This day in history: Feb 24, 2014, MTGOX gets into trouble - FinanceFeeds

This day in history: Feb 24, 2014, MTGOX gets into trouble

Three years ago, MTGOX said some 750,000 bitcoins deposited by users and approximately 100,000 bitcoins belonging to it had disappeared.

Those who are interested in crypto currencies and Bitcoin, in particular, probably recall at least some of the events from late February 2014, when the biggest Bitcoin exchange – MTGOX, ran into trouble and halted its operations.

On February 24, 2014, MTGOX found out large discrepancies between the amount of cash held in financial institutions and the amount deposited by its users. MTGOX’s director back then – Mark Karpeles, said the amount was approximately JPY 2.8 billion. Initial reports claimed that some 750,000 bitcoins deposited by users and approximately 100,000 bitcoins belonging to MTGOX had disappeared.

Once MTGOX discovered that bitcoins had disappeared and the discrepancies between cash funds and deposit balances, the company judged that it would be difficult to continue its normal activities normally and closed its site at noon (local time) on February 25, 2014.

On February 28, 2014, MTGOX submitted an application for the start of a procedure of civil rehabilitation at the Tokyo District Court. The application was accepted on the same day. At the same time, the exchange was under several orders issued by the Court: a preservative order prohibiting it from paying its debts, transferring its assets or establishing security over its assets, an order establishing a comprehensive prohibition of forced attachment of its assets by its creditors and a supervisory order ordering supervision by a supervisory committee.

  • The latest report

The latest report into MTGOX’s fortunes was released at the seventh creditors’ meeting held on September 28, 2016.

The Bankruptcy Trustee – Nobuaki Kobayashi, announced that he had secured an account balance of JPY 1,054,483,013 as of September 27, 2016, a decrease of approximately JPY 10,200,000 from the time of the sixth creditors’ meeting.

The amount of BTC managed by the bankruptcy estate as of September 21, 2016 was 202,185.35450043BTC. The Bankruptcy Trustee said he was still investigating the existence of additional BTC held by MTGOX.

He said he was also investigating whether any BTC or money in other currencies that were possessed by or under the control of MTGOX disappeared, and the events leading to such disappearance. He is assisted in this work by Deloitte Touche Tohmatsu LLC (and its affiliates), ReEx Accounting Firm, and Payward.

Back then, Nobuaki Kobayashi noted that given the limited amount of information that exists, he believes it would be difficult to understand the full picture.

  • Robert Marie Mark Karpeles

The petition for the start of bankruptcy proceeding against Robert Marie Mark Karpeles, the representative director of MTGOX, was submitted with the court on October 23, 2015. As a result, the start of the bankruptcy proceeding against Karpeles was determined on November 10, 2015. Karpeles was prosecuted on September 11, 2015 on the charges of unauthorized creation and use of private electromagnetic records, as well as suspicion of corporate embezzlement. On top of that, he was subsequently prosecuted on November 18, 2015 on the same charges of unauthorized creation and use of private electromagnetic records and suspicion of corporate embezzlement. Karpeles was released on bail on July 14, 2016.

  • What’s next?

The eighth creditors’ meeting will be held on March 8, 2017.

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