MtGox, U.S. government $2.57 million seized funds settlement approved

By Caroline Salls

Pittsburgh, May 2 – MtGox Co. Ltd.’s bankruptcy trustee obtained court approval of a settlement reached with the U.S. government and the related transfer of $2.57 million in seized funds, as well as the repatriation of released funds to Japan for distribution in the company’s Japanese bankruptcy proceedings, according to an order filed Monday with the U.S. Bankruptcy Court for the Northern District of Texas.

Bankruptcy trustee Nobuaki Kobayashi said in the motion that the U.S. government, acting through the Secret Service and the Homeland Security Investigations arm of the Department of Homeland Security, seized a total of $5.14 million in 2013 from bank accounts of a MtGox affiliate located in the United States.

Kobayashi said the seizures were prompted by the U.S. government’s claim that MtGox, through an affiliate, operated an unlicensed money transmitting business in the United States.

In addition, the trustee said multiple affidavits led a U.S. magistrate judge to find that probable cause existed to believe that the MtGox affiliate, which processed funds relating to MtGox’s U.S. customers to and from the bitcoin exchange through an online payment processor in the United States, violated the statute during the course of MtGox’s U.S. bitcoin operations.

Under the settlement, 50% of the seized funds will be transferred to Kobayashi. Those funds will be distributed as part of the Japanese bankruptcy proceedings.

MtGox is a Tokyo-based online bitcoin exchange operator. The company filed for Chapter 15 bankruptcy on March 9, 2014 under case number 14-31229.

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