Mark Karpeles to face fraud lawsuit from 2014

Published by:
Posted on: June 18, 2020 6:14 pm EDT

The former leader of the mangled Mt. Gox exchange won’t escape justice

Former Mt. Gox CEO Mark Karpeles tried to file a summary judgment request for a pending court case in US District Court to prevent a trial for fraud, which has been dismissed by a judge. Karpeles was trying to avoid a 2014 lawsuit in which he is being accused of fraudulent misrepresentation, and the judge who heard his request has stated that the former CEO of the now-defunct exchange must face the case against the sole remaining plaintiff, Gregory Greene.

Two days ago, US District Judge Gary Feinerman rejected the motion presented by Karpeles for summary judgment. This means that the defendant’s assertion that the only plaintiff has altered his argument against him and that brought a host of new allegations. Feinerman had a different opinion and stated that “Greene merely added detail with the aid of discovery,” and that the complaint has “articulated the gist of the fraud of the claim.” The judge added that this action “does not violate the rule against altering the factual basis of a claim on summary judgment.”

The plaintiff opened an account first at Mt. Gox back in 2012, relying on the exchange’s terms of service regarding the platform’s security. Greene noted that he could not “remember” what those terms were, but the suit claims that Karpeles lied on the declarations regarding the safety of the users’ funds; the terms of service said that the platform will securely custody clients’ assets, including “safely and quickly allow[ing] them to buy, sell, trade, or withdraw.”

Karpeles said that Greene’s complaint does not mention a specific term of use. He added that, in fact, there were no terms of service at the time that the plaintiff opened his account and began depositing.