A Japanese court may have hammered the final nail into the coffin of bitcoin exchange Mt. Gox.
Mt. Gox reported on April 16 that a Japanese court had dismissed the company's request for that nation's equivalent of Chapter 11 protection. Now the Japanese government has taken control of Mt. Gox's assets until a bankruptcy trustee is assigned.
The company said in a statement that there are "no prospects for the restart of the business. The dismissal of the application for commencement of a civil rehabilitation procedure will create great inconvenience and concerns to our creditors for which we apologize."
The company has now filed for liquidation.
The explanation for denying the company's bankruptcy request, according to Mt. Gox, was that creating and implementing a rehabilitation plan appears to be too difficult. The company had applied for this protection in February after it had reported that 850,000 bitcoins, worth at the time an estimated $500 million, were stolen from the company's digital account by a hacker. In March, Mt. Gox filed for Chapter 15 bankruptcy protection in the United States. Chapter 15 deals with insolvency cases involving more than one country.
This news is just the latest step in what has been a months-long saga for Mt. Gox and the digital bitcoin currency.
In November the digital currency reached new heights in value after it received a positive testimony from the U.S. officials.
"We all recognize that virtual currencies, in and of themselves, are not illegal," said Mythili Raman, acting assistant attorney general at the Justice Department's criminal division.
In February, Mt. Gox reported the bitcoin theft and then the bottom fell out of the company and the digital currency itself. This left bitcoin users and traders out in the cold as they could not get their money back from the company.
The next truly bizarre part of the story then moved to California where a retired engineer named Dorian Satoshi Nakamoto was named as the genius behind the digital currency in a Newsweek article. He quickly denied that he had anything to do with it, but the damage was already done and Nakamoto, for a period, became the focus for the tabloids. He has since hired a lawyer and stopped speaking in public on the issue.
In late March Mt. Gox managed to "find" 200,000 of the 850,000 missing coins, which it said were stored in a forgotten digital wallet, but at this point it was too little too late. Just a few days later the IRS stated that bitcoins are not currency, but property and would be taxed as such. At this point Mt. Gox made a move many thought should have been done earlier -- it called in the Tokyo police for help in locating the stolen bitcoins.
