Bitcoin traders agree to settlement in Mt. Gox class-action suit
Plans call to revive Mt. Gox as 'New Gox'
By Zach Miners | Published: 20:02, 29 April 2014
Plaintiffs in two class-action suits charging the embattled Bitcoin exchange Mt. Gox with fraud have agreed to a settlement, and new plans to revive the exchange have been drafted.
Earlier this year a class-action suit in Illinois was filed against Mt. Gox, following reports revealing the theft of some 850,000 bitcoins -- worth hundreds of millions of dollars -- due to a hacking attack. The exchange subsequently filed for liquidation with a Japanese court.
Now, under a settlement agreement, Mt. Gox will be reorganized rather than liquidated, and a portion of the lost bitcoins will be returned, according to a court document filed Monday night in the U.S. District Court for the Northern District of Illinois. A similar class settlement was also reached in Canada.
Under the plan, the investor group Sunlot Holdings will acquire Mt. Gox and establish a new Bitcoin exchange, dubbed "New Gox." With the exception of a US$10 million fiat currency holdback to fund recovery efforts, all bitcoins and fiat currency currently held by Mt. Gox, including 200,000 recently "discovered" bitcoins, will be returned to exchange members' wallets, the court filing said.
Affected Mt. Gox members will also be treated as if they hold a 16.5 percent stake in New Gox, the filing said.
Under the agreement, Sunlot will make its best efforts to investigate and prosecute civil actions against anyone involved in the loss or theft of Mt. Gox's bitcoins, according to the filing.
Mt. Gox was once the largest online exchange for buying and selling bitcoins. With its much-publicized downfall it has served as the poster child for the technological risks of the digital currency, and its uncertain future.
The settlement is contingent on the Japanese courts accepting the purchase with the agreed-upon terms.
"We are very excited about this deal," said Jay Edelseon, lead attorney for the plaintiffs in the case, via email. For the U.S. class, liquidation would have been a disaster, because it would have taken a long time and generated a miniscule payout, he said.
The announced deal will provide immediate funds to the consumer creditors, he added.
A spokesman for Mt. Gox did not immediately respond to a request for comment.
A preliminary approval hearing for the settlement is scheduled for May 1.