MtGox’s US customers try to find Mark Karpeles

Maria Nikolova

Joseph Lack is trying to serve Karpeles in Japan in order to preserve his claims against the ex-head of ill-fated MtGox.

Effecting service on Mark Karpeles, the ex-head of ill-fated Bitcoin exchange MtGox, appears to be a rather cumbersome process. Joseph Lack, who is suing Karpeles and Mizuho over creating transaction difficulties that prevented him and other MtGox’s customers of getting their money back and, hence, causing them damage, has been trying to find Karpeles in order to serve him with the necessary legal documents.

On August 9, 2018, Joseph Lack, the plaintiff in the case launched at the California Central District Court, was granted an extension by three months to the deadline to file proof of service on defendant Mark Karpeles.

Karpeles is a French citizen believed to be living in Japan, so service upon him is governed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents. In order to effect service under the Hague Convention, a physical address is required.

The former MtGox customer did not have a current physical address for Karpeles, but media reports indicated that he recently had been hired by an American company, London Trust Media, Inc. London Trust Media disclosed that Karpeles lives in Tokyo, Japan, necessitating service via the procedures called for in the Hague Convention. Mr Lack says he has been diligent in his efforts to serve Karpeles but is having hard time doing so.

The Court agreed that the time for Mr Lack to file Proof of Service on Defendant Mark Karpeles should be extended to and through October 31, 2018.

Let’s recall what the case is about. On January 24, 2018, plaintiff Joseph Lack filed a putative class action complaint on behalf of himself and others similarly situated against Mark Karpeles and Mizuho Bank Ltd. In the complaint, Lack alleges claims against Karpeles and Mizuho related to the 2014 collapse of the Mt. Gox Bitcoin exchange.

In or around 2013, Mizuho became concerned by Mt. Gox’s growing transaction volumes and reports that US authorities were investigating Mt. Gox for money laundering. Mizuho wanted to distance itself from Mt. Gox and sought to end its business relationship with the exchange. But to avoid reputational harm, avoid regulatory scrutiny, and continue accepting transaction fees, Mizuho wanted Mt. Gox to be the one to terminate the relationship.

When Karpeles refused to close Mt. Gox’s account at Mizuho, the bank implemented policies it kept secret from the public that aimed to frustrate Mizuho’s relationship with Mt. Gox. Thus, Mizuho sharply limited and then ultimately stopped processing international wire withdrawals from Mt.Gox’s Mizuho account. Mizuho, however, continued to accept international cash deposits into the Mt. Gox account.

In January 2014, plaintiff Joseph Lack, a resident of California, joined Mt. Gox. Upon joining, Lack 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 dark. Lack waited in vain for his deposit to appear in his Mt Gox account. He did not succeed in getting his money back.

Accordingly, Lack brought an action against Karpeles and Mizuho.

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