Feeds

Borked Bitcoin bunker MtGox in administration: Lawyer seizes control

$500m in BTC up in smoke

Build a business case: developing custom apps

Collapsed Bitcoin exchange MtGox has been put into administration by a court in Japan, where the website is based, after it became clear the site's chances of recovery are nil.

The biz, which has mislaid half a billion dollars of BTC, was granted protection from creditors in February by the Tokyo District Court as it battled to survive.

But today an administrator was appointed by the bench to effectively seize control of the exchange, paving the way for bankruptcy proceedings and the liquifying of assets.

"I, as the provisional administrator, will administer the assets of the company under the supervision of the Tokyo District Court," lawyer Nobuaki Kobayashi said in a statement [PDF].

"I will strive to fairly and equitably administer the company’s assets, both domestically and internationally, by attempting to utilize certain foreign procedures, including a Chapter 15 filing in the United States of America.

"The future outlook is that, although it is subject to the decision by the Tokyo District Court, it is expected that the commencement of bankruptcy proceedings will be ordered."

The BTC trading website had formally applied to the court for time to rebuild, but this was today shot down by the bench. "The dismissal of the application for commencement of a civil rehabilitation procedure will create great inconvenience and concerns to our creditors for which we apologize," the exchange's founder Mark Karpelès said afterwards in a statement [PDF].

People familiar with the legal battle whispered to the Wall Street Journal that contacting creditors all over the world was proving too difficult for the company, and that the website's staff had run out of ideas for fixing the mess. This led to the court appointing an administrator to take over the exchange.

MtGox hit the rocks in February after somehow misplacing about 850,000 Bitcoins – today worth $500m dollars – 750,000 of which belonged to its customers, and 100,000 was its own private stockpile. It claimed the missing virtual currency was stolen by fraudsters, and filed for bankruptcy protection with liabilities of 6.5 billion yen ($64m).

At the end of last month, the exchange found a stash of 200,000 BTC locked in its digital vault, which if liquified will still leave plenty of creditors out of pocket. But if a buyer can be found for MtGox, people owed money could have a slice of future earnings, it's been suggested.

"MtGox Co., Ltd. intends to fully cooperate with the provisional administrator including by handing over to the provisional administrator current negotiations with sponsor candidates to maximize the distribution to all creditors following a transfer of the business to a sponsor," Karpelès said today.

Speaking of cooperation, the exchange's founder was supposed to travel to the United States this week to face questions about the bankruptcy and a subpoena from the the US Department of Treasury's Financial Crimes Enforcement Network (FinCEN) as part of a related civil action suit against the exchange.

But MtGox's lawyers said Karpelès needed to hire new representation to defend against FinCEN's issues, and he wouldn't be going to the US until he got it. They've asked the US courts to wait until early next month, although they wouldn't guarantee he'd show up then either. ®

5 things you didn’t know about cloud backup

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.