Judge orders Mark Karpeles to face a 2014 lawsuit for fraud

A judge has ruled that the former chief executive of the defunct Mt. Gox cryptomoney exchange, Mark Karpeles, must face a lawsuit for alleged fraud filed in 2014.

On June 16, U.S. District Judge Gary Feinerman dismissed Karpeles‘ motion for summary judgment, rejecting former Mt. Gox chief executive’s claim that the only remaining plaintiff in the case, Gregory Greene, had altered his argument against Karpeles by opposing the motion and filed a „multitude“ of new allegations.

Judge Feinerman found that „Greene merely added details with the help of discovery,“ with the complaint having „articulated the essence of the fraud in the lawsuit.

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„That doesn’t violate the rule against altering the factual basis of a claim in a summary judgment,“ Feinerman added.

Parties fight over Mt. Gox’s terms of service
Greene first opened an account at Mt. Gox in early 2012, claiming to have relied on the exchange’s terms of service statements to assess the security of the platform. During the statement, Greene said he could not „remember“ the terms displayed on the website.

The suit alleges that Karpeles falsely represented the security of users‘ funds on the exchange, and the terms of service proclaimed that the platform would securely safeguard customers‘ assets, including „allowing them to safely and quickly buy, sell, trade or withdraw.

Karpales responded that Greene’s complaint did not cite Mt. Gox’s terms of use, and in fact the exchange did not even have terms of service at the time Greene opened its account and began depositing.

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Greene lost 42.9 BTC in the Mt. Gox collapse
As Mt. Gox users began to experience widespread withdrawal problems from late 2013 through February 2014, Greene made numerous unsuccessful attempts to withdraw its funds from the platform.

Despite completing verification documents sent to him by Mt. Gox support The News Spy in February, Greene lost more than 42.9 Bitcoin (BTC) with a value of nearly USD 26,000 at the time.

Today, Greene’s currencies would be valued at nearly $404,000.

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Greene’s team is satisfied
Speaking to Law360 on June 18, Greene’s attorney Ben Thomassen said, „We are pleased with Judge Feinerman’s decision. On his own, Mark Karpeles withheld critical information and took affirmative action to defraud the investors in Mt.

„We hope to file our motion for class certification and hold Mr. Karpeles fully accountable for his actions,“ Thomassen added.