Mt Gox Fallout: Lawsuit Against Mizuho Bank Approved by US Judge

March 15, 2016 22:16 UTC

A federal judge in Chicago has ruled that a U.S. lawsuit claiming that Japan’s Mizuho Bank inflated customers’ losses directly by limiting withdrawals from their Mt Gox accounts, as the now-defunct exchange’s banking partner, can move forward. Furthermore, the Judge also rejected the bank’s argument that the case should be moved to Japan from the United States, a report by Reuters revealed.

It was 2014 when one of the world’s largest bitcoin exchanges failed when Tokyo-based Mt Gox collapsed. The fallout saw multiple lawsuits filed against the exchange and its founder and CEO Mark Karpeles by customers in order to recover their millions.

Bitcoin exchange Kraken and a Tokyo District Court-assigned Trustee had been tasked toward the claims investigation, with a recent update revealing that some $110 million or 263,094 BTC was approved for 7,952 claimants.

The ensuing storm from the scandal also caught up to one of Japan’s largest lenders, Mizuho Bank Ltd., the banking partner of the troubled exchange.

The bank was added as a defendant to an existing U.S. lawsuit, back in March 2014. The lawsuit alleged that Mizuho was aware of and aided Mt.Gox’s fraud by providing banking services to the exchange. The complaint also stated that “Mizuho profited from the fraud.”

Now, with the latest ruling, U.S. District Judge Gary Feinerman rejected the bank’s argument that the case belonged in Japan rather than the United States, with the U.S. District Court in the northern district of Illinois ruling that the bank knowingly accepted deposits from U.S. residents.

The lawsuit claims that Mizuho continued to accept deposits from Mt Gox users, even after widespread reports of a U.S. government investigation into the exchange.

Additionally, the lawsuit also states that customers who complained about withdrawal delays from the exchange were told by Mt Gox that they were due to ‘technical problems.’ Notably, the lawsuit alleged that Mizuho knew that these statements were false but did nothing as, the lawsuit stated, it “stood silent while allowing the public to continue being duped.”

Featured image from Shutterstock.

Last modified: October 20, 2019 06:50 UTC

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