Menu
Chicago court freezes US assets of Mt. Gox CEO, companies

Chicago court freezes US assets of Mt. Gox CEO, companies

The ruling doesn't touch the failed Bitcoin exchange itself

A U.S. district court judge on Tuesday froze the U.S. assets of Mark Karpeles, CEO of failed Bitcoin exchange Mt. Gox, and two associated companies, allowing lawyers to begin demanding documents from the three parties to investigate what they allege is a huge fraud.

Mt. Gox, once the largest Bitcoin exchange in the world, suspended trading on Feb. 25. Three days later, it said it had lost around 850,000 bitcoins. At the time, the bitcoins were worth around US$474 million. The Tokyo-based exchange filed for bankruptcy protection in Japan shortly afterward, immediately raising the question of whether users would ever get their money back.

Tuesday's ruling, at the U.S. District Court for the Northern District of Illinois in Chicago, covers the CEO and Mt. Gox's U.S. subsidiary and Japanese parent company, Tibanne KK, but it doesn't cover the failed Mt. Gox itself, according to Chris Dore, a partner at Edelson PC in Chicago.

Dore is representing Gregory Greene, a U.S. citizen who filed the Chicago lawsuit against Mt. Gox on Feb. 27 and who says he lost around $25,000 worth of bitcoins in the collapse.

The Japanese company is excluded because lawyers working for Karpeles successfully argued in a Dallas court on Monday for U.S. bankruptcy protection for the company. The Dallas ruling didn't include Karpeles or the two other companies because they haven't filed for bankruptcy.

Dore said the ruling means he can immediately begin demanding documents from the three parties, a legal process called discovery. Typically, it takes several weeks or months for the discovery process to begin.

Dore said he suspects there may be ongoing fraud and that Mt. Gox's bankruptcy efforts are an attempt to protect itself.

"Money is moving around as we speak, bitcoins are moving around accounts associated with Mt. Gox.," said Dore, referring to reports on movements of bitcoins from accounts analysts say could be associated with the failed exchange. "Something is not right so we urgently need to get to the bottom of this quickly."

The Chicago lawsuit has been proposed as a class-action suit. If approved by the court -- something that will be requested at a later date -- it would allow others affected by the collapse of Mt. Gox to join Greene in the case and be considered in any award.

"I've been contacted by at least 300 people from around the world who could be class members, at least the U.S. citizens among them," Dore said.

The case is 14-01437, Gregory Greene vs. MtGox Inc., MtGox KK, Tibanne KK and Mark Karpeles, at the U.S. District Court for the Northern District of Illinois.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags internete-commerceInternet-based applications and servicesMt. Gox

Featured

Slideshows

Ingram Micro maintains Showcase 2018 momentum in Wellington

Ingram Micro maintains Showcase 2018 momentum in Wellington

Ingram Micro maintained Showcase 2018 momentum in Wellington, hosting more than 40 vendors at TSB Arena. Under the banner of Leading the Way, the event demonstrated what’s new, what’s next and how it can be used to improve business and everyday life.

Ingram Micro maintains Showcase 2018 momentum in Wellington
Ingram Micro launches Showcase 2018 in Christchurch

Ingram Micro launches Showcase 2018 in Christchurch

Ingram Micro kickstarted Showcase 2018 in Christchurch, hosting more than 40 vendors at Horncastle Arena. Under the banner of Leading the Way, the event demonstrated what’s new, what’s next and how it can be used to improve business and everyday life.

Ingram Micro launches Showcase 2018 in Christchurch
Data breach notification laws in NZ: How can partners prepare?

Data breach notification laws in NZ: How can partners prepare?

This exclusive Reseller News Roundtable outlined the responsibilities facing security partners today, assessing risk while evaluating the role of the vendor in providing added layers of protection.

Data breach notification laws in NZ: How can partners prepare?
Show Comments