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

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

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Martyn Williams

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?