Mt. Gox ex-CEO Mark Karpeles opposes class certification in lawsuit

The disgraced former CEO of Mt. Gox has urged a court in Illinois to reject certification of a class of plaintiffs that claims to have lost $400 million in the collapse of the cryptocurrency exchange, saying there is a “glaring problem” with their claim.

The lawsuit dates from February 2014, and holds ex-CEO Mark Karpeles as the only remaining defendant. The complaint alleges Karpeles engaged in fraud by taking $400 million from the exchange, which he subsequently blamed on hackers.

However, according to Karpeles, lead plaintiff Gregory Greene has raised “inconsistent allegations and testimony about what his own claim for fraud even is.”

In the lawsuit, Karpeles is accused of giving the “false impression that Mt. Gox was a safe and secure bitcoin exchange, despite his awareness of serious security flaws and other issues that eventually led to its collapse in February 2014.”

According to the claim, users were told their digital currency was secure on the platform, despite a number of undisclosed hacks and “security events” concerning the exchange.

In response, Karpeles said the judge should decline to certify the class, and thereby prevent the lawsuit from going ahead, because “the mix of information that any individual user read, considered and relied upon is vastly different for each user.”

Further, Karepeles has said Greene should not be allowed to represent the class due to “his meandering allegations of fraud, his credibility issues, and a hotly contested issue of whether the terms of use upon which he now bases his claim even existed when he began using Mt. Gox.”

Greene says that “[r]ead as a whole, the terms of use presented Mt. Gox as a legitimate and secure place to deposit, store and trade bitcoins and fiat currency.”

However, representatives for Karpeles have said Greene is not typical, and therefore should not be allowed to represent the class in the case.

“Mr. Greene’s changing allegations, discovery responses, deposition testimony and subsequent declarations subject him to individual defenses and credibility problems. Because of this, Mr. Greene’s claims are not typical, and he is not an adequate class representative.”

The U.S. District Court for the Northern District of Illinois will consider the claims in due course.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to BinanceBitcoin.comBlockstreamShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.