Apr 18, 2014 · 5 minutes

A number of investors have created a website meant to encourage Bitcoin owners affected by Mt Gox's recent woes -- including the loss of hundreds of thousands of bitcoins, accusations of misuse of customer funds, and filing for bankruptcy protection -- to help save the exchange.

The investors plan to prevent the company from liquidating so they can conduct an audit that will identify the exchange's problems, figure out the extent of its issues, and get its "hundreds of thousands" of users their money back. They say that they are willing to "invest heavily in this business once we have conducted a full accounting of Mt Gox's assets and legal liabilities."

The plan would let the investors protect their investments in other Bitcoin-related companies while also "send[ing] a powerful message to the broader public and regulators" that Bitcoin can operate without government intervention. People in support of the plan are encouraged to sign up, share the number of bitcoins they lost, and add their own comments, which can be shared by the team to gin up more support for the cause. They can also choose to make their information private, which would prevent the site from using anything but their first name.

This is one of several websites created for the express purpose of addressing a controversial issue. The Heartbleed bug that has captured headlines for the last month was revealed with its own website and branding. Aereo recently launched a website meant to convince people that it should win its case in the Supreme Court. Now these investors are turning to the humble Web page to garner support for a plan to save a company that grows more controversial by the day.

The sites have been met with mixed results. Heartbleed has successfully raised attention for a serious problem with online security, but Aereo's website isn't particularly convincing, and the site launched by these investors is fighting a perception of incompetence and corruption. But at least its slogan -- "Rehabilitate Don't Liquidate Mt Gox" -- is picket sign-worthy.

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Reuters reports that this effort is unlikely to succeed:

Mt. Gox, once the world's biggest bitcoin exchange, is likely to be liquidated after a Tokyo court dismissed the company's bid to resuscitate its business, the court appointed administrator said on Wednesday.

'The Tokyo district court recognized that it would be difficult for the company to carry out the civil rehabilitation proceedings and dismissed the application for the commencement of the civil rehabilitation proceedings,' he said.

The investor group, which offered to take over the assets of Mt. Gox and revive it, has received backing from many creditors and hopes to convince the court to reconsider its rehabilitation proposal, the Wall Street Journal reported on Thursday. The Wall Street Journal notes that Mt. Gox CEO Mark Karpeles was said to be working with the group until recently:

A statement on the website says the consortium, led by bitcoin entrepreneur Brock Pierce and including venture capitalists Matthew Roszak and William Quigley, had been working for several weeks with owner Mark Karpelès before he abandoned that plan this week. "We believe Mark Karpelès changed course in an effort to avoid personal liability, but in doing so has sacrificed your interests," the statement says.

Mr. Karpelès, along with Mt. Gox and its holding company, Tibanne Co., have been cited in a civil suit that the plaintiffs want certified as a class action alleging they are jointly guilty of consumer fraud by failing to comply with pledges to protect customers' bitcoins

ComputerWorld points out that customers helping Mt. Gox could profit under the plan:

Rejecting Mt. Gox's bid for rehabilitation as it had no viable plan, the Tokyo District Court on April 16 appointed a provisional administrator to take over Mt. Gox's affairs as a prelude to full bankruptcy proceedings.

If the court moves ahead with liquidation, Mt. Gox's assets would be evaluated, sold off and any cash would be distributed to creditors based on their claims. The process would take longer than regular bankruptcies in Japan due to the complexity of the case.

Under a rehabilitation scenario, however, the tens of thousands of users who lost bitcoins in the collapse could potentially receive a share of future profits.

Pando weighs in

Tim Worstall wrote about Mt. Gox’s lackadaisical business practices after it “found” 200,000 bitcoins in a forgotten wallet earlier this month:

There’s two implications of this announcement. The first being that the organisation wasn’t, in fact, an organisation at all. It was a bunch of script kiddies having a lark. This isn’t, perhaps, the greatest of surprises to anyone who has been following the story.

The second is that MtGox has clearly been trading insolvently since June 2011. For those not entirely current on accounting law (and why should you be? This is a most, most, boring area) this is one of those no-nos that every entrepreneur is warned about. It’s OK to go bust: failure is how we learn. But don’t cross over into fraud and deception which is what insolvent trading is. Michael Carney wrote about allegations that the Bitcoin Foundation, a group that often serves as the cryptocurrency’s mouthpiece, is led by corrupt individuals seeking personal profit:

The Foundation has been a central point of communication for the media and key regulators, including Congress and the New York Department of Financial Services, as they seek to understand and react to this increasingly mainstream new financial technology. In that way, the Foundation holds immense power to impact all those who are betting their time, money, and careers on the crypto-currency revolution.

The crypto-currency community is still grappling with the questions of how to present a unified and representative voice for what is still a nascent and highly distributed industry. But while there remain more questions than answers about the inner-workings of the Bitcoin Foundation, it’s clear the time for ignoring questions about its leadership has passed. Transparency and decisive action are badly needed.

That supports an earlier argument Carney made about Bitcoin’s trust problems:

In many ways this type of transparency and such a solitary leader are at odds with bitcoin’s foundational tenets: it was created as a decentralized and distributed system meant to remove the need for trust between parties. Rabid libertarians and cyberpunks may be ok with such a system, but average Joes, not to mention the regulators intent on protecting them, are not.

The bitcoin protocol solves a real problem by allowing digital transactions to be completed outside of the costly and cumbersome existing financial infrastructure, but for the value of this solution to be realized, people have to use it. Bitcoin may have emerged as an anti-establishment financial instrument, but for it to survive and more importantly fulfill its lofty potential, it will need to shed much of its early ideology. Trust is key, and trust does not grow in the shadows.

Mt. Gox’s unraveling doesn’t need to be the end of bitcoin, but it needs to be the end of its innocence.