Former CEO of Mt Gox Disputes U.S. Lawsuit

3 min read

The ex-CEO of obsolete exchange Mt Gox, Mark Karpeles applied his contestation to the U.S. federal judge in the state of Illinois against the fraud lawsuit submitted by his former clients, arguing that he has insufficient ties in the state.

Karpeles representatives discussed with U.S. District Court Judge Gary Feinerman, stating that the defendant had little to no relations in Illinois and his business did not operate in the state, which would make the lawsuit invalid. Karpeles is accused of conversion, negligence, and fraud, according to Law360.

The accusations are a result from the bankruptcy Mt. Gox experienced after it was hacked and allegedly embezzled back in 2014. Approximately one million bitcoins were lost in the hack, a sum which was valued at around $400 million and nearly 7 billion according to today’s market.

The former CEO currently resides in Japan and will be facing an entry of default claim after Judge Feinerman ordered the court to make Karpeles the main plaintiff in the customer retribution case.

Karpeles had time until August 24 to contest the request for entry of default at a hearing scheduled to take place on August 28. Today, Karpeles’ attorneys filed a motion to counter the lawsuit, claiming that their client had the “minimum contacts” needed to form relations in the state.

An excerpt from the motion stated:

“Mr. Karpeles expressly asserts that this Court lacks personal jurisdiction over him and preserves this objection and argument for all purposes…Because this Court lacks personal jurisdiction over Mr. Karpeles, this proceeding against him must be dismissed with no further actions taken, including but not limited to the entry of any default.”

The creditors at Mt Gox were asked to submit their settlement claims until October 22.

“Plaintiffs bear the burden of establishing personal jurisdiction,” was written in his motion. “Blanket, conclusory assertions that this court has personal jurisdiction are insufficient.”

“[He hasn’t] purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state,” Karpeles’ attorneys went on to state that, “[nor] alleged injury arise out of the defendant’s forum-related activities.”

Earlier this month, the creditors of Mt Gox started preparing a revised repayment plan. All accepted and rejected claims filled until the date of October 22, 2018, will be revealed by the representative on January 24, 2019.

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