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HomeFintechMizuho Bank seeks to dismiss allegations by former MtGox client
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Mizuho Bank seeks to dismiss allegations by former MtGox client

The consequences of the collapse of Bitcoin exchange Mt. Gox can still be felt, especially in terms of litigation. One of the companies embroiled in a set of legal actions related to MtGox’s demise is Mizuho Bank, which has been accused of creating transaction difficulties for MtGox’s customers, thus causing them to suffer losses.

On Friday, June 1, 2018, Mizuho sought to dismiss accusations by Joseph Lack, an ex-customer of the Exchange, who slams the bank for creating withdrawal difficulties for customers of MtGox.

The documents, filed by Mizuho with the California Central District Court, say that Lack has not pleaded a claim for fraudulent concealment. According to the bank, the linchpin of Lack’s argument in opposition to Mizuho’s motion to dismiss is the premise that Lack and other Mt. Gox users could not withdraw cash from their Mt. Gox accounts after Mizuho stopped accepting wire transfer requests from Mt. Gox in June 2013. This premise, according to Mizuho, is false.

The bank insists that the plaintiffs’ complaint and the contemporaneous media reports it cites provide no factual basis on which the Court could plausibly infer that withdrawals were absolutely impossible. To the extent Mt. Gox was delayed in processing cash withdrawals, those delays were clearly and repeatedly disclosed to Mt. Gox’s users, the bank argues. As a result, Mt. Gox users were apprised of all material facts at the time Lack decided, in late January 2014, to deposit funds with Mt. Gox. In short, Mizuho says that “Lack’s own non-conclusory factual allegations do not support an inference that Mizuho engaged in any actionable fraud against Lack or any other Mt. Gox users”.

Let’s recall that several former customers of Mt. Gox bitcoin exchange have targeted Mizuho in a number of legal actions. In all cases, the plaintiffs seek compensation due to Mizuho Bank’s decision not to process any outbound wire transfers from the Exchange’s bank account at Mizuho and Mizuho’s decision to conceal these practices.

The claims at issue in these actions arise out of the collapse of the Mt. Gox bitcoin exchange. Three days after the exchange “went dark” in February 2013, Gregory Greene, a Chicago citizen, sued the corporate entities that owned the exchange – Mt. Gox K.K. and Tibanne K.K., as well as a number of corporate officers, including Mark Karpeles, Gonzague Gay-Bouchery, and Jed McCaleb. Soon after that, the complaint was amended to add Joseph Lack, a California citizen, as a plaintiff, and Mizuho Bank Ltd., which had served as Mt. Gox’s principal banking partner, as a defendant.

Greene and Lack, on behalf of a class of all Mt. Gox customers in the United States, brought claims against the Mt. Gox defendants, over fraud, conversion, and negligence. These entities and individuals, plaintiffs alleged, had withheld vital information about security flaws, leading to the loss of bitcoin and fiat currency held in accounts on the exchange.

Against Mizuho, Greene and Lack brought claims for tortious interference with contract and breach of contract. Mizuho was the only financial institution servicing Mt. Gox’s American users but, according to the plaintiffs, had made the unilateral decision to cease processing international wire withdrawal requests. Thousands of such requests, submitted by American customers of Mt. Gox, had gone unfulfilled due to Mizuho’s policies, interfering with the contractual relationship between plaintiffs and Mt. Gox. And Mizuho had concealed its actions, thereby withholding information plainly material to the decision to purchase bitcoin on Mt. Gox.

The case, captioned Joseph Lack v. Mizuho Bank, Ltd., et al (2:18-cv-00617), continues at the California Central District Court.

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