Mark Karpeles, who was the CEO of Mt Gox at the time it suffered a massive hack, recently tried to have the charges of fraud against him dropped. However, a US District Judge threw out the appeal. A former user of the defunct exchange is suing Mark Karpeles for fraud.
The Rise and Fall of Mt Gox
Before it went down in 2014, the Mt Gox exchange was the largest BTC exchange in the world. At the time, it was processing 70% of all Bitcoin trading globally. However, it was shut down in February 2014 after it was hacked and lost 850,000 BTC, which was worth $450 million back then. Today, that BTC would be worth around $7.9 billion.
Why Karpeles Wanted the Case Dropped
According to Karpeles attorney, Gregory Greene, a former user of the exchange, and last plaintiff against Karpeles, had changed his argument in the middle of the case. However, Gary Feinerman, a US District Judge, rejected the argument. The case will now proceed and Greene legal team will have an opportunity to present their motion later.
Greene’s case against the former CEO goes back to 2014 when Mt Gox collapsed and sought bankruptcy protection. The complaint by Greene is not for the loss of his BTC. In the cases, he accuses Karpeles of negligence and fraud on behalf of the 24,000 former customers of the crypto exchange.
In this case, Karpeles is accused of illegally assuming control of the customer assets held at Mt Gox. He is also accused of being negligent in the safeguarding of the crypto assets of users from misuse. Additionally, he is accused of acting deceptively by misrepresenting the services offered by the exchange. In 2019, Karpeles was given a suspended sentence by the Tokyo District Court for his role in the collapse of Mt Gox. However, Greene is adamant about suing Karpeles.
Former users of the Mt Gox have yet to receive compensation for the loss of their crypto. In the latest, plans, most of them will only receive a small fraction of what they lost. However, that process is still ongoing six years after the exchange shut down.