Kraken to Assist With Mt. Gox Bankruptcy Proceedings

© Flickr / Whitez “The outcome of the Mt. Gox bankruptcy proceedings will deeply affect the Bitcoin community as a whole,” said Kraken CEO Jesse Powell.
“The outcome of the Mt. Gox bankruptcy proceedings will deeply affect the Bitcoin community as a whole,” said Kraken CEO Jesse Powell. - Sputnik International
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US bitcoin exchange Kraken is to help Japanese investigators determine what happened to 850,000 missing bitcoins.

MOSCOW, November 26 (Sputnik) — Payward Inc., which operates US bitcoin exchange Kraken, is to assist a Japanese court with the administration of bankruptcy proceedings following the collapse of the Tokyo-based Mt. Gox bitcoin exchange.

“The outcome of the Mt. Gox bankruptcy proceedings will deeply affect the Bitcoin community as a whole,” said Kraken CEO Jesse Powell. “We’ve decided to volunteer our resources and expertise in an attempt to minimize damage to creditors, restore faith in the Bitcoin community, and demonstrate trusted leadership in the industry,” Powell said, in a statement made Tuesday on the company’s website.

Mt. Gox started operating as a bitcoin exchange in July 2010 and by 2013 it was the biggest bitcoin exchange in the world, handling 70% of all trading. However, its collapse in February this year dealt a blow to trust in bitcoin, when it became clear that a lack of security at the exchange had allowed 750,000 of users’ bitcoins and 100,000 of its own to go missing.

When the exchange filed for bankruptcy in February, the missing bitcoins had a total price value of $480 mln, and represented 7% of the estimated global total of the currency in circulation. The bitcoins’ disappearance was blamed on hackers, said to have taken advantage of a vulnerability in the bitcoin protocol which allowed the transaction ID to be altered, against which Mt. Gox is alleged to have failed to enact sufficient safeguards.

Reuters reported that Mt. Gox, at the time of the bankruptcy application, had liabilities of 6.5 bln yen ($63.67 mln) compared to total assets of 3.84 bln yen ($33 mln), and 127,000 creditors of whom just over 1,000 were Japanese.

Mark Karpeles, CEO of Mt. Gox, told the Wall Street Journal shortly after the bankruptcy that “we believed there were no bitcoins left in old wallets, but found 199,999.99 bitcoins on March 7," adding that he believed no more would be found.

Kraken is now to assist Japanese bankruptcy trustee Nobuaki Kobayashi in investigating the loss and managing the distribution of assets to creditors. “It is very helpful … to obtain support from a company with expertise in operating a bitcoin exchange business and managing bitcoin transactions,” Kobayashi wrote in court documents submitted on Wednesday. However, he also stressed that Payward will not succeed Mt. Gox’s operation.

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