Mt. Gox Revival Plan Hit With Objection from Creditor CoinLab

CoinLab, the former operations manager for Mt. Gox in the US and Canada, has filed an objection to the plan to revive the now-defunct exchange issued by Sunlot Holdings, an investor group that includes John Betts, Matthew Roszak and Bitcoin Foundation board member-elect Brock Pierce.

A Seattle-based digital currency company, CoinLab entered into an agreement to handle the purchase, sale and exchange of bitcoin for Mt. Gox customers in the US and Canada back in November 2012. It later filed a lawsuit against Mt. Gox, claiming it was not provided with the adequate resources to fulfil the agreement. Mt. Gox later countersued in September both lawsuits are still unsettled.

The formal filing asserts, among a laundry list of claims, that the proposal by Sunlot “does not account for the claims of other unsecured creditors” (including CoinLab) and thus needs additional consideration before moving toward any final approval.

The complaint reads:

“In an attempt to obtain approval of the Sunlot Proposal, Sunlot has crafted a procedural maneuver that attempts to cram down the proposal upon creditors, while avoiding competitive bidding or other meaningful creditor safeguards.”

New uncertainty

The submission is expected to be addressed in a status conference in a Dallas, Texas, court today.

The proposal, championed by the global legal team representing the exchange’s former users, was given preliminary approval by a US court on 8th May.

At the time, representatives of the class action told CoinDesk they were optimistic that the plan would soon move to Japanese courts for review. Under the proposal, Sunlot would purchase Mt. Gox for 1 BTC, assuming the company’s liabilities and providing former users with a 16.5% stake in the revived exchange.

CoinLab detailed how it is seeking to ensure its complaints are addressed before any proposal regarding Mt. Gox is finalized:

“Until it receives full assurances that its rights and defenses will be protected, CoinLab is compelled to seek to protect its interests now, before the flawed Sunlot Proposal (and procedural evasion) can gain an unfair advantage.”

Competing bid

Perhaps most notably, CoinLab took aim at Sunlot’s exclusive bid for the exchange, claiming that since its agreement to service Mt. Gox clients in North America is still active, and that as it has direct experience working with Mt. Gox, it is uniquely suited to continue the exchange’s operations on behalf of creditors.

While CoinLab stopped short of issuing a bid, it did raise awareness to the fact that, should it chose to do so, no formal process for this filing is in place.

“CoinLab offers a market efficiency to creditors because it can address disposition of its intellectual property rights in the exchange as well as market expertise. However, no process currently exists for competing overbids.”

These statements were called into question by lawyers representing the international class actions against the exchange, who said in a separate filing:

“CoinLab is factually and legally wrong and seems only to trying to influence the orderly procedures of both the Class Action Litigation and the Japanese court system. CoinLab seems to be doing this because it views itself as a competitor to Sunlot and wants to bid.”

Missing funds

CoinLab also critiqued how the proposal, if approved, would effectively place Sunlot in the role currently being filed by Mt. Gox’s Japanese bankruptcy attorney.

The company argued this would be problematic given that the company has certain vested interests, saying: