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April 16, 2014, 2:44 a.m. EDT

Mt. Gox files for liquidation in Tokyo

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By MarketWatch

Defunct bitcoin exchange Mt. Gox has given up its plan to rebuild under bankruptcy protection and has asked a Tokyo court to allow it to be liquidated, people familiar with the situation said.

These people cited as reasons the complexity of the procedure--including the difficulty of holding meetings with creditors spread around the world--as well as the lack of realistic rehabilitation plans for the Tokyo-based exchange.

Mt. Gox, at one point the world's busiest bitcoin exchange, collapsed in February and said as it filed for bankruptcy protection in Tokyo on Feb. 28 that it had lost 850,000 bitcoin worth around half a billion dollars. Since then, about 200,000 bitcoin have been recovered and are part of the exchange's assets.

For creditors in bankruptcy cases, a switch to liquidation usually means they will recoup less of their investment. But one person close to Mt. Gox said there was still hope a buyer for the exchange could be found, an outcome that could mean creditors receive part of any future earnings.

If the request is approved by the court, a trustee will be appointed, who will take over management of the company's assets from its chief executive officer, Mark Karpelès.

Mt. Gox lawyers weren't reachable for a comment, while a Tokyo District Court spokeswoman said she couldn't comment on an individual case.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Katy Stech at katherine.stech@wsj.com

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