Mt. Gox

Mt. Gox63 posts

Mt. Gox was one of the first Bitcoin exchanges, a place where customers could convert their local currencies into the virtual currency. The site was located in Japan and run by Mark Karpeles, a young French programmer. As Bitcoin increased in value the site experienced technical difficulties, hacking and public relations crises, culminating in the exchanges’ bankruptcy in February 2014, and the loss of hundreds of millions of dollars of users’ funds.

1 Jun, 1985
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Mark Karpeles born in France

Birth

Mark Marie Robert Karpelès is born in Chenove, in the Burgundy region of France. His mother is Anne Karpelès, a geologist turned realtor.

He writes his first computer program aged 10, the same year he is sent to Collège Prieuré de Binson, a Catholic boarding school two hours north of Dijon.

1993
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Convicted of computer fraud

Arrest
Note: Exact year is unknown.

According to Reuters, blog posts Karpeles wrote in 2006 say he was arrested twice in France before he was 21 for computer fraud-related charges. One resulted in a 3-month suspended sentence. French authorities in Tokyo said they have seen confirmation of one prior conviction, but do not have details.

Indeed, during my misspent youth, I made a huge, huge mistake. Enough silliness that I found myself locked into custody and brought temporarily placed in the “mousetrap” (souricière: possibly “n.f. (pol.): ‘Baited trap’ laid by the forces of law-and-order.”). This was followed by an investigation of more than a year, which eventually ended in a trial.

I will not give too much detail about what I did wrong, just say it concerns payment systems on the Internet. I spent two years taking risks becoming larger, perhaps because it was an exciting side … whatever, I ended up getting arrested (in rather bizarre circumstances, noting that when I was arrested, I was just in a police station to file a complaint for something else).

Karpeles then notes he had to undergo psychiatric review, and that it was the psychiatrist who gave him an interest in Japan.

Then I had the right to visits to a shrink. And it turned out, after much discussion, this psych was also interested in Japan (except that a psychologist there earns a rather good living, and they can go regularly) … And I had a agreement with the therapist. The agreement was rather simple. I had to do historical research in the history of Japan and write a report. Obviously it was not so complicated for me, but I could still see and more interesting things about some of the history of Japan.

In the end he stated in his report (which I have a copy) that I was not responsible for my actions, and that the abuse of cannabis was bad for my mental health. I was rather shocked (I never, oh, ever smoked substances “illegal”, I swear on it), then after thinking a lot, I finally concluded that it was can not be so bad as that. In the end, the trial was not concluded too bad for me (3 months suspended sentence disappearing after 5 years, and nothing in the criminal record).

Oct 2003
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Joins Linux Cyberjoueurs

Hired by Linux Cyberjoueurs, Owned by Stephane Portha, the company develops Flash games and Graal online, an MMO RPG. Through the following year Portha complains that Karpeles is spending too much time on internet chats instead of coding.

Mr. Karpeles,

I find myself obliged to notify you of a reprimand for your misconduct.

You have been notified on numerous occasions that the use of the [workplace’s] Internet and your computer are reserved for your professional work, but that occasional private use is tolerated provided that it does not impede the good conduct of the affairs of the company. (See your contract of employment)

In the office Friday, March 12, 2004 I observed that you not only did not do your [coding] work, but that you were [instead] using Internet chat software.

Also, I found it particularly troubling that you would lie [to me] when i asked you about what you were working on and that you [did not stop] your use of this software to chat after several requests for explanation [of your behavior].

If this happens again, we will be compelled to take serious disciplinary action, rather than a simple reprimand.

Please accept my sentiments on this matter, sir.

Signed,
Stephane Portha

Mar 2005
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Visits Japan

Karpeles visits Japan for the first time:

Having always dreamed of going to Japan, I gladly accepted.  What follows is a race [with customs] to obtain a passport in less than 3 days, prepare a departure to Japan, fund my plane. Finally, I’m flying to Japan. Over there everything [is going great], I took a few thousand photos , and a whole lot of adventure, full of discovery and extremely exciting things

Oct 2005
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Moves to Israel

Moves Country

Karlpeles  moves to Israel, hoping to get closer to his Catholic faith while working for internet company Fotovista.  In a blog post he argues that Hebrew is as important to Christians as it is to religious Jews.  He only worked at this job for a few months before he once again began to feel depressed and “empty” according to one blog. In addition to his work at Fotovista he works on his own site, Ookoo.org. However, due to power outages and service disruptions he loses most of his customers and returns to France.

15 Jul, 2007
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Visits Japan, learns Japanese

Karpeles visits Japan for a month, during which time he claims to learn Japanese fluently:

Many of you knew, some didn’t know, I went to Japan from July 15th to August 15th. During one full month, I had to speak Japanese, and live in the Japanese way. I could stay in a guest house in Omiya, Saitama, and also spent one week in Osaka (during which I could go to Kyoto). Thanks to that, I gained a few levels in Japanese Mastering, allowing me to speak Japanese (almost) fluently, speak with Japanese women which resulted in strange results, such as me, being a geekmaster, having a Japanese girlfriend.

Jan 2009
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Arrested on return to France

Arrest

Karpeles is arrested by BEFTI (Brigade Investigation of Fraud in Information Technology) after allegations that he stole his employers’ data.  He describes the BEFTI officers as “barbaric”, commenting that the arrest was “like no other”. After 13 hours in jail and a search of the servers, Palm Pilot, and other home computers, he was released after making a statement.

Jun 2009
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Karpeles moves to Japan

Moves Country

Karpeles arrives in his Japan with his cat Tiban and some hard drives. Karpeles first visited Japan for a month in 2007, and posted a blog entry in Japanese saying he was a ‘geek’.

Karpeles Blog: I do computer-related work (a programmer); my goal is world domination.

Mar 2011
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Karpeles buys Mt. Gox

Acquisition

Mt-Gox-LogoKarpeles buys Mt. Gox from an unemployed software hacker named Jed McCaleb.  Before the site started trading in Bitcoins, it was an online marketplace where people could buy and sell cards for the Magic: The Gathering trading card game. Mt. Gox  is short for “Magic: The Gathering Online Exchange” McCaleb, nervous about regulatory scrutiny on bitcoin, wanted rid of the exchange and sold it to Karpeles in for no upfront fee, people with knowledge of the deal said. Karpeles told others he had later paid McCaleb a small fee, calling it “a very good deal”.

19 Jun, 2011
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Database hacked; 500,000 coins missing or stolen. Exchange closes.

A hacker transfers 25,000 Bitcoins are  transferred from 478 accounts on the currency’s largest exchange — Mt. Gox.  Mt. Gox admits to a major breach and shuts down.

Karpeles: One account with a lot of coins was compromised and whoever stole it (using a HK based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins. The $1000/day withdraw limit was active for this account and the hacker could only get out with $1000 worth of coins. Apart from this no account was compromised, and nothing was lost. Due to the large impact this had on the Bitcoin market, we will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again.

Within an hour of the hack, 100,000 Bitcoins were sold at incredibly cheap rates on Mt. Gox, plunging the market from around $17.50 USD per Bitcoin to just $0.01 per Bitcoin.  Meanwhile 400,000 other Bitcoins are reported missing (approx $8.75M USD at the time). Around the same time a hacker posted the following comment:

I have hacked into mtgox database. Got a huge number of logins password combos.
Mtgox has fixed the problem now. Too late, cause I’ve already got the data. Will sell the database for the right price

2012
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Sued for unfinished work

Files Suit

Karpeles is sued by a customer who claims he had paid 15,000 euros ($20,700) for a website to be developed that was never built. The Tokyo District Court rules in May 2013 that Karpeles has to return the money.

28 Feb, 2013
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Partnership with Coinlab

coinlabMt. Gox announces CoinLab as their exclusive partner in the United States and Canada. As of March 29, all US and Canadian customers currently transacting with Mt.Gox will transact through CoinLab, Inc. Mt.Gox will continue to provide back-end exchange clearing services, and transition over handling of customer accounts, deposits, withdrawals, and other functions to CoinLab’s US-based team.

CEO of CoinLab, Peter Vessenes: This move will bring local product delivery, liquidity and customer service to a huge group of Bitcoin fanatics. We’re excited by, and awed at the responsibility we have caring for our over 100,000 new customers and over a half-billion dollars in annualized trade volume.

Karpeles: This should be a huge win for everyone — faster deposit and withdrawal times, easier-to-reach customer service, and better access for United States financial markets, market makers and liquidity providers.

1 Apr, 2013
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Bitcoin hits $100, Mt Gox has 76% market share

The price of one bitcoin  breaks through the milestone $100 barrier for the first time. Mt Gox is processing 76% of all bitcoin trades or $6 million worth of Bitcoin trades per day, which equates to $60,000 in daily revenue for the company which has 18 employees.

23 Apr, 2013
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Reuters interview

Interview

Reuters interviews Karpeles, who while sitting on a big blue ball, explains that the currency needs more merchants to adopt it so it can grow,

2 May, 2013
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CoinLab sues for $75m

Files Suit

Coinlab’s files a Federal lawsuit inWashington State. Coinlab alleging that Mt. Gox has breached a contract clause which was supposed to give Coinlab exclusive access to the North American market. The lawsuit states:

Defendants have breached the exclusivity provisions of the Agreement by directly servicing customers in the United States and Canada since the Agreement took effect

Despite repeated requests to do so, Mt. Gox has failed to deliver all passwords, Yubikeys, administrative logins and any other security information required so that CoinLab may assume operation of the Bitcoin exchange services for customers in the United States and Canada.

Coinlab is demanding $75 million in damages, and even that, it says, “likely underestimates the actual damages.”

15 May, 2013
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Homeland Security seizes U.S. Dwolla account

Warrant

The US Department of Homeland Security (DHS) issues a warrant (document) to seize money from Mt. Gox’s US subsidiary’s account with payment processor Dwolla. The warrant suggests the US Immigration and Customs Enforcement (ICE), an investigative branch of the DHS, feels the subsidiary, which should have been licensed by the US Financial Crimes Enforcement Network (FinCEN), has been operating as an unregistered money transmitter in the United States.

In order to accept funds in dollars, Mt. Gox opened a Wells Fargo business account for Mutum Sigillum LLC (Mt. Gox’s American subsidiary). The company had to complete a document that states whether it provides money services or not. The warrant reads: “That document was completed on May 20, 2011, and identified Mutum Sigillum LLC as a business not engaged in money services.”

In particular, Karpeles answered no to two important questions: “Do you deal in or exchange currency for your customer?” and “Does your business accept funds from customers and send the funds based on customers’ instructions (Money Transmitter)?”

30 May, 2013
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Bans anonymous currency deals

Following the recent arrest of five people from Liberty Reserve in the US, Mt. Gox takes steps to avoid action from US authorities announcing it will no longer accept anonymous accountsIt continues to allow Bitcoin deposits and withdrawals but any currency transactions need ID checks. New staff have been hired to verify accounts within 48 hours. 

17 Jul, 2013
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Ver: Problems caused by banking system

Makes Statement

After meeting with Karpeles, Ver makes a video statement:

Today I’m at the Mtgox world headquarters in Tokyo Japan. I had a nice chat with MTGOX CEO, Mark Karpeles, about their current situation. He showed me multiple bank statements, as well as letters from banks and lawyers. I’m sure that all the current withdrawal problems at MTGOX are being caused by the traditional banking system, not because of a lack of liquidity at MTGOX.

16 Sep, 2013
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Mt. Gox countersues bitcoin incubator CoinLab for $5.5m in damages

Files Suit

Mt. Gox and bitcoin business incubator, Coinlab had formed a business partnership last November, giving  CoinLab the exclusive license to market Mt. Gox’s services in North America. But CoinLab had filed a complaint on May 2, claiming $75million damages, alleging that Mt. Gox had withheld information it needed to market to customers, instead continuing to sell into North America itself. In response, Mt. Gox alleges that CoinLab was not able to operate lawfully as its partner in the US, the reason for the $5.5m damages suit.

7 Feb, 2014
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Halts withdrawals citing technical malfunction

The price of Bitcoin drops 8 percent after the exchange halts withdrawals, citing technical malfunction.

In order for our team to resolve the withdrawal issue it is necessary for a temporarily pause on all withdrawal requests to obtain a clear technical view of the current processes.

10 Feb, 2014
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‘Transaction Malleability’ bug

Announcement

The exchange announces the reason for the suspension of withdrawals is the detection of unusual activity on transactions from the exchange’s Bitcoin wallets to external wallets, known as “transaction malleability”.

An individual could request bitcoins from an exchange or wallet service, alter the resulting transaction’s hash before inclusion in the blockchain, then contact the issuing service while claiming the transaction did not proceed. If the alteration fails, the user can simply send the bitcoins back and try again until successful.

17 Feb, 2014
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Withdrawals will restart ‘soon’

Announcement

We have now implemented a solution that should enable withdrawals and mitigate any issues caused by transaction malleability. With this new system in place, MtGox should be able to resume withdrawals soon. At the beginning we will do so at a moderated pace and with new daily/monthly limits in place to prevent any problems with the new system and to take into account current market conditions.

24 Feb, 2014
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Crisis Strategy document: 744,408 Bitcoins missing

A document titled “Mt. Gox Crisis Strategy” is released by Bitcoin entrepreneur Ryan Selkis. The document shows that Mt Gox cannot account for over 740,000 Bitcoins (with a value of $350 million):

For several weeks MtGox customers have been affected by bitcoin withdrawal issues that compounded on themselves. Publicly, MtGox declared that “transaction malleability” caused the system to be subject to theft, and that something needed to be done by the core devs to fix it. Gox’s own workaround solution was criticized, and eventually a fix was provided byBlockchain.info.The truth, it turns out, is that the damage had already been done.

At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years.

The cold storage has been wiped out due to a leak in the hotwallet.The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company.

The document, prepared by Mt. Gox representatives and employees at global consulting firm Mandalah is confirmed by Karpeles as  “more or less authentic” during an interview the next day with Fox Business.

According to a source, the same junior staffer who published the business plan document also attended an alleged emergency investor meeting just one day after the “Crisis Strategy Draft” was created.  According to that source, it was at this meeting in which Karpeles and colleague Gonzague Gay-Bouchery first outlined the extent of Mt. Gox’s losses.

This meeting triggered a chain reaction of events in which the solicited investors rebuffed Karpeles and his colleagues, demanded they come clean to customers and stakeholders immediately, and then notified other industry executives, including those at the Bitcoin Foundation, of the catastrophic losses at Mt. Gox.  This group of executives promptly reached out to regulatory authorities and began crafting a joint statement condemning Mt. Gox. They also restricted their own employees from buying or selling bitcoin.

0

Other exchanges issue statement

AnnouncementMakes Statement

A statement is issued by the founders of other Bitcoin exchanges, distancing themselves from Mt. Gox:

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants.  As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

25 Feb, 2014
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Mt Gox video regret

After Mt. Gox goes bankrupt, Ver makes a statement, expressing his regret at making the previous video:

About 7 months ago, purely as a favor to Mtgox, I made a video stating that their fiat withdrawal problems were not being caused by a lack of liquidity. I made no claims regarding their solvency. While everything I said in the video was factually true, today I have come to regret making it for them. It ended up causing the community put additional trust in an entity that deserved none.

He says the problem were caused by poor programming skills and a total lack of bookkeeping in a  single mismanaged company and that the Bitcoin protocol is “stronger than ever before”.

Roger Ver on MTGOX Bankruptcy and Bitcoin

0

Exchange goes offline

Closure

The Mt. Gox website goes offline with no explanation. The Company’s Tokyo office is empty and a handful of protesters remain outside. Karpeles tells Reuters in an email:

We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.

0

Karpeles: We haven’t given up

Interview

In an IRC chat with Fox Business Karpeles says he hasn’t given up:

FB: Is that Crisis Strategy Draft even legit?
MK: more or less. as the name suggests it’s a draft and it’s a bunch of porposals to deal with the issue at hand, not things that are actually planned or done. This said document was not produced by MtGox.

FB: Are you stepping down as CEO and away from gox too? (if you can’t legally disclose, then just say so)
MK: can’t disclose that yet

FB: So you guys are still actively trying to save it though?
MK: we haven’t given up

FB: How much did you lose yourself?
MK: Well technically speaking it’s not “lost” just yet, just temporarily unavailable

0

U.S. citizen files class action lawsuit

Files Suit

Gregory Greene, of Illinois, files a class action lawsuit against Mt. Gox for its loss of approximately 750,000 Bitcoins valued at more than $400 million. Filed in the U.S. District Court in Chicago, the 32 page legal complaint accuses Mt. Gox and Mark Karpeles of consumer fraud and negligence for failing to provide the necessary security to prevent theft of the Bitcoin reserves, as well as claims they are guilty of breach of fiduciary duty, breach of contract, and unjust enrichment. Although Greene is the only named plaintiff in the suit, the complaint lists “all persons in the United States who had Bitcoins or Fiat Currency stored with Mt. Gox on February 7, 2014.”

28 Feb, 2014
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Files for bankruptcy, “discrepancies” of ¥2.7bn ($27m)

Bankruptcy

Mt. Gox officially files for bankruptcy protection with outstanding debts of ¥6.5bn ($63.6m), against assets of ¥3.8bn ($37.4m).  A notice posted on their website admits that “although the complete extent is not yet known”, 750,000 of its customers’ bitcoins and 100,000 of the company’s own have “disappeared” due to “illegal access through the abuse of a bug in the bitcoin system”. At this time they “cannot confirm the exact amount of missing deposit funds and the total amount of bitcoins which disappeared.”

In order to increase repayments to our creditors, it is necessary to explore the possibility of having MtGox Co., Ltd. continue its business. This is why the civil rehabilitation procedure has been chosen, rebuilding MtGox Co., Ltd under the supervision of the court in a legally organized procedure while giving proper explanations will not be for the sole benefit of the company but for that of the whole bitcoin community.

9 Mar, 2014
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Hackers claim fraud, take over Karpeles accounts

Screen-Shot-2014-03-09-at-3.01.06-PMHackers take over Karpeles’ Reddit account and personal blog adding a post alleging that the exchange has actually kept at least some of the bitcoins that the company had said were stolen from users.

It’s time that MTGOX got the bitcoin communities wrath instead of [the] Bitcoin Community getting Goxed

“Goxed”– is a term that users use suffer from Mt. Gox’s technical glitches. The hackers also post a 716MB file to Karpeles’ personal website that they said comprised stolen data from Mt. Gox’s servers, which includes an Excel spreadsheet of over a million trades, company balances, admin files and Karpeles’ home address and CV. Forbes reports that the file includes malware and that the personal details of all Mt Gox customers appears to have been put up for sale.

10 Mar, 2014
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Files for U.S. bankruptcy to halt class action

Bankruptcy

The Company files for U.S. bankruptcy protection in Dallas late Sunday saying without protection it will spend substantial funds defending itself against Gregory Greene’s class action. Greene is scheduled to ask a federal judge on March 11 to freeze Mt. Gox’s U.S.-based servers and other computer equipment and to set up a trust over Mt. Gox’s U.S. assets. The Chapter 15 filing allows Mt. Gox to ask the U.S. Bankruptcy Court to recognize its foreign bankruptcy and to assist in the Japanese proceedings by protecting its U.S.-based assets. U.S. creditors can contest Mt. Gox’s request for Chapter 15 protection.

11 Mar, 2014
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U.S. assets frozen

Judgement

U.S. District Judge Gary Feinerman issues a temporary order freezing money and property belonging to the Mt. Gox Inc. (the U.S. affiliate of Tibanne), Tibanne KK, and principal Mark Karpeles. The order is issued without opposition from the frozen entities, who are not represented in court, and in the presence of lawyers for Mt.Gox Co. Feinerman’s order expires March 25 and does not cover Mt. Gox Co, which has sought bankruptcy protection in Japan and expires on March 25. Citing what he called a “very limited record,” Feinerman said plaintiff Greene established a “sufficient likelihood of success” on his claims to warrant the freeze.

Fienerman: It may turn out there are no such assets

After the hearing, lead plaintiff’s lawyer Jay Edelson said he plans to immediately question Karpeles under oath.

13 Mar, 2014
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Exchange remained open despite knowledge of large-scale theft

According to a sworn declaration in Mt. Gox’s  U.S. bankruptcy filing, the company may have collected a large sum in trading fees in the weeks before its closure, even though it was already aware that a vast number of Bitcoins had gone missing. Even though Mt Gox told customers it was investigating possible fraud on Feb 7, due to a security issue called transaction malleability, buying and selling on the exchange continued until Feb. 25.

According to Bitcoincharts.com, an average of 49,912 bitcoins were traded daily on Mt. Gox between Feb. 7 and Feb. 25, at an average weighted price of $380.54 per bitcoin.

17 Mar, 2014
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Canadian class action announcement

Announcement

Canadians with deposits in Mt Gox announce a class action for $500 million in compensation for  losses on the exchange. The lawsuit targets Mt. Gox, Karpeles and Jed McCaleb, and Mizuho bank, one of the largest banks in Japan, according to a notice of action to Ontario Superior Court. Toronto litigation lawyer Ted Charney said:

We’re never going to find out what’s going on unless we start a lawsuit because it’s the only way we’re going to get access to the records. It’s really the only way to get the thing going.

The notice of action, a summary of the case, gives lawyers a month to file a substantive statement of claim.

18 Mar, 2014
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Customers can login, see balance

Customers are able to login to the Mt. Gox site and check their balances. A notice on the site says:

This balance confirmation service is provided on this site only for the convenience of all users. Please be aware that confirming the balance on this site does not constitute a filing of rehabilitation claims under the civil rehabilitation procedure and note that the balance amounts shown on this site should also not be considered an acknowledgment by MtGox Co., Ltd. of the amount of any rehabilitation claims of users.

21 Mar, 2014
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Finds 200,000 Bitcoin

In a filing, Karpeles discloses Mt. Gox has discovered 200,000 bitcoin in a digital wallet, which is worth about $118 million at current exchange rates. The Bitcoin was discovered in one of the “old-format wallets” that Mt.Gox had used in the past and assumed no longer held any bitcoins. The recovered 200,000 bitcoin brings Mt.Gox’s total loss down to 650,000 bitcoin.

0

Karpeles refuses travel to U.S

In response to a motion filed Tuesday 25 March, where Gregory Greene and Joseph Lack ask a U.S. judge to order Karpeles, as CEO of Mt. Gox to go to the U.S. to testify in the U.S. in order to protect domestic creditors, Karpeles proposes to go to Taiwan instead, where he would allow lawyers to question him in person or via video link. The plaintiffs offer to pay all travel expenses. Steven Woodrow, a Colorado-based lawyer for the plaintiffs, said:

Most foreign representatives, from our research, who have availed themselves of the United States courts, are more than willing to come to the United States to justify the relief that they’re seeking,” Woodrow added. “For some reason, Mr. Karpeles seems averse to coming to the United States. His attorneys won’t tell us why.

29 Mar, 2014
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Staff questioned use of funds

According to interviews with Reuters, in 2012 a small group of employees met with Karepeles to ask him to address their concerns that Mt. Gox was overspending. Costs included rent in a Tokyo high-rise, high-tech gadgets such as a robot and a 3-D printer and a souped-up, racing version of the Honda Civic imported from Britain for Karpeles. They were also concerned that company expenses were being paid from the same bank account used for customer deposits. Karpeles told the group that customer money was not being used to fund the business. Several of the staff left the meeting frustrated that Karpeles would not share proof that client deposits had been protected, while Karpeles believed he had thwarted a challenge to his leadership by staff who had no right to see the books of a firm he owned and was funding.

1 Apr, 2014
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Judge orders Karpeles to U.S

Judgement

Judge Judy JerniganU.S. Bankruptcy Judge Stacey Jernigan orders Karpeles to appear on April 17 in Dallas at the offices of Baker & McKenzie, the law firm that represents Mt. Gox. Last month, Karpeles asked a Dallas court to grant Mt. Gox Chapter 15 bankruptcy protection, in part to put a stop to a class action that had been filed by U.S. customers in Chicago federal court. Under Chapter 15, Mt. Gox must prove at a May 20 hearing that it should be granted such protection from creditors. Judge Jernigan:

If he avails himself of this court, my God, he is going to get himself over here.

A Baker & McKenzie attorney said the company may replace Karpeles as the “foreign representative” of Mt. Gox in the U.S. bankruptcy court.

16 Apr, 2014
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‘No Prospects’ to revive exchange

Judgement

The Tokyo District Court dismisses an application for civil rehabilitation and appoints an administrator of the company’s assets in place of Karpeles.

Karpeles: 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 administrator, lawyer Nobuaki Kobayashi, said in a separate statement that the court will probably order the start of bankruptcy proceedings. How the company is treated will be decided by taking into account factors including whether there is any candidate to buy the business, Kobayashi said. Kobayashi also said any investigation of the liability of Karpeles will be conducted as part of the bankruptcy proceedings.

29 Apr, 2014
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Bitcoin traders settle class actions

Settlement

According to a statement and court filings, U.S. and Canadian customers have agreed to settle their proposed class action lawsuits by supporting a plan by Sunlot Holdings to buy the exchange and accept their share of bitcoins still held by Mt. Gox. Sunlot plans to buy Mt. Gox for one Bitcoin (less than $500).

The customers will share in a 16.5 percent stake after Mt. Gox is sold to Sunlot, a firm backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley, and split the 200,000 bitcoins that Mt. Gox said it found after seeking bankruptcy protection. They will also split up to $20 million held by the administrator for Mt. Gox. Jay Edelson, the lead attorney in the U.S. case said:

This is the customers’ best option and the only chance they have for full restitution

The settlement releases Jed McCaleb, and Gonzague Gay-Bouchery, who have committed to help pursue the class action against the remaining defendants: Karpeles, Tibanne, Mizuho Bank Ltd and others.

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