Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Mt. Gox creditors ask judge to approve settlement
Author: Joel R. Glucksman
Date: May 15, 2014
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The U.S. creditors of the now-defunct Mt. Gox bitcoin exchange have asked a U.S. judge to approve a proposed settlement that would revive the company, according to Bloomberg.
The settlement would still have to be approved by the Japanesebankruptcy court overseeing the company’s liquidation, but would return some money to depositors and resolve claims against a number of the firm’s executives. Mt. Gox principal Mark Karpeles would not be released from potential liabilities.
The exchange filed for bankruptcy in Japan on Feb. 28 after claiming to have lost 850,000 bitcoins, 700,000 of which belonged to customers who had deposited the currency in Mt. Gox “digital wallets.” At the time, the firm claimed that hackers had exploited “transaction malleability” to steal this money, but this claim has since been disputed. Shortly thereafter, Mt. Gox announced that it had found 200,000 bitcoins stored in an old-format digital wallet, but depositor losses still exceeded $218 million.
In return for settling separate class action lawsuits, U.S. and Canadian depositors would share a 16.5 percent stake in Mt. Gox following its sale to Sunlot, which has proposed to buy the firm for a nominal fee of one bitcoin, according to Reuters. Depositors would split the 200,000 bitcoins still in Mt. Gox coffers as well as the $20 million in fiat currency held by the Japanese bankruptcy administrator for the firm. This sale would have to be approved by the Tokyo court.
The settlement also releases Mt. Gox founder Jed McCaleb and Gonzague Gay-Bouchery, former-CMO, according to the news source. The two reiterated their commitment to aiding in the class action suit against the remaining defendents in the case, including former CEO Mark Karpeles, parent company Tibanne and Mizuho Bank Ltd.
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