Feb 28 Mt. Gox, once the world's largest bitcoin
exchange, has been sued by a customer in what may be the first
of many U.S. lawsuits seeking to recoup millions of dollars of
losses linked to a hacking attack that led to the exchange's
In a complaint filed on Thursday in U.S. District Court in
Chicago, plaintiff Gregory Greene said Mt. Gox and its chief
executive, Mark Karpeles, were negligent and committed fraud for
having failed to protect the Tokyo-based exchange from theft.
Greene said bitcoin prices plummeted after Mt. Gox found the
security breach, but said he and other investors in the virtual
currency could not cut their losses because the exchange had
halted trading. Mt. Gox took down its website on Tuesday.
"Mt. Gox intentionally and knowingly failed to provide its
users with the level of security protection for which they
paid," said Greene, who estimated his bitcoin stake at $25,000.
The lawsuit seeks class action status on behalf of Mt. Gox
users, restitution, monetary damages and other remedies.
It was not immediately clear which law firm would defend Mt.
Gox against the lawsuit. Baker & McKenzie, a Chicago-based firm
that represents the exchange in Japan, did not immediately
respond on Friday to requests for comment.
At a news conference on Friday at the Tokyo District Court,
Karpeles said he was "very sorry" and blamed Mt. Gox's collapse
on a "weakness in our system," but predicted that the bitcoin
market would continue to grow.
Mt. Gox said it may have 750,000 of its customers' bitcoins
and 100,000 of its own, equal to about 7 percent of bitcoins
worldwide, for a total loss of about $480 million.
The exchange reported having 127,000 creditors, liabilities
of 6.5 billion yen ($64 million) and assets of 3.84 billion yen
It is common for alleged frauds that generate significant
losses or attention to result in a slew of U.S. lawsuits seeking
class action status, even if the alleged wrongful activity
occurs outside the country.
"This is a case of serial mismanagement, if not outright
fraud, by Karpeles and Mt. Gox," said Steven Woodrow, a partner
at the Edelson law firm in Denver, who filed Greene's lawsuit.
"Users of the exchange are collectively out millions while Mt.
Gox holds onto their bitcoins. We intend to get to the bottom of
this in an American court."
The case is Greene v. MtGox Inc, U.S. District Court,
Northern District of Illinois, No. 14-01437.