
Mt. Gox Trustee Will Consider Returning Bitcoin Unconverted - sillysaurus3
http://online.wsj.com/articles/mt-gox-trustee-will-consider-returning-bitcoin-unconverted-1406117734
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By TAKASHI MOCHIZUKI CONNECT Updated July 23, 2014 10:32 a.m. ET TOKYO—An
official responsible for the assets of Mt. Gox told creditors he would
consider returning the bitcoin that remains with the defunct exchange without
converting it into regular currencies, people who attended a closed meeting
with creditors said.

Some of those who had deposits with what was once the world's largest bitcoin
exchange welcomed the possibility of keeping the virtual currency unconverted,
avoiding a potential drop in its value. But they also expressed their
frustration with a bankruptcy process they say is taking place with little
transparency.

Mark Karpelès, the chief executive of the defunct exchange was also present,
despite saying he had concerns about his safety.

Mt. Gox filed for bankruptcy protection in February, saying it had lost
850,000 bitcoin, worth half a billion dollars, in hacking attacks. Only about
a quarter of the missing electronic currency deposited with the exchange has
been recovered.

The bankruptcy highlighted concerns over the regulation and security of
bitcoin.

Some of the defunct exchange's 127,000 creditors have been worried that the
recovered bitcoin might be converted into dollars, euro or yen before being
distributed to creditors at the end of the bankruptcy process. Many creditors
would prefer to keep their share of the remaining money in bitcoin, since a
large-scale conversion into conventional currencies would deflate its value.

"The court-appointed trustee asked how many of us want to have the bitcoin
returned as bitcoin, and about 70% of us raised our hands and gave a round of
applause," said Yoshimitsu Homma, a Mt. Gox creditor. "He said the option
would be considered, though he added it wouldn't be easy due to legal
requirements."

About 100 creditors attended the meeting, gaining their first opportunity to
talk with Nobuaki Kobayashi, the trustee who has remained largely silent while
carrying out his duties. Mr. Kobayashi has made announcements via the Mt. Gox
website, but his critics say his handling of the case lacks transparency,
leaving creditors dissatisfied with his work.

Mr. Kobayashi has repeatedly declined to comment on any aspect of the
bankruptcy process.

Mr. Kobayashi used the first 30 minutes of the meeting to explain the
bankruptcy process and how he was seeking a sponsor to take over the operation
of the business while continuing efforts to find more of the lost bitcoin, the
people at the meeting said. The trustee spent the subsequent 90 minutes
answering questions, though the people said Mr. Kobayashi didn't provide any
new details.

"I wasn't expecting much, but I'm totally disappointed with the meeting," said
Kolin Burges, a creditor who staged a sit-down protest outside the Mt. Gox
office building for several weeks starting in February.

Creditors had asked the Tokyo bankruptcy court to allow the proceedings to be
recorded and posted online, as many creditors aren't based in Japan and can't
make it to the series of meetings to be held at the court. But those requests
weren't approved.

No photography or recordings are permitted in the court building.

Another focal point during the meeting was the whereabouts of the lost bitcoin
and the police investigation into the matter. Mr. Kobayashi declined to
comment on that, saying he didn't want to disrupt the investigation.

Mr. Karpelès briefly apologized during the meeting, in response to a request
by a creditor, but said nothing else.

"I am really sorry for what happened and will do my best to make the outcome
of the bankruptcy as best as possible," Mr. Karpelès told The Wall Street
Journal after the meeting. He said he had been worried about attending the
meeting because of recent death threats he received. "I really hope everyone
recovers what they lost and that the culprit is caught," he said.

The next meeting, including an update on the bankruptcy process, will be held
in November.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

