Mt. Gox US Bankruptcy Filing Receives CoinLab Support

The procedural move potentially opens the door for Japanese officials to become more involved in the case.

AccessTimeIconJun 9, 2014 at 8:30 p.m. UTC
Updated Sep 11, 2021 at 10:51 a.m. UTC

Seattle-based digital currency startup and the former manager of Mt. Gox's US and Canada operations CoinLab has announced that it is now supporting the Japan-based exchange's Chapter 15 bankruptcy filing.

The news comes from court papers filed Friday, 6th June and obtained by The Wall Street Journal that state that CoinLab will not move to oppose the filing. CoinLab previously objected to the revival plan for Mt. Gox submitted by investor syndicate Sunlot Holdings.

The move, while seemingly small, could open the door for the Sunlot Holdings plan, as well as those rumored to be submitted by China-based digital currency exchange OKCoin and CoinLab itself, to move to Japan for formal vetting.

Mt. Gox's Japanese bankruptcy trustee Nobuaki Kobayashi has previously indicated that the bankrupt exchange needs to secure approval for its Chapter 15 protection in the US before he can assert more authority over developments in the case.

Mt. Gox KK, the company's Japanese entity was granted preliminary protection in the US upon filing for Chapter 15 bankruptcy in March, a move that granted certain protections from creditors.

, it was noted that the presiding bankruptcy judge Stacey Jernigan would need to review the matter before choosing whether to extend the offering.

CoinLab enters the conversation

The move is the second notable development in the case caused by the assertion of CoinLab in the proceedings following its move to block the revival plan proposed by Sunlot.

In this filing, CoinLab argued that Sunlot was perhaps looking to take advantage of Mt. Gox creditors by overcharging for certain responsibilities it would carry out once charged with the management of the exchange's liabilities. However, this was just one of a long list of other concerns.

Notably, CoinLab's claims against Mt. Gox are among the more dated in the case.

CoinLab filed a lawsuit against Mt. Gox in May 2013 claiming that Mt. Gox did not provide it with the necessary resources to fulfill its contractual obligations, and was later countersued by the exchange in September of that year.

Neither lawsuit had been settled at the time of Mt. Gox's insolvency, though CoinLab sources have indicated to CoinDesk that more legal developments were expected in the case prior to the exchange's bankruptcy filing.

Upcoming hearing

The news comes amid a relatively quiet period in what has so far proved to be a chaotic case for the involved legal experts, regulators and creditors, many of whom lost substantial savings in the exchange's demise.

However, new activity is to be expected later this month when on 17th June, Judge Jernigan will hold a hearing to determine whether Mt. Gox is formally granted Chapter 15 protection.

At the meeting, the Journal indicates that Mt. Gox officials will need to "prove a legitimate court proceeding is taking place in a foreign country" before securing protection.

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