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Bitcoin Bankruptcy Spills over into the U.S.

April 7, 2014

The largest bitcoin exchange Mt. Gox lost $473 million in the online currency. This resulted in them filing for bankruptcy protection in Japan (Mt. Gox Co Ltd, U.S. Bankruptcy Court, Northern District of Texas, No. 14-31229). It remains unclear if the bitcoin were stolen or if there are other factors at plan. Read more about the bitcoin bankruptcy.

Two class action lawsuits were brought against the company. Mt. Gox filed for creditor protection on March 9 in the U.S. Bankruptcy Court in Dallas under Chapter 15 of the U.S. Bankruptcy Code. This will temporarily shield the company’s assets while the main bankruptcy proceeding is carried out in another country. The petition listed about $37.7 million in assets and $63.9 million in liabilities. U.S. Bankruptcy Judge Hale granted the company’s application. Shielding the company’s assets from the creditors and halting the two suits.

Chapter 15 is an international bankruptcy that allows the US Bankruptcy Court to recognize the foreign bankruptcy proceeding and protects the U.S. based assets for the company.

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