U.S. court issues restraining order halting Bitcoins.com auction

The much-anticipated auction of branding-friendly domain Bitcoins.com was stopped yesterday when the U.S. District Court of Seattle issued a restraining order preventing the sale. Owned by Mt.Gox parent company Tibanne K.K., Bitcoins.com was expected to sell for around $1 million, with at least half of the proceeds going to Mt.Gox creditors. The injunction was issued mere hours before the auction was to take place in Dallas, and will expire in 14 days.

The restraining order was issued at the request of Seattle-based bitcoin company CoinLab, which has a long-unsettled lawsuit against Mt.Gox predating the shuttered exchange’s bankruptcy case. Although CoinLab has generally been supportive of the bankruptcy, it appears to see the sale of Bitcoins.com as an attempt to liquidate a Mt.Gox related asset without court approval. In court documents, Chief U.S. federal judge Marsha Pechman said that the sale of Bitcoins.com could heavily damage the court’s ability to provide relief to CoinLab.

It remains an open question if Bitcoins.com truly is a Mt.Gox asset, as under Japanese law Tibanne and its holdings are largely protected from claims leveled against its subsidiary. The U.S. District court found there to be enough cause to block the sale, even though Mt.Gox’s court appointed trustee seemingly had no issue with it. The restraining order forces Mt.Gox and Tibanne to preserve and account for all currently held assets, including Bitcoins.com.

Heritage Auctions has withdrawn Bitcoins.com from their auction listings, although spokesman Noah Fleisher told the Wall Street Journal that the company looks forward to the matter matter being resolved so the domain can be relisted.