U.S. Court Blocks Bitcoin Domain Name Auction
Mt. Gox Chief Karpelès Planned to Auction bitcoins.com Domain Name
By TAKASHI MOCHIZUKI CONNECT
July 24, 2014 1:23 a.m. ET
A Bitcoin is seen in a picture taken at La Maison du Bitcoin in Paris. Reuters
TOKYO—A planned auction of bitcoins.com, a domain name owned by the chief executive of defunct bitcoin exchange Mt. Gox, has been postponed after a U.S. court order temporarily blocked the company that operated the exchange from selling assets.
A district court in Washington state issued the injunction, which will expire in 14 days, against web-hosting company Tibanne in response to a request from Seattle-based CoinLab, which has filed a suit in the U.S. against Mt. Gox.
The international legal dispute that has erupted over the remnants of Mt. Gox reflects the escalating tug of war among interested parties over how the Japanese company’s assets—much of which are denominated in a virtual currency—should be divided up.
Until Mt. Gox’s collapse earlier this year, Tibanne had been focusing on managing what was once the world’s largest bitcoin exchange. Mark Karpelès, the company’s CEO, previously told The Wall Street Journal that he hopes to fund Tibanne’s operations via domain name auctions until its new venture takes off, while promising he will use at least half of the revenue from the auction to repay Mt. Gox creditors.
Mt. Gox collapsed in February, claiming it had lost 850,000 bitcoins due to hacking attacks. Most of the assets, worth half a billion dollars, belong to creditors and the exchange is in Japanese liquidation proceedings under the supervision of a court-appointed trustee.
In addition to 200,000 bitcoins it later discovered and other assets it is seeking to liquidate, the defunct exchange holds ¥700 million ($6.9 million) in cash, according to a statement by the trustee shown at Mt. Gox’s first meeting with creditors held on Wednesday.
Originally scheduled for Thursday, the auction was expected to generate more than $750,000, according to Heritage Auctions, which was handling the sale. While Mt. Gox lawyers weren’t immediately available for comment, the auction house confirmed it has taken down the item from the day’s list.
“Heritage Auctions has withdrawn Bitcoins.com from tomorrow’s auction as a result of a Temporary Restraining Order,” Noah Fleisher, the house’s spokesman, said in an email. “We look forward to our consignor resolving the matter and to rescheduling the sale.”
“I’m pleased that we will see more judicial oversight and transparency in this litigation. I hope the information Tibanne is directed to deliver will help piece together some answers,” CoinLab CEO Peter Vessenes said.
Chief U.S. federal judge Marsha Pechman noted in a court document that there is good cause to believe that there would be immediate and irreparable damage to the court’s ability to grant effective final relief to CoinLab if Tibanne is allowed to sell off its assets.