Plaintiffs alleged that US investors who wired money into Mt.Gox’s account at Mizuho Bank after June 21, 2013, were walking into a trap.
Anthony Motto, Joseph Lack and Gregory Pearce – former customers of now-defunct bitcoin exchange MtGox are seeking class certification in a case against Mizuho Bank over transactional difficulties stemming from the bank’s controversial relationship with the Exchange.
On Friday, October 13, 2017, the trio filed a Motion (and an accompanying Memorandum) to certify class with the Illinois Northern District Court.
In brief, according to the documents, seen by FinanceFeeds, the US investors who wired money into Mt. Gox’s account at Mizuho Bank after June 21, 2013, are said to have walked into a trap: their money could go into Mt. Gox’s account at Mizuho, but it could never leave. And by virtue of Mizuho’s common conduct, the trap was the same for all class members, the Plaintiffs allege.
In 2012, as Mt. Gox’s user base grew and the Exchange had to process a significant volume of transactions, the need for a bank that could handle a substantial number of deposits and withdrawals every day prompted Mt. Gox to Mizuho Bank, Ltd, where Mt. Gox established deposit accounts. It was in 2012 that individuals interested in investing in bitcoin became able to wire money to the bank account of Mt. Gox KK, operator of the now-defunct Mt. Gox bitcoin exchange, at Mizuho Bank.
Mizuho (at that point the only route to Mt. Gox for USD) approached Mt. Gox in June 2013 with a different request, which can be summarized as “Stop sending us wire remittance requests”.
The whats, whys, and hows of that decision and its aftermath form the basis for the parties’ underlying dispute. In brief, Plaintiffs allege that Mizuho unilaterally decided no longer to process outbound international wires, and then worked to ensure that transactional difficulties never were attributed to the bank.
The Memorandum by the Plaintiffs refers to an email exchange between an entrepreneur working in bitcoin and a Japanese accounting firm suggesting that Mizuho was using its influence to prevent Mt. Gox from finding any other business partners. Mizuho is said to have requested that firms do not do business with Mt. Gox or any related entity. However, these details were absent from the information shared with Mt. Gox’s customers. Bitcoin investors were informed on June 21st of a “temporary hiatus” in the USD withdrawals from Mt. Gox and then told on July 4th that withdrawals had resumed.
Mt. Gox’s customers kept trading on the Exchange and relied on Mt. Gox’s promise that it would hold funds on behalf of its customers. When thousands of individuals submitted requests to withdraw their fiat currencies from Mt. Gox’s account at Mizuho, Mt. Gox was able to offer a only a handful of investors relief, though only after extended delay and payment of an increased fee. The majority of them, however, were left high and dry.
On February 7, 2014, Mt. Gox announced a “temporary suspension”. Two and half weeks later, the Exchange collapsed.
Movants propose two classes to litigate their claims: a Withdrawal Class to litigate the intentional-interference claim, and a Deposit Class to litigate the fraud claim.
Lack and Motto move the Court to certify a class of all individuals in the United States who wired fiat currency to Mt. Gox’s bank account at Mizuho between June 20, 2013, and February 24, 2014 (the “Deposit Class”), and appoint them as class representatives and their lawyers as class counsel.
Pearce moves the Court to certify a class of all individuals who, while residing in the United States, submitted a withdrawal request to Mt. Gox that went unfulfilled between June 20, 2013, and February 24, 2014, and to appoint him as class representative and his counsel as class counsel (the “Withdrawal Class”).
The case is captioned Greene v. MtGox Inc. et al (1:14-cv-01437).