Temporary Bankruptcy Protection Granted To Bitcoin Exchange, Mt. Gox

Temporary Bankruptcy Protection Granted To Bitcoin Exchange, Mt. Gox

A temporary bankruptcy protection was granted to Mt. Gox recently, which held back a pair of lawsuits in the US against the Tokyo-based Bitcoin exchange.

The motion for provisional relief of the company under Chapter 15 was approved by Judge Harlan Hale. It allowed the exchange to continue operations while fending off lawsuits. Chapter 15 provides benefits for companies based in other countries from the US court system.

The decision preceded a scheduled hearing in Chicago on the request of an investor to freeze the US assets of Mt. Gox in a class action lawsuit that was filed a month ago. Coinlab also filed another lawsuit for breach of contract last May.

The motion of the troubled exchange was filed on Sunday. The company filed another motion in Japan last month. The security lapse that resulted to deceptive withdrawals of the virtual currency of its customers amounting to nearly 750,000 was blamed by the exchange. The exchange also moss around 100,000 of the virtual currency. The total value lost was nearly $500,000.

Mt. Gox was considered as the biggest and most prominent exchange during its peak. But withdrawals were suspended by the exchange on February 7 following the discovery of a glitch in the system that affected transactions. The company apologized for the problem and indicated that a workaround was developed that allowed service to resume. However, it has yet to resume its services.

Mt. Gox is set to appear for an April 1 hearing to decide if the case should proceed of whether the protection for the bitcoin exchange will be continued.

Posted by James Fried on Wednesday March 12 2014, 6:44 AM EST. Ref: CNET. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0