MtGox continues to be in the headlines, as on Sunday the firm filed for Chapter 15 Protection in the US Bankruptcy Court in Dallas. Chapter 15 is a unique form of bankruptcy protection that was created to handle insolvency cases involving parties from multiple countries. Chapter 15 provides firms that have filed for bankruptcy protection in a foreign country to also access US courts to assist in handling the insolvency case and distribution of assets to creditors.
First reported in MarketWatch on Sunday night that MtGox had entered an electronic filing, court documents have been currently published on the US court website. According to court documents, MtGox has hired Dallas based Baker and McKenzie to handle the Chapter 15 filing and case. Similar to its filing in Japan, the US documents state that “On February 7th 2014, all bitcoin withdrawals were halted by MtGox due to the theft or disappearance of hundreds of thousands of bitcoins owned by MtGox customers as well as MtGox itself. “ They added that they were investigated the matter but continue to blame a problem with the bitcoin algorithm as they stated “it is believed to have been caused or related to a defect or “bug” in the bitcoin software algorithm.”
According to court documents, MtGox stated that the purpose of the Chapter 15 filing “in an effort to maximize recoveries to, and provide from an equitable distribution of value among all creditors”.
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The case is set to be heard by Judge Harlin D. Hale at 1:30PM Dallas local time.
The US filing occurs after an interesting weekend for MtGox where a personal website of their CEO, Mark Karpeles was reportedly hacked, with a database of client information being leaked. The database records revealed client balances that many are believing to show that client bitcoins remain in control of the company. However, the database may also be reflective of client liabilities without properly representing the firm’s internal holdings which MtGox has reported to be missing nearly 750,000 client bitcoins.