MtGox, formerly the world's biggest bitcoin exchange, is the subject of a rescue attempt from a group of investors who want to save it from liquidation.
Tokyo-based MtGox dealt a severe blow to bitcoin's reputation when it fell victim to an apparent digital heist in February in which $480m (£286m) worth of the virtual currency disappeared. The exchange is under threat of liquidation after a Tokyo court dismissed an attempt to resuscitate the business this week, triggering a last-ditch attempt to save the platform.
"We need your help to stop a liquidation, which would be good neither for MtGox creditors nor bitcoin's reputation with the general public and regulators," wrote the investors on the Save Gox website.
The company had 127,000 customers at the time of its closure, and each of them is now a creditor with little hope of recovering all the money they lost. The Save Gox group is attempting to halt the liquidation by reviving the exchange.
"Under our proposal, MtGox's remaining assets would be distributed to customers immediately. Creditors would be made whole over time by sharing revenue generated from business operations and from other recovery programmes, such as participating in the upside if they continue doing business with the rebuilt exchange."
Exchanges like MtGox offer a way to convert official currencies such as dollars into bitcoins. Each virtual coin represents a unique solution to a complex cryptographic problem, aimed at preventing duplication and forgery. However, the safety of the currency has been questioned by officials at the central banks of the US, the Netherlands, Denmark and China. The head of the Federal Reserve, Janet Yellen, has flagged concerns about the currency being used for money laundering and has warned that the Fed "doesn't have authority to supervise or regulate bitcoin in anyway."
But that has not deterred supporters of bitcoin, who are attracted to the concept of a currency that operates outside the conventions of the global financial system. The MtGox investor group has received backing from many creditors and hopes to persuade the court to reconsider its rehabilitation proposal. When MtGox closed, it held 2,000 bitcoins, despite having a debt to its customers of 850,000 bitcoins. Since then, the company has announced it discovered 200,000 bitcoins in an unused computer wallet, but is still far from being solvent.
The company is reportedly liable for more than $20m in fiat currency that it does not have.
Since the closure of MtGox, the price of bitcoin has hovered at around half its December peak of $1,150 a coin. The decline began in the months before MtGox shut its website, as it halted withdrawal of bitcoins in an effort to prevent hackers stealing more.
But since MtGox finally collapsed, the price has been held down over fears that the Chinese government – one of bitcoin's most vocal opponents – will move against the currency. Founded in 2009 by American software hacker Jed McCaleb, MtGox was originally a site for people to trade cards for a game called Magic: The Gathering. MtGox is short for "Magic: The Gathering Online Exchange". Only 1,000 of MtGox's 127,000 creditors are Japanese.
At the time of MtGox's collapse, its founder, Mark Karpeles, a French national, said the furore would not dent the currency's popularity. "The bitcoin industry is healthy and it is growing. It will continue," he said.
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