Official bankruptcy proceedings begin against MtGox parent company Tibanne

Almost exactly a year has passed since the high profile demise of Japanese Bitcoin exchange MtGox, which at the time was not only a pioneer in virtual currency exchange, but also the largest Bitcoin facility in existance.

Its insolvency came about due to the company having stated that it had lost almost 750,000 of its customers’ Bitcoins, and around 100,000 of its own Bitcoins, totaling around 7% of all Bitcoins in circulation worldwide at the time, and worth around $473 million near the time of the filing for bankruptcy, which took place on February 28, 2014.

Several attempts were then made by various companies to consider the viability of purchasing MtGox out of bankruptcy, none of which came to fruition.

Today, the firm’s parent company, Tibanne Ltd, has finally become the subject of bankruptcy proceedings, a matter which has been confirmed in a letter from attorney and bankruptcy trustee Nobuaki Kobayashi.

The letter reads as follows:

While I have continually and strongly claimed against TIBANNE Co., Ltd. (“TIBANNE”), which is the parent company of MtGox Co., Ltd. (“MtGox”), for repayment of the loan receivables that MtGox has against TIBANNE, repayment from TIBANNE has not yet been made.

Accordingly, on January 29, 2015, I applied for commencement of the bankruptcy proceeding for TIBANNE, as a creditor thereof, with permission from the Tokyo District Court. In response, on January 30, 2015, the Tokyo District Court issued an order of commencement of the bankruptcy proceeding for TIBANNE.

I, as the Bankruptcy Trustee of MtGox, will continue to make efforts to take necessary measures with respect to collection of receivables due from affiliated companies, etc.

Tibanne Ltd was founded by MtGox CEO Mark Karpeles in Tokyo, Japan, with the company providing web hosting, application development and system management. The firm began a recruitment drive at the end of 2013 in order to appoint a number of developers to its team, just three months before the demise of MtGox.

Contrary to today’s Bitcoin exchanges, many of which are backed by national regulatory authorities and have achieved funding from mainstream venture capital investors, MtGox had to go it alone in the pioneering days, and was often the subject of litigation.

On May 2, 2013 CoinLab filed a $75 million lawsuit against Mt. Gox alleging a breach of contract. The companies had formed a partnership in February 2013 under which CoinLab handled all of MtGox’s North American services. CoinLab’s lawsuit contends that MtGox failed to allow them to move existing U.S. and Canadian customers from Mt. Gox to CoinLab/

Just two weeks later, on May 15, 2013, the US Department of Homeland Security (DHS) issued a warrant to seize money from MtGox’s US subsidiary’s account with payment processor Dwolla.

The warrant suggested that the US Immigration and Customs Enforcement, an investigative branch of the DHS, felt that the subsidiary, which was not licensed by the US Financial Crimes Enforcement Network (FinCEN), was operating as an unregistered money transmitter in the US.Between May and July more than $5 million were seized. On 29 June 2013, MtGox received its money services business (MSB) license from FinCEN.

On February 7, 2014, all Bitcoin withdrawals were halted by Mt. Gox. The company stated at the time that it was pausing withdrawal requests “to obtain a clear technical view of the currency processes”.The company issued a press release on February 10, 2014 stating that the issue was due to transaction malleability: “A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue.”

On 17 February 2014, with all Mt. Gox withdrawals still halted and competing exchanges back in full operation, the company published another press release indicating the steps that it claimed it was taking to address security issues, which were subsequently not resolved, resulting in the firm’s bankruptcy just ten days later.

Most certainly, one year on, with the downfall of Tibanne, the final chapter in the MtGox story has come to an end.

For the official announcement from MtGox, click here.

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