Bitcoin bankruptcy math in doubt

When it comes to Bitcoin, it’s hard to know what to believe-or whom.

When Mt. Gox filed for U.S. bankruptcy protection on Sunday, it listed liabilities of about $64 million and assets of $38 million, according to the AP.

Source: Associated Press. Graphic: Tobey - The Washington Post
Source: Associated Press. Graphic: Tobey – The Washington Post

But hackers who broke into Mt Gox CEO Mark Karpales’ Reddit account this weekend posted a summary of data they found on Mt. Gox servers showing the company still has 951,116 bitcoins, and various amounts in other currencies, including $30, 611,805. 67 USD, which they say is evidence the exchange’s owners may have pocketed the missing bitcoins themselves.

Something doesn’t add up.

The Tokyo-based exchange, which once handled 80 percent of the world’s bitcoin trades, went dark after nearly half a billion dollars in bitcoins went missing in a heist that went unnoticed for years.

After filing for bankruptcy in Japan last month, Mt.Gox filed for bankruptcy in the U.S. hoping to forestall a class-action lawsuit aimed at recouping funds for U.S. residents who had their accounts frozen when the virtual currency exchange imploded in late February.

The lawyer handling the case, Steven Woodrow, told the AP he will seek a federal court order that would freeze Mt. Gox’s computers and other assets in the U.S.  A Chicago court will consider the request tomorrow.

Mt. Gox also is hoping to use U.S. bankruptcy laws to ward off another lawsuit filed last year in a Seattle federal court by a former U.S. partner, CoinLab Action, the AP said.

CoinLab was supposed to use Mt. Gox’s technology to run a bitcoin exchange in the U.S. and Canada. The alliance unraveled within a few months, prompting CoinLab to sue Mt. Gox for alleged breach of contract. CoinLab is seeking $75 million in damages, according to court documents, cited by the AP.

The attorney leading the class action blasted the bankruptcy as a ruse, Reuters reported.

“This case involves a massive fraud,” Steven Woodrow told Judge Harlin Hale in Dallas, according to Reuters. “They claim incredibly that they will preserve assets and protect assets by entrusting the servers and other property to Mr. Karpeles. Respectfully, your honor, that is the definition of the fox guarding the henhouse.”

This article has been updated to clarify the amount in bitcoins and  other currencies Mt. Gox allegedly has, according to information posted by hackers. The hackers claim Mt.Gox has 951,116 bitcoins and various amounts in other currencies, including $30, 611,805. 67 USD. The article previously implied the 951,116 bitcoins were worth $30,611,805.67 USD.

 

Gail Sullivan covers business for the Morning Mix blog.
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