US and Canadian customers of Mt. Gox, the Tokyo-based exchange for digital currency bitcoin that filed for bankruptcy in late February, have agreed to settle their proposed class action lawsuits that alleged the company defrauded them.
In return for settling separate class actions, they agreed to a plan by which they will share in a 16.5% stake after Mt. Gox is sold to Sunlot Holdings, a firm backed by entrepreneur Brock Pierce and venture capitalist William Quigley.
Once the world’s biggest bitcoin exchange Mt. Gox filed for bankruptcy in Japan and the US after reporting that it had lost around 850,000 bitcoins – worth more than US$400m – in a hacking attack. Later, it announced that around 200,000 of the missing bitcoins had been retrieved.
However, the exchange is still expected to be liquidated after the Tokyo District Court agreed to the company’s request to abandon plans to revive the business.
The court named lawyer Nobuaki Kobayashi as the bankruptcy trustee to oversee the process. The creditors and the buyout group now hope that their deal will halt the liquidation proceedings.
According to the Sunlot consortium, liquidation would result in a much smaller recovery value for creditors than its alternative plan plan to revive the exchange and share trading profits with those former exchange customers.
John Betts, Sunlot’s chief executive officer (CEO), said the bid is aimed not only at improving the outcome for those creditors but also sends a message that the “bitcoin community looks after its own.”
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