US and Canadian customers of failed Tokyo-based bitcoin exchange Mt Gox have agreed to settle their proposed class action lawsuits that alleged the company defrauded them of hundreds of millions of dollars.
The plaintiffs agreed to support a plan by Sunlot Holdings to buy the exchange and accept their share of bitcoins still held by Mt Gox, according to a statement and court filings.
Mt Gox filed for bankruptcy in Japan and the United States earlier this year after saying it lost some 850,000 bitcoins - worth more than $400 million - in a hacking attack. It subsequently said it found 200,000 bitcoins.
Once the world’s biggest bitcoin exchange, Mt Gox is slated to be liquidated after the Tokyo District Court granted the company’s request to abandon plans to revive its business.
In return for settling separate class actions, the US and Canadian customers will share in a 16.5 per cent stake after Mt Gox is sold to Sunlot, a firm backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley.
Sunlot has proposed buying Mt Gox for one bitcoin, or less than $500, according to the Wall Street Journal. A sale to Sunlot must be approved by the Tokyo court.
In addition, the customers will split the 200,000 bitcoins that Mt Gox said it found after seeking bankruptcy protection, and they will split up to $20 million in fiat currency held by the administrator for Mt Gox.
“This is the customers’ best option and the only chance they have for full restitution,” said a statement from Jay Edelson of the Edelson law firm, the lead attorney in the US case.
The settlement releases Mt Gox's founder, Jed McCaleb, and Gonzague Gay-Bouchery, once the exchange's chief marketing officer. The pair committed to help pursue the class action against the remaining defendants: Mt. Gox CEO Mark Karpeles, parent company Tibanne, the company's banking partner Mizuho Bank and others.
The settlement needs to be approved by the Canadian and US courts overseeing the class actions cases.