Thursday, June 1, 2023 | Back issues
Courthouse News Service Courthouse News Service

After Bitcoin Loss, Mt. Gox Given U.S. Protection

DALLAS (CN) - A federal judge granted collapsed bitcoin exchange Mt. Gox temporary protection Monday from U.S. lawsuits in the wake of a security breach and believed theft of approximately 744,000 bitcoins.

The Tokyo-based cryptocurrency exchange filed for bankruptcy protection in Japan last month, shutting down after more than $470 million worth of the currency disappeared from the site.

Mt. Gox had allowed users to buy and sell the digital currency, which is largely unregulated by governments or central banks. The price of bitcoins is highly violatile, topping $1,000 in November.

On Sunday, Mt. Gox filed for Chapter 15 bankruptcy protection, asking a Dallas federal judge to halt two pending lawsuits while its bankruptcy in Japan unfolds.

It lists between $10 million and $50 million in assets and between $50 million and $100 million in liabilities.

U.S. Bankruptcy Judge Harlin Hale granted the request the next day, ordering Mt. Gox to return to court on April 1 to determine if an extension is needed.

Mt. Gox was sued months earlier in Seattle by Bitcoin business incubator CoinLab, which seeks more than $75 million for breach of contract.

After the bankruptcy filing in Japan, a man hoping to represent a class of investors who lost their bitcoins in the security breach sued Mt. Gox in Chicago.

Lead plaintiff Gregory Greene said the Tokyo-based exchange touted itself as the "world's largest bitcoin exchange," handling "over 80% of all bitcoin trade."

But the price on Mt. Gox plummeted after the exchange froze bitcoin withdrawals while it purportedly investigated a "bug" or "technical glitch," the lawsuit claims.

Mt. Gox is represented by David Parham with Baker McKenzie in Dallas.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.