A restraining order issued by the US District Court of Seattle has resulted in the cancellation of the anticipated auction of the Bitcoins.com domain name.

The domain name, currently owned by Mt. Gox CEO Mark Karpeles through his company Tibanne KK was expected to be auctioned by US-based auction house Heritage Auctions on 24th July. However, bitcoin startup CoinLab – which recently agreed to support Mt. Gox’s bankruptcy plan – moved to prevent the sale.

Tibanne KK has been ordered to preserve and account for all held assets, which includes the Bitcoins.com domain name. In a statement, CoinLab lawyer Roger Townsend indicated that the company, while supportive of the bankruptcy proceedings, would not allow the sale of its assets without permission.

Townsend remarked:

“We are pleased that the court entered an order requiring Tibanne to preserve and account for all of its assets, including any ownership it might have in Mt Gox, domain names or payments that it has received since the bankruptcy. This TRO sends a strong message to Tibanne that they cannot dissipate assets without the court’s approval.”

CoinDesk reached out to Heritage Auctions regarding the court order, but has not received an immediate response. The auction appears to be on-schedule for its original launch date according to the Heritage auction page for the Bitcoins.com sale.

CoinLab was originally contracted to provide services to Mt. Gox customers in the US and Canada. However, this relationship ended when CoinLab sued the company for failing to provide it with the resources to carry out its mandate. Mt. Gox later countersued, and neither lawsuit has been formally resolved.

Auction bad for bankruptcy

In court documents, CoinLab argued that the domain name auction would have a significantly negative impact on Mt. Gox’s bankruptcy process – and the ability for creditors to recoup lost funds.

The district court agreed with the company, saying:

“There is good cause to believe that immediate and irreparable damage to the court’s ability to grant effective final relief for plaintiff in the form of damage and monetary restitution will occur from the sale, transfer, assignment or other disposition or concealment by defendant Tibanne KK of their assets or records, unless Tibanne KK is immediately restrained and enjoyed by this order.”

The order went on to state that it is “in the public interest” to prohibit Tibanne KK and any of its employees from taking any action that might affect control or ownership of the company’s assets.

The restraining order will expire in 14 days, after which time an extension will be considered by the court.

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