Mt. Gox files U.S. bankruptcy, opponents call it a ruse http://www.reuters.com/article/2014/03/10/us-bitcoin-mtgox-bankruptcy-idUSBREA290WU20140310 Mt. Gox, once the world's largest bitcoin exchange, received U.S. bankruptcy protection on Monday to temporarily halt U.S. legal action against the Japanese company by traders who allege the operation was a fraud. Judge Harlin Hale in Dallas granted temporary bankruptcy protection to Mt. Gox, which had filed for bankruptcy protection in Japan in February. Attorneys for Mt. Gox said without bankruptcy protection the company would be irreparably harmed by a proposed class action in Chicago federal court and a breach of contract case in Seattle federal court. Mt. Gox filed for bankruptcy in Japan last month after it said it may have lost 750,000 of its customers' bitcoins as part of an attack by hackers. The plaintiff leading the Chicago lawsuit was scheduled on Tuesday to ask a federal judge to freeze Mt. Gox's U.S.-based servers and other computer equipment and to set up a trust over Mt. Gox's assets. Mt. Gox's founder, Mark Karpeles, was scheduled to be deposed later this month in the Seattle lawsuit. The attorney leading the class action blasted the bankruptcy as a ruse. "This case involves a massive fraud," said Steven Woodrow, an attorney leading the class action, told Hale. "They claim incredibly that they will preserve assets and protect assets by entrusting the servers and other property to Mr. Karpeles. Respectfully, your honor, that is the definition of the fox guarding the henhouse." Mt. Gox said in papers filed with the Dallas court that the hacking attack was the subject of an intense investigation that indicated so far the bitcoins were lost as a result of a flaw in the software algorithm that underlies bitcoin, the digital currency. An attorney for Coinlab Inc, which sued Mt. Gox in Seattle for breaching a contract last year, said her client was troubled by what appeared to be fraudulent behavior by Karpeles in the days leading up the U.S. bankruptcy filing. "We don't have proof yet but we do have concerns about the movement of hundreds of millions of dollars in bitcoins over the weekend, moved by Mr. Karpeles," said Jane Pearson, an attorney with Foster Pepper. (more at above url)