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Search for missing Mt. Gox bitcoins gathers pace

The story of a defunct Japanese bitcoin exchange sprung back into life on Wednesday when a little-known U.S. company announced it was leading the charge to find 650,000 units of the digital currency that had previously been lost by the Tokyo-based firm.

Kraken is a bitcoin exchange based in San Francisco and is owned by Payward Inc. On Wednesday the company published a new blogpost detailing the deal saying that it had been selected to support an investigation into the missing bitcoins, as well as the distribution of remaining assets to Mt. Gox's creditors.

Mt. Gox made headlines back at the start of the year when it filed for bankruptcy protection before being placed into formal administration in April. Mt. Gox once claimed that it handled around 80 percent of all global dollar trades for bitcoin, but its success soon turned sour. It came to light that it had outstanding debts of about 6.5 billion Japanese yen ($63.6 million), 850,000 lost bitcoins and 127,000 empty-handed customers.

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CEO Mark Karpeles became a figure of hate within the industry and a small clutch of protesters gathered outside the headquarters of the Japanese exchange, demanding their investments back. Karpeles later said that 200,000 of the lost bitcoins had been recovered but that still leaves $241 million of the cryptocurrency, valued at today's market prices, unaccounted for.

A bitcoin trader is surrounded by reporters as he protests against Tokyo-based bitcoin changer Mt.Gox in front of the company's office.
Yoshikazu Tsuno | AFP | Getty Images
A bitcoin trader is surrounded by reporters as he protests against Tokyo-based bitcoin changer Mt.Gox in front of the company's office.

Kraken said that it would now assist in the search with a Mt. Gox trustee and the tie-up had been approved by a Tokyo-based court on Wednesday. Kraken proudly stated that it was chosen due to its proven track record of stable exchange operation and reliable customer support.

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"The outcome of the Mt. Gox bankruptcy proceedings will deeply affect the bitcoin community as a whole," Kraken CEO, Jesse Powell, said in the blogpost on its website. "We've decided to volunteer our resources and expertise in an attempt to minimize damage to creditors, restore faith in the bitcoin community, and demonstrate trusted leadership in the industry."

However in a subsequent press conference with Powell, industry website Coindesk reported that he saw only a slim chance of his company actually uncovering the lost bitcoins.

"I wouldn't hold my breath," he said.

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Kolin Burges, a former software developer, was one of the protestors outside Mt. Gox's offices back in February, having traveled from the U.K. in the hope of retrieving his investments. On Wednesday, he tweeted his frustration at four months of "disappointing" creditor meetings for Mt. Gox, but added that Kraken's announcement was an "interesting twist."

"(Very) interesting Kraken press (conference)," he said on the social media site.

"They are being given a lot of power. I upgrade my assessment from interesting twist to game changer."

Bitcoin is a "virtual" currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining. One bitcoin is currently worth $372, according to an index by Coindesk.