US Judge grants more time to ex-MtGox clients to complete deposition of Mark Karpeles

Maria Nikolova

The Honorable Gary Feinerman of the Illinois Northern District Court has granted an extension of time to complete discovery in a case related to the collapse of MtGox.

Shortly after the parties in a US lawsuit related to the demise of Bitcoin exchange MtGox complained about procedural difficulties concerning the deposition of Mark Karpeles in Japan, the Court has agreed to give them more time to complete discovery.

On September 3, 2019, the Honorable Gary Feinerman of the Illinois Northern District Court granted the parties’ motion for extension of time to complete discovery. The fact discovery deadline has now been extended to December 12, 2019.

Over the last several months, the parties in the case brought by ex-MtGox US customer Gregory Greene, have worked to schedule Karpeles’s deposition in Japan. Due to the restrictions imposed by the treaty between the United States and Japan, all depositions taken in Japan must take place at either the US Embassy in Tokyo or the US Embassy in Osaka. The treaty does not allow for video or telephonic depositions. As a result of these and other restrictions, the Embassy deposition rooms are subject to very limited availability and must, at minimum, be booked six weeks in advance.

The parties originally agreed to take Karpeles’s deposition on September 13, 2019 and reserved the Tokyo Embassy deposition room for that date. Due to subsequent scheduling conflicts of counsel, however, the parties had to release that reservation. The next available and workable date for Karpeles’s deposition is November 5, 2019. To accommodate this agreed date, and to allow enough time for the plaintiff to propound one round of post-deposition discovery (should any be needed), the parties requested that the Court extend the discovery deadline in the case through December 12, 2019.

The plaintiffs in the case seek on behalf of a putative class to hold Mark Karpeles, Mt. Gox’s principal, liable for financial losses allegedly arising from the exchange’s collapse. The plaintiffs are bringing state law claims that sound in conversion/trespass to chattels, negligence, and consumer fraud. Their complaint alleges that Karpeles intentionally misrepresented the security and stability of the Mt. Gox exchange and that his negligent or intentional failures in designing and operating the exchange allowed the loss of the plaintiffs’ assets. On behalf of a putative class, the plaintiffs seek actual, statutory, and punitive damages, along with prejudgment interest and attorney fees.

Let’s recall that, in March 2019, the Illinois Northern District Court denied a motion to dismiss brought by Mark Karpeles. In denying Karpeles’ motion to dismiss, Judge Gary Feinerman noted that Greene’s contacts with the exchange were not random, isolated, or fortuitous, but rather the product of Mt. Gox’s virtual presence in Illinois, as some 7,056, or about 1.5%, of the addresses associated with Mt. Gox accounts came from Illinois.

The Court has found that, even if the Illinois market was “simply one among many”, a place of no particular interest to him, Karpeles purposefully availed himself of that market by operating an exchange that generated thousands of Illinois accounts and by purporting to safeguard the assets of Greene and the other Illinois users.

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