Mt. Gox: long investigation pending after court bankruptcy ruling

Journalist:
April 24, 2014
This document on the Mt. Gox website announces the Tokyo court ruling, ordering bankruptcy proceedings for the exchange.

[dropcap size=small]T[/dropcap]he Mt. Gox website got updated with a new document. The Tokyo District Court ordered liquidation to begin at the failed Bitcoin exchange. This definitive order follows an earlier announcement made last week, where the bankruptcy administrator said it would be difficult to get Mt. Gox started again.

“At 5 p.m. on April 24, 2014, the Tokyo District Court issued an order of commencement of the bankruptcy proceedings for MtGox Co., Ltd. (the “Company”) (Case No.: Heisei 24(hu)No.3830), and at the same time, appointed me as the bankruptcy trustee.

The power and authority to administer and dispose of the assets of the Company is vested exclusively in the bankruptcy trustee, and the bankruptcy trustee will implement the bankruptcy proceedings, such as the administration and realization of the Company’s assets and the investigation of the claims. We kindly ask for your understanding and cooperation.”

These are the opening words in a new document placed on the Mt. Gox website. The search for investors yielded no solution, leaving bankruptcy the only way for the failed exchange. Ever since Mt. Gox filed for bankruptcy protection on February 28th, users of the exchange have been eagerly waiting for the outcome of this case. 750,000 Bitcoins vanished into thin air, and CEO Mark Karpeles became one of the most heavily debated personalities in the Bitcoin universe.

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Many people will wonder what is going to happen now. The Mt. Gox hotline will remain open to assist everyone with questions regarding the exchange and this ruling. There was also an appendix added to the official announcement of the bankruptcy proceedings. In this appendix, several frequently asked questions are answered.  Perhaps the most asked question will be the next one:

“Q. What is expected to happen under the bankruptcy proceedings?
A. The bankruptcy trustee will implement the bankruptcy proceedings, in which the assets of the bankrupt entity will be managed and converted into cash, the investigation of the claims, etc. will be conducted, and if funds for a distribution are secured, the liquidating distribution will be made.”

What this trustee will do is gather all the assets Mt. Gox has left. These will be converted into cash that will be used to pay expenses and distribute the balance to the owed creditors. He will also be responsible for the investigation of the liability of Karpeles, regarding all missing assets.

Now that this is official, it seems very unlikely the exchange will ever resume its operations again. If a potential buyer shows up and agrees to all required terms, the sale of Mt. Gox is still possible. This, however, is all up to the bankruptcy trustee now. The outcome is impossible to predict. How much money is left in Mt. Gox? It will take much time to determine this. As the investigation continues, I do not expect the bankruptcy trustee to release much information about his findings. All the Bitcoin community can do now is wait for the final verdict. Will the creditors ever see any form of reimbursement and, if so, how big will this reimbursement be? One thing is sure; Mt. Gox’ bankruptcy is official now.

Featured Mt. Gox protesters image by Theverge.com

Christoph Marckx @cryptomaniacs

Internet addict and virtual currency aficionado living in Belgium. I work in a school, where I am responsible for every computer and the entire network that keeps our students connected to the world. I love cryptocurrencies, mostly because it gives us a chance to take back our freedom. If we do this right, there are exciting times ahead!