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Inside the bizarre upside-down bankruptcy of Mt. Gox

•, By Adrianne Jeffries

Every six months for the past four years, some number of former customers of the defunct Mt. Gox bitcoin exchange have gathered in a small room in a Tokyo courthouse to hear an update from Nobuaki Kobayashi, the stoic Japanese attorney appointed as the trustee for the case.

The number of creditors attending the meeting has dwindled over time: the first one reportedly drew more than 100 people, but the most recent one earlier this month drew fewer than 30, according to the estimates of one attendee.

That does not mean the Mt. Gox case has gotten any less strange — just the opposite. By definition, bankruptcy occurs when an entity cannot pay its debts. But as of this writing, Mt. Gox has enough assets to pay off its claims with more than $1.4 billion worth of bitcoins left over. The trouble is figuring out what to do with them.

"This is absolutely unprecedented in Japanese law," says Andy Pag, who got a group of creditors together under the name Mt. Gox Legal and hired an attorney to advocate for better terms. "There's never been a bankruptcy like this in Japan or probably anywhere in the world."

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