Mark Karpeles has 10 days to reply to MtGox US customers’ claims

Maria Nikolova

If the ex-head of ill-fated MtGox fails to act within the specified deadlines, he faces a default entry against him.

Judge Gary Feinerman of the Illinois Northern District Court has decided to grant a motion by ex-MtGox clients in the United States to dismiss their claims against Mizuho Bank which was accused of creating transaction difficulties for MtGox’s ex-customers. At the same time, the Judge has directed the Court to make Mark Karpeles, the notorious head of the ill-fated Bitcoin exchange the lead defendant in the case.

The plaintiffs in the case last week requested the entry of default against Karpeles. On Monday, August 13th, the Judge said that if Karpeles wishes to oppose the request for entry of default, he must file an opposition by August 24, 2018 or appear (either personally or through counsel) at the hearing to be held on August 28, 2018.

Other than the brief appearance through his attorneys, defendant Karpeles has not formally participated in this case in any way.

The action, captioned Greene v. MtGox Inc. et al (1:14-cv-01437), was brought by Gregory Greene and Anthony Motto who have sought to hold Mizuho Bank, Ltd. and Mark Karpeles liable for financial losses arising from the demise of the Mt. Gox. According to the plaintiff, the investors who wired money into Mt. Gox’s account at Mizuho Bank after June 21, 2013, walked into a trap: their money could go into Mt. Gox’s account at Mizuho, but it could never leave.

Bitcoin investors were informed on June 21, 2013, 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.

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