Mt Gox CEO Sees Bid for Class-Action Lawsuit

Unfortunately, hacks of cryptocurrency exchanges are fairly commonplace and happen to everyone from small exchanges to the biggest ones and have led to the loss of hundreds of millions of dollars in some cases. While these hacks might be commonplace, few have been as famous and as impactful as the half of the now-defunct cryptocurrency exchange Mt Gox as this was one of the first major hacks, as well as one of the most damaging as the victims of the hack, have been trying to get compensation almost five years after the fact.

A new twist has occurred in the case as District Judge Robert Kelly has denied the request of its former CEO Mark Karpeles to dismiss a class-action lawsuit against him as reported on July 30, 2019.

The History of the Case

Karpeles had previously filed to have the lawsuit which alleged that he hid issues at the exchange from its users dismissed by claiming that the Philadelphia Court did not have any jurisdiction in the case. The class-action lawsuit had been initiated by Gregory Pierce, a former Mt.Gox user on behalf of all the people affected by the shutdown of the company.

According to the lawsuit, Karpeles was aware of several security issues within the system that governed the exchange itself but did not make any of these known to the public and therefore, put their funds and information in danger. Initially, the case was filed against Mizuho bank, which is the banking partner of Mt Gox but it was soon discovered that the court did not have jurisdiction over the bank and thus, attention was turned to the Karpeles who is now being sued for negligence and fraud.

There have been rumors of users who held bitcoin in Mt Gox being able to file for self-admission rehabilitation claims in a bid to get some of their funds back and in April 2019, the trustee of Mt Gox extended the deadline for the submission of rehabilitation plans.

While the incident took place years ago, there is still the lingering issue of making exchanges much more secure so that they cannot be hacked and users’ funds cannot be stolen and considering the increase that has taken place in crypto trading globally, there is even more at stake today than when Mt Gox first collapsed.