Mt Gox set to liquidate as court denies rehabilitation

Wed Apr 16, 2014 4:57pm IST

Mark Karpeles (L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014. Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection on Friday, saying it may have lost all of its investors' virtual coins due to hacking into its faulty computer system. Karpeles, bowing in contrition and wearing a suit instead of his customary T-shirt, apologised in Japanese at a news conference for the company's collapse, blaming ''a weakness in our system.''    REUTERS/Yuya Shino (JAPAN - Tags: CRIME LAW BUSINESS) - RTR3FTG4

Mark Karpeles (L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014. Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection on Friday, saying it may have lost all of its investors' virtual coins due to hacking into its faulty computer system. Karpeles, bowing in contrition and wearing a suit instead of his customary T-shirt, apologised in Japanese at a news conference for the company's collapse, blaming ''a weakness in our system.''

Credit: Reuters/Yuya Shino (JAPAN - Tags: CRIME LAW BUSINESS) - RTR3FTG4

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REUTERS - Mt. Gox, once the world's biggest bitcoin exchange, is likely to be liquidated after a Tokyo court dismissed the company's bid to resuscitate its business, the court-appointed administrator said on Wednesday.

CEO Mark Karpeles is also likely to be investigated for liability in the collapse of the Tokyo-based firm, the provisional administrator, lawyer Nobuaki Kobayashi, said in a statement published on the Mt. Gox website.

"The Tokyo District Court recognised that it would be difficult for the company to carry out the civil rehabilitation proceedings and dismissed the application for thecommencement of the civil rehabilitation proceedings," he said.

Mt. Gox filed for bankruptcy protection from creditors in Japan in late February, saying it may have lost some 850,000 bitcoins - worth around $454 million at today's rates - due to hacking into its computer system. It later said it had found 200,000 of those bitcoins.

In Wednesday's order for provisional administration, the court put the company's assets under Kobayashi's control until bankruptcy proceedings officially commence and a bankruptcy trustee is named.

"It is expected that, if the bankruptcy proceedings commence, an investigation regarding the liability of the representative director of the company will be conducted as part of the bankruptcy proceedings," it said.

Karpeles did not immediately respond to an email seeking comment.

Kobayashi did not refer to an offer made last month by a group of investors, including former child actor-turned entrepreneur Brock Pierce, to take over Mt. Gox. But he said such offers would be taken into consideration.

The court's decision comes after Karpeles' lawyers told a U.S. federal judge this week that he is not willing to travel to the United States to answer questions about the bitcoin exchange's U.S. bankruptcy case.

(Editing by William Mallard and Ian Geoghegan)

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