When you’re working in a new financial market that is taking place outside the banking industry, you begin to encounter safety concerns such as lack of regulation, possible money laundering, and cyber attacks.
Queens, NY (PRWEB) March 10, 2014
On Friday, February 28, 2014, the world’s largest Bitcoin exchange filed for bankruptcy protection in Japan. The company, Mt. Gox, was based in Tokyo but has thousands of Bitcoin investors around the world. And while Mt. Gox has little recognition among Americans, it does raise several important issues surrounding bankruptcy in the new digital age. Bruce Feinstein, Esq., a bankruptcy attorney in Queens, New York, is using this recent news to shed light on the questions surrounding digital currency and bankruptcy in an increasingly global economy.
“My clients are new to the Bitcoin phenomenon, some of them have never even heard of it,” says Mr. Feinstein. “But that only further underlines the fact that we need to start informing ourselves about Bitcoin and how to treat it when it comes to bankruptcy. One day we may all be dealing in digital currency, and our federal and state laws must provide the proper legal pathways to handle the issues that arise in our evolving global financial market.”
Bitcoin is a form of decentralized digital currency established in 2009. It uses cryptography to control the creation and transfer of funds, and bitcoin holders can transfer the money using a special software on their computers and mobile devices. The Bitcoin phenomenon spawned a number of start-ups and trading companies, one of which was Mt. Gox. The company grew into a major player in the Bitcoin industry, only to be toppled when hackers stole approximately $460 million, or 850, 000 bitcoins according to a Wired Magazine article published on March 3, 2014. Mt. Gox subsequently filed for bankruptcy after stopping trades and refusing to pay out its investors.
It’s stories like these that take innovations like Bitcoin and turn them into nightmare scenarios. Mr Feinstein adds, “On the surface, a company like Mt. Gox is a wonderful entrepreneurial concept. But when you’re working in a new financial market that is taking place outside the banking industry and outside the Fed, you begin to encounter safety concerns such as lack of regulation, possible money laundering, and cyber attacks.”
And when a cyber attack did affect Mt. Gox, the result was devastating for the company and its investors. Mr. Feinstein advocates a discussion about creating a legal structure for digital currencies that will protect those who invest in them and develop them. Mt. Gox entered the equivalent of a Chapter 11 bankruptcy in the U.S., and Mr. Feinstein’s firm – which provides Chapter 11 and Chapter 7 bankruptcy aid - continues to monitor this developing story.
The Law Offices of Bruce Feinstein, Esq. has nearly two decades of experience in bankruptcy law, helping clients and families resolve their issues and move forward with their lives. Visit bfeinsteinesq.com for more information or call (718) 514-9770 to reach the New York office.