Mt. Gox to seek bankruptcy protection

By Nicel Jane Avellana

Feb 28, 2014 10:04 AM EST

Tokyo-based Bitcoin exchange Mt. Gox announced that it was going to file for bankruptcy protection, The Wall Street Journal reported.

In a news conference held at the Tokyo District Court, the company's lawyer said 750,000 of the bitcoins belonging to its clients and 100,000 bitcoins Mt. Gox owned were lost. Based on the CoinDesk bitcoin index market prices, the loss of Mt. Gox would amount to $473 million. The company's lawyer added that the exchange had assets amounting to JPY 3.84 billion but had an outstanding debt of JPY 6.5 billion, the report said.

The exchange halted withdrawals of the digital currency early this month due to a technical problem that possibly led to deceptive withdrawals from the platform. Mt. Gox finally closed the exchange to all transactions this week, causing the highest setback so far to the bitcoin industry and yet bringing the issue of the insufficient protection given to users to the fore. Some Mt. Gox investors believe the chances getting back their money are nil with individual investors revealing that their bitcoins trapped in Mt. Gox amounted to hundreds of thousands of dollars, the report said.

Mt. Gox clients that have come from as far as UK and Australia have flown to Tokyo this month to air their grievances outside the firm's home base. Some individuals close to the exchange revealed that there were also other factors, aside from the technical problems, that caused Mt. Gox to have a hard time meeting the request of clients to get back their money. According to the sources, lenders also shared the blame as they took time to transfer the funds. Some said government requests also contributed to the difficulty, the report said.

According to the Mt. Gox website, its customer settlement accounts were found in Mizuho Bank and Japan Net Bank, The WSJ reported.

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