Failed Bitcoin exchange MtGox was placed in administration by a Japanese court on Wednesday, with an order for bankruptcy expected to be issued soon, its administrator and chief executive said.
“The Tokyo District Court decided today to dismiss the application for commencement of a civil rehabilitation and at the same time, an order for Provisional Administration was issued,” a statement from CEO Mark Karpeles said.
“Attorney-at-law Nobuaki Kobayashi (Supervisor and Examiner under the Civil Rehabilitation Procedure) was appointed Provisional Administrator,”
The move means Karpeles, the controversial founder of what was at one time the world’s biggest trading place for the virtual currency, will cede control of the company to Kobayashi.
“I, as the provisional administrator, will administer the assets of the Company under the supervision of the Tokyo District Court,” said a statement in Kobayashi’s name posted on the MtGox website.
“I will strive to fairly and equitably administer the company’s assets, both domestically and internationally, by attempting to utilise certain foreign procedures, including a Chapter 15 filing in the United States of America.
“The future outlook is that, although it is subject to the decision by the Tokyo District Court, it is expected that the commencement of bankruptcy proceedings will be ordered.”
Kobayashi said the future of the business of the Bitcoin exchange was not clear.
“After the bankruptcy proceedings commence, it will be unlikely that the Company can restart the exchange,” said his statement.
“The treatment of the exchange business is expected to be decided by taking into consideration the various matters including whether there is any proper buyer candidate who can assume the business and how to transfer the business to such buyer.”
Private credit research firm Teikoku Databank put MtGox’s liabilities at about 6.5 billion yen ($64 million).
The sudden freeze of the MtGox exchange earlier this threw the global Bitcoin community into paroxysms and provoked huge volatility in an already-volatile currency.
The exchange went dark suddenly in February, shortly after it stopped Bitcoin withdrawals, claiming there was a bug in the software that underpins the virtual currency, making it vulnerable to thieves.
It filed for bankruptcy protection shortly after, saying it had lost 850,000 coins, which were worth nearly $500 million at the time. It made a similar filing in the United States in early March.
The company said last month it had handed over documents to the Tokyo police, after it found 200,000 of the lost coins in a “cold wallet” — a storage device, such as a memory stick, that is not connected to other computers.
Unlike traditional currencies backed by central banks, Bitcoin is generated by complex chains of interactions among a huge network of computers around the planet.
After trading for cents per Bitcoin for the first two years of its existence, it began a frenzied climb in 2011 that took it to $40 a coin in late 2012 and to $1,100 last year. It is currently trading at around $505.
The unit’s relative anonymity and lack of regulation has been attacked by critics who fear it could be used to finance organised crime or terrorism.