US Mt Gox Victims Notch Legal Win Against CEO of Infamous Bitcoin Exchange
US Mt Gox victims notched a legal win in their case against disgraced Bitcoin exchange CEO Mark Karpeles. | Source: Quentin TYBERGHIEN / AFP
Mark Karpeles, the former CEO of the notorious Mt Gox, has lost the motion to strike a lawsuit against him on the grounds that plaintiffs – specifically the defunct bitcoin exchange’s US victims – are likely to be reimbursed eventually.
The exchange’s former CEO spent nearly a year in a Japanese jail after being arrested and charged with embezzlement and is now out on bail. Karpeles is awaiting trial in a country with a 99% conviction rate and faces up to 10 years in prison following the loss or theft of 850,000 BTC from the exchange in 2014. Now, a judge has ruled he must also reckon with a lawsuit in the US.
Illinois Judge Quashes Karpeles’ Bid to Halt US Lawsuit
Earlier this week, Karpeles filed a motion to stay that US lawsuit against him because civil rehabilitation proceedings are likely to compensate the plaintiffs, Mt Gox victims Gregory Greene and Anthony Motto, making the lawsuit unnecessary. Greene and Motto aim to hold Karpeles personally liable for the loss of their funds due to his role as leader of the defunct and compromised exchange during the time of bankruptcy.
Karpeles’ defense team argued that the case should be stayed to conserve judicial resources and avoid frivolous legal expenses on all sides, also stating that a class action was not the appropriate channel to resolve the dispute between Karpeles and the former Mt Gox customers.
Part of Karpeles’ defense is the argument that 200,000 of the stolen bitcoins have been tracked and recovered and have significantly increased in value, which could be viewed as compensation for the victims.
On the other hand, it seems illogical to ignore the fact that this would have resulted in massive profits for any clients choosing to hold the entirety of their cryptocurrency funds through the astronomical price gains seen since the exchange collapsed and went bankrupt, making Karpeles’ claims dubious at best.
Judge Gary Feinerman of the Illinois Northern District Court denied the motion, allowing the case holding Karpeles personally liable to proceed. The Court recently indicated that it would not support the claims made by Karpeles in a separate case being brought by the former CEO against Mt Gox clients.
A notice filed on January 11 instructed parties to“proceed on the assumption that Defendant Karpeles’s motion to dismiss will be denied.”
Mt Gox Disaster Reaches Fifth Anniversary
Launched in 2010, Mt Gox at one time handled over 70% of all bitcoin transactions worldwide before shutting down and filing for bankruptcy in February 2014.
Nearly 1 million bitcoins were reported missing from the exchange, likely stolen. Worth $450 million at the time at around $550 per BTC, the funds ended up being worth billions as bitcoin increased in value. Mark Karpeles, a founding member of the Bitcoin Foundation, had acquired Mt Gox in 2011.
Karpeles faces a verdict in his Japanese trial later this month, where he stands accused of embezzling $3 million from Mt Gox. He is forbidden from leaving Japan while out on bail.
He has complained of mistreatment at the hands of Japanese authorities, stating that he was interrogated for 50 straight days by police without a lawyer while in jail, and adding that he wouldn’t wish his experience on his worst enemy – or even “humanity’s worst enemy.”
Meanwhile, crypto billionaire Brock Pierce – who claims to be the current owner of Mt Gox – has unveiled a blockbuster plan to revive the infamous exchange.
