Mt Gox finds 200,000 ‘forgotten’ bitcoins after bankruptcy filing

Exchange finds 200,000 of virtual currency worth US$117m a week after filing for protection

PUBLISHED : Friday, 21 March, 2014, 10:46pm
UPDATED : Saturday, 22 March, 2014, 4:37am

Mt Gox said yesterday that it found 200,000 "forgotten" bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection saying it lost nearly all the 850,000 bitcoins it held, worth some US$500 million at today's prices.

Mt Gox made the announcement on its website. Online sleuths had noticed about 200,000 bitcoins, currently worth about US$117 million, moving through the exchange after the bankruptcy filing.

The exchange, headed by 28-year-old Frenchman Mark Karpeles, said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins but which it checked again after its bankruptcy filing.

"On March 7, 2014, [Mt Gox] confirmed that an old format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC," the statement said.

It added that it moved the 200,000 bitcoins from online to offline wallets on March 14 to 15 "for security reasons". "These bitcoin movements, including the change in the manner in which these coins were stored, had been reported to the court and the supervisor by counsels," it noted.

Many of Mt Gox's 127,000 creditors, who feared they had lost their investments when the exchange filed for bankruptcy, are sceptical about what the exchange has said happened to the bitcoins it had. In its bankruptcy filing, Mt Gox also said US$28 million was "missing" from its Japanese bank accounts.

On Thursday, a judge in Chicago overseeing a class action against Mt Gox revised a previous order, allowing some of the exchange's bitcoin movements to be tracked. Judge Gary Feinerman likened the effort to follow the bitcoin transactions to a sting operation.

Feinerman had previously frozen assets belonging to the American affiliate of Mt Gox.

"Today in court we got relief ... specifically to track the 180,000 bitcoins, which we've been monitoring. Hours later, Mt Gox claimed it 'found' these bitcoins ... it appears Mt Gox realised we were close and decided to acknowledge that it owned these 180,000 to 200,000 bitcoins," Steven Woodrow, a partner at law firm Edelson, said.

Edelson is representing Illinois resident Gregory Greene, who proposed the class action over what he claims is a massive fraud. Mt Gox blamed the loss of 750,000 bitcoins belonging to its customers and 100,000 of its own on hackers.

Those 850,000 bitcoins represented about 7 per cent of all bitcoins worldwide.

Greene, who said he lost access to about US$25,000 in bitcoins, has accused Mt Gox, related companies and Karpeles of misappropriation.

Additional reporting by Bloomberg