Judge orders Mt. Gox's Karpeles to US for questioning

Karpeles must answer questions on April 17, a Texas judge ruled

A judge in Texas has ordered Mark Karpeles, the CEO of failed Bitcoin exchange Mt. Gox, to go to the U.S. to answer questions about its bankruptcy.

Judge Stacey Jernigan summoned Karpeles to appear on April 17 at the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, according to a lawyer for the creditors of Mt. Gox.

The court had granted the exchange temporary protection from creditors, but it must prove that it deserves full protection.

In March, Mt. Gox customers Gregory Greene and Joseph Lack asked the judge to order Karpeles to go to the U.S. for a deposition to explain why it went bankrupt and what had happened to the bitcoins the exchange reported were missing.

The pair are plaintiffs in an Illinois class-action lawsuit accusing Japan-based Mt. Gox of fraud.

Blaming software errors that may have been exploited by hackers, the exchange had reported some US$474 million in bitcoins had gone missing when it filed for bankruptcy protection in Tokyo in February with liabilities of ¥6.5 billion ($63.6 million).

Through Mt. Gox's lawyers, Karpeles has indicated that he is willing to be questioned in Taiwan, but the judge noted that the Mt. Gox head had filed for bankruptcy protection in Texas.

"If he avails himself of this court, my God, he is going to get himself over here," Jernigan was quoted as saying by Reuters during the two-hour hearing Tuesday.

"To have Mr. Karpeles come here and answer basic questions about why he should get bankruptcy protection is a tremendous victory for consumers and creditors of Mt. Gox," said Steven Woodrow, a lawyer for the plaintiffs, by phone.

"If he complies with the order, that's great. If he doesn't, he'll have to throw himself on the mercy of the court."

If Karpeles fails to appear, he could face a range of consequences including the court admonishing him or throwing out his case, Woodrow said.

A U.S. lawyer for Mt. Gox did not immediately respond to a request for comment.

The exchange's lawyers tried to persuade the judge that Karpeles should not have to be questioned in the U.S., according to Woodrow. The judge did not welcome their suggestion that Karpeles could be replaced as a "foreign representative" in the case, according to the Reuters report.

The U.S. legal proceeding is taking place while a bankruptcy examiner appointed by the Tokyo District Court continues to probe Mt. Gox, once the world's largest Bitcoin exchange, as part of its Japanese motion for a civil rehabilitation.

Mt. Gox hopes to rebuild itself to "repay debts to creditors," according to a statement on its website. The deadline for examiner's report has been postponed to May 9, after which the Tokyo court will decide whether Mt. Gox should be rehabilitated or liquidated.

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Tags internetInternet-based applications and servicesMt. Gox

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Tim Hornyak

IDG News Service
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