Illinois Court directs Mark Karpeles to try to get documents from Japanese public prosecutor

Maria Nikolova

The documents and other materials are seen as important to the proper resolution of a class action brought by an Mt. Gox customer who alleges he was harmed by Karpeles’s actions.

Less than two weeks after the Honorable Gary Feinerman of the Illinois Northern District Court ordered Mark Karpeles to produce certain documents related to the operations of MtGox, the Judge has issued another order related to another batch of documents sought by the plaintiff in a class action targeting Karpeles.

The case in question was launched by Gregory Greene, a former customer of MtGox. The plaintiff seeks to hold Karpeles accountable for conduct that led to the loss of more than $400 million from US users of the MtGox bitcoin exchange on theories of negligence, conversion, and fraud. The plaintiff alleges that, as the CEO of MtGox, Karpeles controlled all aspects of the exchange: he was responsible for the code underlying the exchange, knew of bugs and other security issues affecting the exchange, and controlled what information was disclosed to Mt. Gox’s customers.

Greene requests that Karpeles produces information all of which falls under the following categories:

  • Documents sufficient to identify witnesses relating to Karpeles’s operation of the Mt. Gox exchange;

  • Documents relating to Class members’ interactions with the exchange, along with their bitcoin and fiat currency holdings;

  • Documents relating to Karpeles’s ability to access and/or control Mt. Gox’s systems or user accounts, including his use of “bots” on the exchange; and

  • Documents relating to unauthorized exchange activity, whether resulting from “bugs” or “hacks”.

Each of these topics bears on the manner in which Karpeles, as the acting MtGox CEO from 2011 until 2014, operated the exchange and interacted with actual and potential customers of the Exchange.

On October 30, 2019, the Honorable Gary Feinerman granted in part a motion by Gregory Greene to compel production of certain documents – Karpeles was told to produce all documents received from the Japanese bankruptcy trustees.

On November 8, 2019, the Judge issued another order with regard to information production.

In the latest order, the court directs Karpeles to make a good faith effort to secure the Japanese public prosecutor’s permission to produce to Greene the documents and materials that Karpeles received from the prosecutor – the documents and materials responsive to Greene’s written discovery requests.

The Illinois Northern District Court requests that the Japanese public prosecutor grant the permission sought by Karpeles. The documents and other materials are very important to the proper resolution of this civil case, a putative class action brought by an Mt Gox customer who alleges he was harmed by Karpeles’s actions.

“It is the court’s hope that the prosecutor will grant permission, given that Karpeles’s criminal trial has concluded, and given that this civil case has the purpose of determining whether Karpeles is responsible for the harms caused by the shutdown of the Mt. Gox bitcoin exchange”, the order states.

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