Bitcoin exchange seeks U.S. bankruptcy protection

Mt. Gox, which used to be the world’s largest bitcoin exchange, filed for U.S. bankruptcy protection late Sunday.

The Japan-based company filed for bankruptcy in a Dallas court, according to Reuters. By seeking bankruptcy, it hopes to avoid extensive legal costs stemming from a class-action suit filed against the company in Chicago.

{mosads}The company has already filed for bankruptcy in its home nation.

On Feb. 7, the exchange halted all withdrawals of the virtual currency. While the company originally said it was working through some technical issues, the exchange filed for bankruptcy roughly three weeks after freezing the exchange. The company eventually said weaknesses in its system had allowed hackers to

At the time it closed its doors, Mt. Gox had been home to roughly 750,000 bitcoins, worth about $470 million at the time.

The high-profile collapse has led to fresh scrutiny of the new currency, and even has attracted some attention in Washington.

Sen. Joe Manchin (D-W.Va.), who sits on the Senate Banking Committee, called on regulators to step in and ban the currency one day after Mt. Gox first declared bankruptcy, citing concerns about its use in financing illegal enterprises, money laundering, and drug trafficking.

But proponents of the currency, unbacked by any nation or single institution, continue to tout its merits, and depict the recent disruptions as part of a maturing process.