Mt.Gox Will Reportedly File For Liquidation Instead Of Bankruptcy

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Mt.Gox has filed for liquidation in a Tokyo court instead of going forward with its plans to rebuild under bankruptcy protection, according to a report in the Wall Street Journal.

The newspaper’s sources said that Mt.Gox decided to abandon its previous plan for rehabilitation because it was too complex and unrealistic, but that it still hopes a buyer for the exchange can be found. If Mt.Gox does indeed file for liquidation, however, it makes it even more unlikely that creditors will recover all of their assets.

Mark Karpeles, the founder of Mt.Gox, said yesterday that he would not travel to the U.S. in response to a subpoena from the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Karpeles’ lawyer said he wanted to first find legal representation in respect to FinCEN’s questions.

Mt.Gox’s site still displays a notice in Japanese and English telling visitors that it is pursuing a civil rehabilitation procedure.

Filed for bankruptcy protection in February after revealing that it had lost about 850,000 bitcoin. About 200,000 bitcoin were later recovered in in an “old-format” digital wallet, reducing the total loss to a rumored total of 744,408, or about $400 million at current exchange rates.

Though Mt.Gox claimed that it lost the bitcoin to a bug called transaction malleability, recent research from ETH Zurich University found that the company only lost 386 bitcoin to the attack, making the Mt.Gox even more confusing.

Public domain image created by Jason Benjamin

IMAGE BY Jason Benjamin UNDER Public Domain LICENSE