Judge orders Mark Karpeles to produce documents in lawsuit launched by former MtGox customer

Maria Nikolova

The Honorable Gary Feinerman has given Karpeles until November 4, 2019 to comply with the plaintiff’s request for documents.

In the face of Mark Karpeles’ refusal to produce documents related to the operations of MtGox, an Illinois Judge has ordered the former principal of the ill-fated Bitcoin exchange to comply with the discovery request of a former MtGox customer.

On October 30, 2019, the Honorable Gary Feinerman granted in part a motion by Gregory Greene to compel production of certain documents. By noon Tokyo time on November 4, 2019, Karpeles will have to produce to the plaintiff all documents (paper or electronic) responsive to the plaintiff’s document requests that Karpeles received from the Japanese bankruptcy trustees. A further order will address the documents the plaintiff received from the Japanese public prosecutor.

The plaintiff – Gregory Greene, propounded interrogatories and document requests on Karpeles on February 11, 2019. The plaintiff seeks 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.

Karpeles has objected to the discovery request for fear of criminal liability in Japan. Karpeles says that Japanese prosecutors provided him with certain of those documents and materials in order to put on his defense in his criminal trial. Any documents or materials related to Mt. Gox that are currently in Mr. Karpeles’ possession were provided to him by the Japanese authorities in that context.

Let’s recall that Gregory Greene 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.

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