TOKYO (3/3/14)--The most prominent Bitcoin exchange in the world filed for bankruptcy protection at a Tokyo District Court Friday.
Tokyo-based Mt. Gox said that its liabilities currently exceed assets by about 2.7 billion yen or $26 million, and that it has 127,000 creditors. The company's debt spiked after it fell prey to cyberthievery that cost it 750,000 in customers' coins and 100,000 of its own---worth about $450 million in U.S. dollars, based on Feb. 28 exchange rates (The New York Times, Bloomberg Feb. 28).
The company filed for protection under Japan's Civil Rehabilitation law, which is akin to Chapter 11 in the U.S. Under the law, the company will be assigned an administrator who will develop a restructuring blueprint and handle payment of claim distributions to creditors.
In the year ending 2013, Mt. Gox had revenue of 135 million yen, or $1.33 million, according to Bloomberg.
Once host to about four-fifths of the world's Bitcoin trading, according to The New York Times, the exchange has, over the past few weeks, been rocked by the theft. On Feb. 7, the company froze withdrawals amid reports of the heist. Mt. Gox confirmed it Feb. 24 and said Wednesday that it was "working very hard" toward a solution. Mt. Gox CEO Mark Karpeles said Friday that weak cybersecurity enabled the breach, according to Bloomberg.
Bitcoin was released to the public in 2008 by a pseudonymous programmer or group of programmers known as Satoshi Nakamoto. It has no central bank and relies on an open ledger to verify transactions. Bitcoin also enables users to preserve anonymity.
The decentralized and identity-concealing characteristics of Bitcoin have led law enforcement officials to call on the federal government to more closely regulate digital currencies.