NZ liquidators chase Mt Gox over $43m of frozen bitcoins

New Zealand liquidators chasing $43 million of bitcoins allegedly frozen in Mt Gox accounts say they know little about the bitcoin trading platform’s disappearance.

Japan-based Mt Gox is the world’s largest exchange for bitcoins, a speculative virtual currency which has been gaining popularity and value, since it emerged in 2009.

However, earlier this week Mt Gox was taken offline after what it says was a major security issue, reportedly involving the theft of 744,408 bitcoins.

Mt Gox’s problems – which chief executive Mark Karpeles insists are being fixed – is a blow for Auckland-based PKF liquidators Anthony McCullagh and Stephen Lawrence, who have been chasing Mt Gox for access to accounts held by New Zealand-registered Bitcoinica Limited Partnership, which ran a now defunct online currency and bitcoin trading platform.

The site ceased trading in 2012 after a series of hacks and thefts, and liquidators have struggled to verify what has happened. But they’ve been told Bitcoinica-related accounts, frozen by Mt Gox, hold 64,532 bitcoins and $US134,809.

When Bitcoinica collapsed in 2012, bitcoins were worth $US11.77 each. At today’s price of about $US558 each, the Bitcoinica accounts could be worth more than $43 million.

PKF director Chris McCullagh, who is not a named liquidator but has been working on the liquidation, told NBR ONLINE says Mt Gox’s problems are a potential blow in what has been a difficult and frustrating liquidation.

He has not had direct contact from Mr Kapeles or its Melbourne-based lawyers Baker & McKenzie, since the site went offline on Wednesday (New Zealand time).

“It definitely will create some issues for the liquidation,” Mr McCullagh says.

“To be honest, I know probably as much as you do because all of my information on the current status of Mt Gox is coming from international media.

“Until there’s some public announcement by Mt Gox, or until they make direct contact with their account holders, then I think we’re just going to be in the dark.”

Bitcoin thefts
According to PKF’s reports, Bitcoinica’s servers were first hacked in May 10, 2012, a month after trading on the platform started, when an unknown person allegedly stole 18,547 bitcoins and deleted customer records and account balances.

At the time, the limited partnership said it would reimburse losses but a further breach in July led to further losses and the site ceased trading.

In that breach of Bitcoinica’s Mt Gox account, on July 9 2012, a further 40,000 bitcoins and $US91,875 were allegedly stolen.

Bitcoinica’s founder, Melbourne-based Zhou Tong, was then asked to recover the funds and bitcoins and, according to liquidators, $US100,190 and 19,879 bitcoins were recovered from “an unidentified party”.

Four Bitcoinica users filed claims for $US460,000 in the Superior Court of California in August 2012.

Mt Gox’s problems will obviously deepen the gloom of Bitcoinica’s unsecured creditors – 202 of whom had lodged claims with PKF for almost $1.6 million.

PKF liquidators said the Japan-based platform had refused to provide information on the Bitcoinica-related accounts and it was considering legal action to gain access to the accounts.

“Mt Gox, via its Australian solicitors, has maintained its position that it has insufficient evidence to prove the limited partnership was, and remains the holder of Mt Gox accounts,” the report says.

“If Mt Gox still refuses to grant us access to the limited partnership’s accounts, then we must consider taking legal action.

“As we have previously reported, this is likely to be a costly exercise and we will require funding from creditors to proceed.”

For more on Bitcoinica, including comments from the former Auckland accountant who set up the partnership’s shell company, read today’s National Business Review print edition.

dwilliams@nbr.co.nz