Business

Steve Kaaru

Former Mt Gox CEO fails in attempt to have case against him stayed

A U.S. court has ruled against a motion by Mark Karpeles to stay a lawsuit against him. The former CEO of the now-defunct Mt. Gox had made the motion in court, urging it to allow him enough time for an ongoing case in Japan to be determined. According to Karpeles, the proceedings from the case in Japan are likely to fully compensate the plaintiffs.

The two plaintiffs, Antony Motto and Gregory Greene are former Mt Gox clients who lost their money when the exchange went under. The two moved to court, holding Karpeles personally liable for their losses.

The ruling against Karpeles’ motion to stay was made by Judge Gary Feinerman of the Illinois Northern District Court. As reported by Finance Feeds, Feinerman ruled that the motion to stay and the alternative to strike class allegations was “granted in part and denied without prejudice in part.” 

Karpeles had sought to have the court stay the case so as to save the court from using unnecessary resources and to eliminate unnecessary legal expenses. He argued that upon the conclusion of the proceedings in the Tokyo court, the plaintiffs would receive compensation. Mt Gox recovering some of the lost crypto and the consequent rise in the market were some of the two factors his motion hinged on.

In the alternative, he had moved that the court strike the class action lawsuit, claiming it wasn’t the best way to litigate the issue. 

The embattled Karpeles also faces criminal charges in Japan according to a report by a Japanese media outlet. Prosecutors at the Tokyo District Court accused Karpeles of embezzling customers’ funds for his personal use in the midst of the infamous 2011 hack. According to the report, Karpeles used some of the proceeds to invest in a software development venture and the rest for personal use.

Karpeles also faces charges of data manipulation on the Mt Gox trading system. He also reportedly fabricated customers’ balances, a charge he has vehemently denied.

Since filing for liquidation in 2014 after losing 850,000 Bitcoin Core (BTC) tokens, Mt. Gox has been involved in endless court battles with its former customers. At the time, the BTC tokens were collectively worth $480 million. A report later emerged claiming that the exchange, which was once the largest in the world, had recovered some of the BTC.

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