A federal judge in Chicago has temporarily frozen the US assets of Mark Karpeles, CEO of the insolvent Mt Gox bitcoin exchange, who has also been told to provide evidence that the company didn’t defraud its customers.
Mt Gox, once the most popular bitcoin exchange in the world, applied for bankruptcy protection in Tokyo at the end of February after an unidentified party allegedly made off with around 850,000 bitcoins, worth an estimated $500 million. Later, the company also applied for bankruptcy protection in the US.
Hackers recently took control of Karpeles’ personal blog, Reddit and Tumblr accounts, and posted information that allegedly confirmed Mt Gox still had access to most of its bitcoins. None of their allegations have been confirmed and the company has not responded to a request for comment.
Mt Gox was established in 2010 as Magic: The Gathering Online Exchange – a platform for trading collectible game cards, but its focus soon shifted to a more lucrative business – transactions in digital currency.
On 7 February, the exchange temporarily stopped all withdrawals, while it was investigating “unusual activity” in its systems. Two weeks later, the website suddenly went offline, amidst rumours of insolvency. These rumours were confirmed by Karpeles on 28 February.
According to Reuters, the freeze on Karpeles’ assets will last for two weeks, and also applies to Mt Gox’s US affiliate and the Japanese parent company Tibanne. However, it doesn’t extend to Mt Gox KK headquartered in Tokyo, which had previously filed for bankruptcy protection.
In a court hearing on Monday, parties suing Mt Gox for negligence and fraud referred to the recent data leak, saying there were growing concerns that Karpeles moved hundreds of thousands of bitcoins into secure accounts.
“The main thing we hope to achieve is to finally see what the web of things that Karpeles has put together over the last few years and to start unwinding it as to where things are and what happened,” said Christopher Dore, an attorney who represents Mt Gox customers in a lawsuit seeking class-action status.
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