Mt. Gox Files for Liquidation [WSJ]

The plans to rebuild Mt. Gox aren't realistic, sources say

Mt. Gox has reportedly given up on trying to rebuild the company after it was granted bankruptcy protection in Japan and has asked a local court to allow it to be liquidated.

Wall Street Journal cites unnamed sources familiar with the situation saying that the entire plan to rebuilt Mt. Gox is unrealistic. For this reason, Karpeles is now seeking to liquidate the business, which would put creditors in a tight spot and users in the impossibility of ever recovering their lost Bitcoins.

Mt. Gox was the most popular Bitcoin exchange in the world, but the company started facing some technical issues back in February. After several weeks during which the withdrawals were completely blocked, Mt. Gox finally filed for bankruptcy protection on February 28.

The company said it had lost 850,000 Bitcoin worth about half a billion dollars at that moment’s value. About 200,000 Bitcoins have been recovered since then from an old wallet.

Mt. Gox blames a malleability built in the Bitcoin protocol for losing all those coins, but a group of researchers says that it would be impossible to lose so many coins in this manner. The number would be closer to 60,000 than 850,000.

Furthermore, some recent reports indicated that the company’s employees were concerned that Karpeles might have been using users’ Bitcoins to cover losses. They confronted the CEO back in 2012, but were left with no clear response regarding how Mt. Gox conducted its business.

While liquidation is the main option, there’s also a chance that Mt. Gox could eventually be sold to someone interested. The fact that this isn’t the main option for the company is rather surprising, especially since a group of investors has already shown an interest in purchasing Mt. Gox for $1 since the debt it carries is quite large.

Mark Karpeles was supposed to appear before the court this week in the United States, but he announced that he wasn’t going to show up until he secured legal counsel and had time to get proper advice.

A rather large group of people in the United States is filing a class action against Mt. Gox, demanding the return of the lost money. Karpeles was actually hoping to obtain the same level of bankruptcy protection in the United States, which would have fended off those who wanted to sue the company.

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