First Class Action Lawsuit Against Mt. Gox Filed in the US

As all Bitcoins were lost by Mt. Gox, many lawsuits are sure to come

By on March 1st, 2014 12:01 GMT

Mt. Gox has just filed for bankruptcy yesterday and there’s already a class action lawsuit in the making.

Gregory Greene, a Bitcoin investor, has filed a class action lawsuit in Chicago on behalf of all the victims of the Mt. Gox bankruptcy.

“This is a case of serial mismanagement, if not outright fraud, by Karpeles and Mt. Gox,” said Steven Woodrow, Greene’s lawyer, a partner at the Edelson law firm in Denver, Colorado. He is the one who formally filed the complaint against Mt. Gox and Karpeles, claiming that company engaged in fraudulent behavior and is responsible of negligence as it did not protect its users against theft.

Greene did not have a whole lot of Bitcoins, but even so, they’re worth about $25,000 and they have most likely all been lost.

As a reminder, according to a Mt. Gox document, the company lost nearly 750,000 Bitcoins belonging to users and about another 100,000 it owned itself. The total estimated loss is valued at over $475 million.

As expected, there’s a pretty high interest in the class action lawsuit.

Edelson, the law firm that took on the case, told CoinDesk that the Mt. Gox lawsuit fits right in with the type of cases it always takes, namely consumer tech cases, especially those related to online privacy and data breaches.

Considering how many users have lost fortunes when Mt. Gox went down, it’s safe to say that there are going to be a lot of lawsuits announced in the coming weeks.

Mt. Gox filed for bankruptcy in Japan on Friday. The company had been having a lot of problems for several weeks.

As February rolled around, Mt. Gox froze Bitcoin withdrawals, claiming that it had found a bug affecting transactions. Two weeks later, all operations were halted for a few hours, but resumed.
Last weekend, Mark Karpeles, Mt. Gox CEO, resigned from the Bitcoin Foundation in a rather suspicious move. On Monday, the site went down completely, making everyone worry about the future of the exchange.

Later that day, the company posted a message, announcing that all transactions had been halted for the users’ safety, especially after an internal file leaked, discussing the loss of hundreds of thousands of Bitcoins. Soon after that, the company’s Twitter account was emptied of all messages.

The entire scandal culminated on Friday, with the announcement that will bring a lot of legal trouble to Mt. Gox.

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