Mizuho insists US customer of MtGox should not get class certification

Maria Nikolova

The case of Joseph Lack who could not withdraw his money from failed MtGox is too specific, the bank argues.

Whereas the civil rehabilitation proceedings against MtGox continue in Japan, many of the clients of the ill-fated Bitcoin exchange have been left in limbo with their claims for compensation rejected. One such case concerns Joseph Lack, a US customer of MtGox, whose claim against the exchange has been denied in Japan, due to what can be described as a “trap” – he could deposit money but could not withdraw.

Joseph Lack has brought a legal action in California and has been seeking class certification, so that others in a similar situation could join the lawsuit. Mizuho objects to the proposed certification.

Lack is a resident of California. He joined Mt. Gox in January 2014. Upon joining, he wired $40,000 to Mt.Gox’s Mizuho account. Mizuho accepted the transfer and collected the transaction fee. On February 24, 2014, the website of the exchange went unresponsive. Lack waited in vain for his deposit to appear in his Mt Gox account and he did not succeed in getting his money back.

Accordingly, Lack brought an action against Karpeles and Mizuho. Lack alleges that Mizuho had a duty to disclose material information to him and the other depositors. Also, the plaintiff accuses Mizuho of intentionally defrauding him by concealing that the bank was no longer accepting withdrawal requests. Furthermore, the plaintiff alleges that Mizuho caused him damage.

After Mt. Gox’s Japanese bankruptcy was converted to a civil rehabilitation proceeding in June 2018, Lack filed a Proof of Rehabilitation Claim in October 2018 in the total amount of $50,362.73, including over $10,360 in “delay damages” from February 26, 2014 when Mt. Gox stopped operating until June 21, 2018. On March 20, 2019, Lack received notice from the Mt. Gox Rehabilitation Trustee that his claim was disapproved “on the ground that such amount does not exist.”

On March 25, 2019, Mizuho Bank, Ltd. submitted a memorandum of law in opposition to plaintiff Joseph Lack’s motion for class certification. The main argument of the bank is that Lack’s situation is too specific.

According to the bank, Lack is unable to fairly and adequately protect the interests of other proposed class members. Also, Lack is said to have failed to present a reliable class-wide method to determine damages for all the members of the putative class tied to his theory of liability.

Finally, according to Mizuho, Lack ignores the fact that a pending Japanese proceeding akin to a reorganization in bankruptcy is likely to make other proposed class members whole because the post-bankruptcy rise in the value of the bitcoin has given the trustee the means to fully reimburse all approved claims of former Mt. Gox users. Class treatment is not a superior means of deciding the claims of either those putative class members who may recover fully, with interest, in the Japanese proceeding, or putative class members whose claims are denied due to individualized issues.

The case continues at the California Central District Court.

Read this next

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”

Digital Assets

Zodia Custody and SBI Digital Asset Holdings launch JV for crypto asset custodian in Japan

“Zodia Custody is both proud and excited to be working with SBI DAH to help set up SBI Zodia Custody; the first tier 1 crypto asset custodian for institutions in Japan.”

Digital Assets

Paxos opens R&D center in Israel to focus on transaction signing and crypto custody security

“Paxos is looking to expand its team in Israel in 2023 and beyond, giving engineers the opportunity to work on cutting-edge financial products and shape the future of the global economy.”