MtGox CEO tries to shift blame onto Vinnik and Mizuho

Maria Nikolova

In an effort to nix the allegations brought by former MtGox customers, Mark Karpeles says Alexander Vinnik and Mizuho should bear the brunt of responsibility for customer losses.

There are several US lawsuits related to the collapse of notorious bitcoin exchange MtGox that name Mark Karpeles, owner and CEO of the ill-fated company, as a defendant. In one of these lawsuits, Gregory Pearce, a Pennsylvanian customer of MtGox, claims one count of negligence and one count of fraud against Karpeles. Pearce brings these claims on behalf of himself and the “Mt. Gox Class.”

On September 6, 2019, Karpeles filed his answer to the plaintiff’s complaint, trying to shift the blame for the losses suffered by MtGox’s customers to Alexander Vinnik and Mizuho Bank.

Gregory Pearce created an Mt. Gox account in November of 2013, and he provided Mt. Gox with his West Chester, Pennsylvania, address, as well as proof of his identity. As a result of Mt. Gox’s virtual presence, a total of 19,208 addresses associated with Mt. Gox accounts came from Pennsylvania. After creating his account with Mt. Gox, Pearce transferred his previously purchased bitcoins to his Mt. Gox account and began to sell and trade through the Exchange.

In January 2014, Pearce converted some of his bitcoin to fiat currency with the intention of immediately withdrawing $5,900 from his Mt. Gox account. Pearce never received his funds, and, on February 10, 2014, he received a message from Mt. Gox’s customer support indicating that all international withdrawals were delayed. During this same time, Pearce attempted to cancel his fiat currency withdrawal request and move his entire Bitcoin balance out of Mt. Gox, but his attempts to transfer his Bitcoin balance out of the Exchange also failed.

At no point prior to, or during the transfer of his bitcoins into the Mt. Gox Exchange did Mt. Gox notify Pearce that Mt. Gox had suffered any type of computer “bug”; Mizuho was no longer providing withdrawal services to Mt. Gox users; and both bitcoin and fiat currency funds would be permanently inaccessible. Pearce claims that he would not have opened his account with Mt. Gox or transferred his bitcoins into the Exchange, or would have taken immediate steps to withdraw his bitcoins from the Exchange, if he had known that: Mizuho was interfering with Mt. Gox’s ability to service users; his ability to make cash withdrawals from the exchange would be materially compromised; the security of Mt. Gox had been compromised; or Mt. Gox intended to go offline and declare bankruptcy.

Pearce initiated this class action suit against Karpeles and Mizuho in January 2018 but in August 2018, the Court found it did not have personal jurisdiction over Mizuho and dismissed it. In July this year, the Court nixed Karpeles’ motion to dismiss for alleged lack of jurisdiction, so the case against MtGox’s CEO continues.

In his response, filed with the Pennsylvania Eastern District Court on September 6, 2019, Karpeles argues that there is no proof that he stole money from the Exchange. However, he stresses that, in July 2017, the US Federal Prosecutors charged Alexander Vinnik, a Russian citizen, with laundering 530,000 of the stolen MtGox bitcoins through his WME wallets and other accounts.

Further, Karpeles argues that Mizuho Bank bears significant responsibility for the specific damages alleged by the plaintiff. According to Karpeles, Mizuho is an indispensable party to the litigation.

According to Karpeles, Pearce has failed to include “necessary and indispensable parties” and therefore the action has to be dismissed.

Read this next

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

Digital Assets

Prisma Finance suffers $10 million crypto exploit, attack ongoing

Liquid staking protocol Prisma Finance fell victim to a security exploit on March 28, resulting in nearly $10 million in Prisma mkUSD and wrapped stETH being stolen by hackers.

<