MtGox inks $2.57 million seized funds settlement with U.S. government

By Caroline Salls

Pittsburgh, March 8 – MtGox Co. Ltd.’s bankruptcy trustee requested court approval of a settlement reached with the U.S. government and the related transfer of $2.57 million in seized funds, as well as the repatriation of released funds to Japan for distribution in the company’s Japanese bankruptcy proceedings, according to a news release.

Bankruptcy trustee Nobuaki Kobayashi said in the motion filed with the U.S. Bankruptcy Court for the Southern District of New York that the U.S. government, acting through the Secret Service and the Homeland Security Investigations arm of the Department of Homeland Security, seized a total of $5.14 million in 2013 from bank accounts of a MtGox affiliate located in the United States.

Kobayashi said the seizures were prompted by the U.S. government’s claim that MtGox, through an affiliate, operated an unlicensed money transmitting business in the United States.

In addition, the trustee said multiple affidavits led a U.S. magistrate judge to find that probable cause existed to believe that the MtGox affiliate, which processed funds relating to MtGox’s U.S. customers to and from the bitcoin exchange through an online payment processor in the United States, violated the statute during the course of MtGox’s U.S. bitcoin operations.

Under the proposed settlement, 50% of the seized funds will be transferred to Kobayashi. Those funds will be distributed as part of the Japanese bankruptcy proceedings.

A hearing is scheduled for April 24.

According to a status report released by the trustee, Kobayashi had secured ¥1,030,895,045 in assets as of Tuesday, a decrease of about ¥23.5 million from the time of the company’s seventh creditors’ meeting.

The amount of bitcoin managed by the bankruptcy estate as of March 5 was 202,185.36428254. The trustee said he is still investigating the existence of additional bitcoin held by the bankrupt entity.

Now that all bankruptcy claims have been accepted or rejected, the trustee said he wishes to proceed to the distribution process as soon as possible, but the distribution schedule will be affected by each creditor’s response to the acceptance or rejection of his or her claim.

As a result, Kobayashi said the possibility of carrying out a distribution and the timing and method of a distribution have not yet been determined.

The trustee said he will continue to consider whether, in the case where a distribution is possible, a distribution will be made by way of distributing bitcoin.

MtGox is a Tokyo-based online bitcoin exchange operator. The company filed for Chapter 15 bankruptcy on March 9, 2014 in the U.S. Bankruptcy Court for the Northern District of Texas under case number 14-31229.

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