Feeds

Chicago man lobs class-action sueball at MtGox

Bitcoin exchange accused of 'intentional and systematic' misappropriation of funds

Beginner's guide to SSL certificates

Friday's bankruptcy filing wasn't the only time the name "MtGox" was heard in a courtroom this week. Predictably, the cash-strapped Bitcoin exchange is now the subject of a class-action lawsuit in the US alleging negligence and fraud on the part of MtGox CEO Mark Karpeles and his staff.

"Mt. Gox intentionally and knowingly failed to provide its users with the level of security protection for which they paid," claimed plaintiff Gregory Greene in his class-action court paperwork.

MtGox, once the largest Bitcoin exchange, filed for bankruptcy in a Tokyo court on Friday after admitting it had lost about $480m worth of the digital currency, an amount that represents nearly seven per cent of the total outstanding Bitcoin worldwide.

The company blamed the blunder on a technical glitch that had gone unfixed for several years, giving scammers ample time to make off with funds from its servers.

Most of that money belonged to MtGox customers, although the company said it had also lost about 100,000 Bitcoin of its own.

"There was some weakness in the system, and the Bitcoins have disappeared," Karpeles said in a press conference on Friday. "I apologize for causing trouble."

That apology wasn't enough to appease Greene, however, who has filed a lawsuit against MtGox in the Northern District of Illinois accusing it of "intentional and systematic misuse and misappropriation of its users' property."

"Plaintiff Greene is just one consumer who had Bitcoins and keys stored with Mt.Gox who has lost money as a result of Mt. Gox's conduct," the suit alleges. "Accordingly, Greene brings suit on behalf of himself and all others similarly situated, to seek both monetary and equitable relief for Mt. Gox's deceptive and unlawful conduct."

The suit seeks a court order requiring MtGox to "make full restitution of all funds wrongfully obtained," plus pay punitive damages and Greene's legal fees.

If successful, the suit would have the court place MtGox's funds in what's known as a "constructive trust" – a legal construct wherein MtGox would be compelled to use its holdings for one purpose and one purpose only, namely to return them to their rightful owners.

Greene's own stake in Bitcoin at MtGox is estimated at around $25,000.

Even if the court rules in Greene's favor, however, he might have a hard time recovering his funds. If the Japanese court looks favorably on MtGox's bankruptcy petition, the company will receive protections similar to those granted by the US's Chapter 11, in that it will be shielded from litigation while it restructures its business. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Why Oracle CEO Larry Ellison had to go ... Except he hasn't
Silicon Valley's veteran seadog in piratical Putin impression
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.