Ex CEO of Mt. Gox Bitcoin Exchange Accuses Plaintiff of Changing Fraud Claims
Mark Karpelès, ex-CEO of defunct bitcoin exchange Mt Gox., recently accused the plaintiff George Greene of changing facts underlying his claim in the middle of the ongoing case, which is forbidden by the court. Also, Karpeles is calling on the court to dismiss the remaining class-action lawsuit brought against him.
Mt.Gox, once the biggest crypto exchange globally, came crashing down in 2014 after suffering a massive hack. Following the incident, a class action lawsuit was initiated, accusing the company of mismanaging clients’ funds, while victims are yet to get back their funds.
Ex-Bitcoin Exchange CEO Wants Fraud Charges Dismissed
In a case filed at the U.S. District Court for the Northern District of Illinois on Monday, March 16, 2020, Karpelès stated that Greene, the last plaintiff remaining in the 2014 class-action lawsuit, changed the basis of his fraud claims.
An excerpt from the filing reads:
“The issue for the court is very straightforward: can plaintiff Gregory Greene pursue completely different and new factual theories for a common law fraud claim than what he pled in the operative complaint? Mr. Greene attempts to do what Seventh Circuit law plainly forbids: change the underlying basis of his fraud claims after defendant Mark Karpeles filed his motion for summary judgment.”
According to the ex-CEO, Greene updated his complaint to add that clients invested in the defunct bitcoin exchange firm based on the company’s terms of use. However, Karpelès stated the plaintiff couldn’t make such a claim, because there were no existing terms of use on the platform when Green opened an account.
The former Mt. Gox CEO also argued that Greene could not provide evidence showing statements that led the former Mt. Gox client into believing that the bitcoin exchange platform was secure.
Karpelès further asked the court to eliminate the testimony of the plaintiff’s expert witness from the records, stating that the testimony only responded to Green’s new claims, not the ones laid out in the complaint.
In response to Greene’s changing the basis of his fraud claims, the former Mt. Gox chief called on the court to dismiss the remaining fraud charge brought against him. Greene initially filed a-three count charge against Karpelès bordering on fraud and negligence. The plaintiff had earlier dismissed two of the three charges.
Mt. Gox Creditors Still in Limbo
Before the hack attack in 2014, Japan-based bitcoin exchange Mt. Gox, was the world’s largest exchange and was responsible for 70% of BTC transactions. However, Mt. Gox’s glory days came to an end, after hackers reportedly stole 850,000 bitcoins from the platform, resulting in the collapse of the exchange.
Shortly after the theft, the company filed for bankruptcy protection both in Japan and in the U.S. There were reports that the hack was successful because most of the BTC was stored in the company’s hot wallet, and the platform failed to put in place adequate security measures. Also, the company kept its clients in the dark about the theft for several months.
Mt. Gox later stated that it found 200,000 bitcoins, with 650,000 BTC unaccounted for till today. CEO Mark Karpelès was arrested in 2015 and released on bail in 2016.
As reported by Blockonomi back in March 2019, a Japanese court found Karpelès guilty of manipulating trading records to conceal the hack. Consequently, the former Mt. Gox CEO received a suspended sentence of two years and six months. Karpelès managed to escape jail term after the court cleared him of all embezzlement charges.
Amid the Mt. Gox saga, aggrieved creditors filed for the commencement of civil rehabilitation, which the Tokyo District Court granted. Subsequently, the bankruptcy filing was halted. Nobuaki Kobayashi, Mt. Gox’s Rehabilitation Trustee, released a document showing the company’s balance and the timeline for the civil rehabilitation process.
The Trustee also announced in October 2019 that the deadline for the submission of a rehabilitation plan was extended to March 31, 2020.
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