MtGox Creditors Agree to Rebuilding Plan for Bitcoin Exchange and Drop Lawsuit

A group of bitcoin investors believes it can save the collapsed MtGox exchange, and Sunlot Holdings has taken the first step down that road by agreeing settlements with creditors in proposed class action lawsuits in the US and Canada.

The group, which is a backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley, believes there is still life in MtGox and has agreed to give US and Canadian creditors a 16.5% stake in the business once it is sold to them.

"This is the customers' best option and the only chance they have for full restitution," said a statement from Jay Edelson, the lead attorney in the US case.

In a statement the group said: "The company negotiated the settlement as part of its effort to take over the bankrupt exchange before a court-ordered liquidation."

MtGox filed for bankruptcy protection in its home country of Japan as well as in the United States earlier this year after it revealed it had lost 850,000 bitcoins (worth around £220 million at current prices).

While the exchange subsequently found 200,000 of those bitcoins in an old wallet, earlier this month it finally gave up on rebuilding plans, and filed for liquidation in Tokyo.

Sunlot Holdings is proposing that the 127,000 MtGox customers who were left high and dry when the exchange halted withdrawals last February will share in the 200,000 bitcoins MtGox rediscovered, as well as the $20 million in fiat currency held by the administrator for MtGox.

Quigley believes that simply letting MtGox disappear would have a negative impact on the entire bitcoin community.

"Liquidation would have adverse consequences for MtGox customers and the entire bitcoin community. Millions of dollars worth of lost bitcoins would never be recovered and most of MtGox's assets would go to paying bankruptcy lawyers and others involved in the process rather than customers."

The deal still needs the approval of the US and Canadian courts before Sunlot is given the green light.

The group will also have to wait until next week, when the Tokyo court overseeing the liquidation process will decide whether Sunlot's proposal of buying MtGox for just one bitcoin will be approved.