Mt. Gox approved for Chapter 15 bankruptcy protection in US
The defeated Bitcoin exchange, which claims to have lost nearly $400 million to hackers, is ordered to hand over any remaining bitcoins to US and Canadian customers.
It appears that Mt. Gox may be starting to see the light at the end of the tunnel. The failed Tokyo-based Bitcoin exchanged was granted approval to begin Chapter 15 bankruptcy proceedings in the US on Tuesday, according to Reuters.
Judge Stacey Jernigan of the US Bankruptcy Court in Dallas approved Mt. Gox's motion for Chapter 15 protection, a classification that allows representatives of the company to file lawsuits and find means to pay back creditors, according to Reuters. Chapter 15 bankruptcy protection was instituted in the US in 2009 as way for companies in other countries to have the benefits of the US court system.
The ruling came as Mt. Gox waits for approval of the settlement in a class action lawsuit recently filed against the company in the US. The suit involved former investors requesting a freeze of the exchange's US assets after Mt. Gox imploded earlier this year.
At its height, Mt. Gox was one of the largest and most popular Bitcoin exchanges. However, it came unraveled in February after it revealed it lost almost 750,000 customer bitcoins, as well as 100,000 of its own bitcoins, when hackers entered the exchange system through a security flaw.
While 200,000 bitcoins were eventually recovered, the total number of those still missing is 650,000 -- which is worth nearly $400 million at current exchange rates. The majority of the affected customers are based in the US.
Mt. Gox filed its motion for bankruptcy in the US in March and was quickly granted temporary protection. Despite the exchange's founder Mark Karpeles refusing to come to the US to discuss the disappearance of the 650,000 bitcoins, it appears Judge Jernigan is sympathetic to the company's plight.
Under the conditions of the Chapter 15 bankruptcy protection, Mt. Gox is to divvy up the 200,000 remaining bitcoins between its US and Canadian customers, as well as give them a combined total of a 16.5 percent stake in the company if and when it's sold, according to Reuters.