generate support.
According to investors, they need the support of new investors to stop the liquidation, “which would be good neither for Mt. Gox creditors nor Bitcoin’s reputation with the general public and regulators.” The investors seem to have garnered some support with their promotional efforts and now are looking to take over the assets of Mt. Gox. If they are successful they hope to revive the company and will present their proposal to the Japanese bankruptcy court in an attempt to convince them their rehabilitation efforts are justified.
Reuters reports Mt. Gox has approximately 127,000 creditors who may lose money if the company is liquidated. Unfortunately, the number of creditors and the fact they are located all over the world has made it unlikely that a rehabilitation process or a restructuring of the business could be successfully completed.
Decline of Mt. Gox
Mt. Gox, once the world’s largest bitcoin operator has lost an estimated 850,000 bitcoins or an estimated $454 million at today’s rates. The company was devastated when nearly half a billion dollars worth of the virtual coins were “lost” due to hacking. The company also filed for bankruptcy protection in February of this year in Japan but later decided they would have difficulty restructuring their debts and continuing their operations due to the complexity of the issues. The court agreed.
No one knows for sure what happened to the missing coins, although there has been speculation from the onset that hackers were involved. Several weeks after the missing coins were reported, however, the company acknowledged they did locate an estimated 200,000 of the missing bitcoins in an unused wallet, reducing the Bitcoin loss to 650,000.
Mt. Gox CEO Mark Karpeles remains under investigation and some believe he has culpability in the collapse of the bitcoin business.
If the courts do not let the investors buy the company, the bankruptcy court will assign administrators, as well as other experts, to review the assets of Mt. Gox and will begin the liquidation process. After the review is completed the court will decide how best to distribute the company’s remaining assets to the various creditors.
According to the New York Times, “The company faces class-action lawsuits in the United States and Canada from users who claim fraud by the company and by its chief executive. Mr. Karpeles could not be reached for comment.”
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