Mark Karpelès to Face Mt. Gox Class Action Lawsuit in Philadelphia

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Mark Karpelès, the former Mt. Gox CEO who was cleared of embezzlement charges by a Tokyo court in March, will face the first of a potential slew of civil lawsuits brought by former customers through a class action in Philadelphia. Karpelès’ had tried to have the case dismissed, arguing that the Philadelphia court did not have jurisdiction over him, but District Judge Robert Kelly rejected that argument, meaning Karpelès will have to answer his case.

Was Karpelès Aware of Security Problems?

The case, brought by Gregory Pearce on behalf of some of the thousands of Pennsylvania residents who hand funds stored on the exchange when it collapsed in 2014, alleges that Karpelès knew about bugs and other security issues on the site but did not make them public, thus preventing users from being able to move funds off the exchange should they wish.

Clearly, Karpelès either didn’t know about the potential security issues within the site that led to 850,000 BTC being siphoned off the exchange over a period of years, or he did know and refused to say anything about it for fear of a run on the exchange. This information will likely come out in the court case.

Karpelès US Tour

Karpelès isn’t just being sued in Pennsylvania. Around the same time as the verdict in his embezzlement case was revealed in March, the Illinois Northern District Court announced that a civil case brought by former Mt. Gox customers Gregory Greene and Anthony Motto would go ahead after rejecting Karpelès’ argument that the court didn’t have jurisdiction over him.

Sound familiar? Judge Gary Feinerman noted in his dismissal of Karpelès request that Greene and Motto’s contacts with the exchange were the product of Mt. Gox’s virtual presence in Illinois, given that some 7,056, or about 1.5%, of the addresses associated with Mt. Gox accounts came from Illinois. All in all, it looks like Mark Karpelès might be a free man in Japan, but he’s going to be spending a fair bit of the next 12-19 months in the USA.