Mizuho blames Mark Karpeles for damages related to MtGox transaction problems

Maria Nikolova

The Japanese bank has filed crossclaims against Mark Karpeles at the California Central District Court.

Less than a week after former customers of ill-fated Bitcoin exchange Mt. Gox managed to convince the Court that their claims about Mizuho Bank’s fraudulent concealment of information related to Mt. Gox’s client funds transactions are plausible, the Japanese bank has decided to put the blame for the damages on Mark Karpeles.

Earlier this week, Mizuho Bank filed crossclaims against the former President, CEO, and majority shareholder of Mt. Gox. The new claims are part of a case targeting Mizuho and Karpeles. The plaintiff – Joseph Lack, a former customer of the Exchange, alleges that Mizuho did not inform customers of MtGox about the transaction difficulties they might experience and thus created a trap, where they could put the money into MtGox’s account but could not withdraw anything.

Now, the Exchange seeks to put the blame on Karpeles. The crossclaims filed with the California Central District Court earlier this week seek to hold Karpeles accountable for the damages caused.

Mizuho alleges that Karpeles was aware that there were security “bugs” in the Mt. Gox system as early as 2011, and that he stole Mt. Gox users’ bitcoins, either by exploiting the security “bugs” or otherwise. Karpeles is said to have made numerous representations to the public and to Mt. Gox users that the withdrawal issues were only temporary and that user assets were safe. Karpeles also assured users through the Mt. Gox online Support Desk that any problems were being dealt with and that there was no cause for alarm.

According to Mizuho, if it had not been for Karpeles’s fraud, Mizuho would not have been sued by MtGox’s customers over the transactions issues, and would not have incurred any losses relating to this action. Karpeles is the actual and proximate cause of any damages suffered by Lack, the bank says.

Mizuho said Karpeles owed it a duty of reasonable care to avoid violating the bank’s rights or legally protected interests. Karpeles’ statements were, at a minimum, negligent and done without reasonable care for the truth or the consequences of these statements, according to the bank.

Mizuho argues that its damages were proximately caused by Karpeles’s false statements.

Mizuho denies all liability alleged against it by Joseph Lack. However, pursuant to Japanese law and/or other applicable law, in the event Mizuho is found liable in any respect, Mizuho is entitled to recover from Karpeles the proportion of the plaintiff’s alleged damages, the bank argues.

The case is captioned Joseph Lack v. Mizuho Bank, Ltd., et al (2:18-cv-00617).

Read this next

Retail FX

Eightcap integrates Acuity’s economic calendar for trade ideas on MT4 or MT5

“By incorporating Acuity’s cutting-edge AI technology into our platform, we are able to offer our clients a powerful new tool that will help them stay ahead of the markets. We are committed to providing an extensive range of tools and educational resources that will enhance our clients’ trading experience and allow them to trade smarter.”

Inside View

Private Equity Renaissance

Recent years have seen a resurgence in the concept of trading physical equities, with a slew of new arrivals joining the market for what is arguably one of the oldest forms of investing. But what has been the driving force behind this change in momentum?

Digital Assets

Dubai introduces new crypto regulations with fines of up to $135,000

Against the backdrop of a crashing market and burned investors, Dubai has sealed a landmark rulebook that governs how the Emirate will regulate cryptocurrency activities.

Institutional FX

FX volume drops 16pct at Russia’s largest exchange in January

The Moscow Exchange, Russia’s largest exchange group, released its monthly batch of trading volumes and metrics for January 2023 – the latest readings showed a pullback across the board for multiple segments, namely in the FX, given lower volatility and a reduced trading schedule.

Institutional FX

Standard Chartered sets up wholly-owned brokerage arm in China

UK-headquartered bank Standard Chartered said its Hong Kong arm has been granted an in-principle approval for a brokerage license from the China Securities Regulatory Commission (CSRC).

Digital Assets

Revolut offers staking for Ether, Cardano, Polkadot, and Tezo

British fintech and banking firm Revolut has introduced crypto staking — a practice of earning rewards for serving as a transaction validator in the Ethereum blockchain – to its UK and European Economic Area (EEA) customers.

Inside View

Saxo releases Q1 2023 Quarterly Outlook: “The Models Are Broken”

“2023 is likely to prove a rough ride for currencies if the USD bear market fails to continue in a straight line, but EUR and JPY may outperform.”

Institutional FX

FXPA welcomes Mesirow as a member of the institutional FX industry body

“Our deep commitment to advancing best practices align well with FXPA’s goals of championing a robust FX market for all industry participants.”

Industry News

ICE delivers Russian-free barrels of ICE Gasoil and expands ESG data in APAC

ICE changed the methodology for Low Sulphur Gasoil futures from previously delivering diesel from any origin, to deliver diesel that does not include any originating from Russia. ICE Gasoil is the global benchmark for refined oil products.

<