Mt. Gox today filed for liquidation in a Tokyo court, abandoning its plans for civil rehabilitation and giving its creditors even less hope of recouping their losses, according to a Wall Street Journal report.
The filing is one step further than the bankruptcy protection the failed bitcoin exchange had applied for on 28th February. The difficulty of the procedure was cited as a reason, together with dwindling hopes of a resurrection.
The filing document, posted on Mt. Gox’s website, said:
“During the following 1 month and a half, an investigation has proceeded with regard to the past factual elements related to the disappearance of bitcoins and missing funds which were the cause of said application, but it is expected that said investigation will still require some time and at this time, there are no prospects for the restart of the business.
Further, MtGox Co., Ltd. is continuing the negotiations with sponsor candidates but the concrete selection process has not yet started.”
Inconvenience
“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 document concluded.
If approved, a trustee will take control of Mt. Gox’s remaining assets from CEO Mark Karpeles. The news was hardly unexpected, but may still surprise some who had remained hopeful of a rescue and partial restoration as recently as yesterday.
Mt. Gox confirmed it had recovered 200,000 BTC in ‘old format’ wallets a month ago, but has not made any more progress towards finding the rest of the 850,000 it declared were missing in its 28th February Japanese bankruptcy filing. It also claimed $63.6m in debts.
Further US action
Today’s liquidation application could be related to Mt. Gox CEO Mark Karpeles’ reluctance to travel to the US, either to testify in the class action against his company or further defend its case for bankruptcy protection.
Though he has not been charged with any criminal offence in the US or his current home country of Japan, Karpeles was reportedly concerned he might be detained in the US as part of investigations into Mt. Gox’s collapse and even its prior connections to users of the Silk Road Marketplace.
The latter issue has already seen the two-month house arrest and indictment of Charlie Shrem, who ran another of bitcoin’s early exchanges, Bitinstant.
The US Department of Homeland Security (DHS) seized a total $5m last year from accounts belonging to Mt. Gox’s US subsidiary Mutum Sigillum LLC, over that company’s failure to register with FinCEN as a money transmitter.
According to Karpeles, the DHS still holds the funds. The two separate seizures were often given as a reason for Mt. Gox’s constant US dollar withdrawal delays, which continued right up until it ceased operations in February this year.
The WSJ reported that, although the DHS said it does not have any ongoing discussions with anyone from Mt. Gox, one of its investigators was still attempting to contact one of Mt. Gox’s former employees in Japan in March.
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