U.S. creditors of Mt. Gox Co., the bankrupt Tokyo-based bitcoin exchange, asked a U.S. judge to approve a proposed settlement that would revive the company, return money to depositors and resolve claims against some of its executives.
The accord depends on a Japanese bankruptcy court’s approval, according to papers filed in federal court in Chicago. The settlement wouldn’t release Mt. Gox principal Mark Karpeles from potential liability.
Mt. Gox filed for bankruptcy in Japan on Feb. 28 after disclosing it couldn’t account for about 850,000 units of the virtual currency, including more than 700,000 belonging to its customers. Bitcoins are worth $436.35 a piece today according to the CoinDesk Bitcoin Price index. While Mt. Gox later announced some 200,000 coins had been located, depositor losses still exceeded $218 million.
U.S. depositor Gregory Greene of Illinois sued the company’s American affiliate, along with Karpeles and a company controlled by him, on behalf of U.S. depositors almost at the same time Mt. Gox filed for bankruptcy in Japan. Joined by Californian depositor Joseph Lack in a revised complaint, the men added claims against minority Mt. Gox owner Jed McCaleb, company executive Gonzague Gay-Bouchery and Japan’s Mizuho Bank Ltd., which handled transactions for the exchange.
Under the accord proposed yesterday, a group of outside investors calling themselves Sunlot Holdings Inc., would acquire the bankrupt company, restart it, distribute the 200,000 recovered bitcoins to depositors on a pro-rata basis and give members of the old exchange a 16.5 percent interest in the new one. Sunlot said in a statement that 127,000 customers would receive payment.
Sunlot and the settling customers would also gain the cooperation of Gay-Bouchery and McCaleb in the pursuit of claims against the non-settling defendants including the bank and Karpeles, according to the filing, and recover missing currency. A parallel settlement is being proposed in a case filed in Canada.
“The settlements and reorganization plan, if first approved by this court and then the Japanese bankruptcy court, have the potential of more than fully compensating the class, as well as the other exchange members who don’t fall within the class, for their losses that resulted from the fall of Mt. Gox,” lawyers for Greene and Lack said in yesterday’s filing.
The lawsuit was filed by Jay Edelson, a class-action lawyer in Chicago. His request for approval will be presented to U.S. District Judge Gary Feinerman on May 1, according to a statement by Sunlot.
The case is Greene v. MtGox Inc., 14-cv-01437, U.S. District Court, Northern District of Illinois (Chicago).