Bitcoin traders settle class actions over failed Mt Gox exchange

Tue Apr 29, 2014 10:03am IST

Mark Karpeles (2nd L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014. REUTERS/Yuya Shino/Files

Mark Karpeles (2nd L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014.

Credit: Reuters/Yuya Shino/Files

Related Topics

Stocks

   

(Reuters) - U.S. and Canadian customers of failed Tokyo-based bitcoin exchange Mt. Gox have agreed to settle their proposed class action lawsuits that alleged the company defrauded them of hundreds of millions of dollars.

The class action plaintiffs agreed to support a plan by Sunlot Holdings to buy the shuttered exchange and accept their share of bitcoins still held by Mt. Gox, according to a statement and court filings.

Mt. Gox filed for bankruptcy in Japan and the United States earlier this year after saying it lost some 850,000 bitcoins - worth more than $400 million - in a hacking attack. It subsequently said it found 200,000 bitcoins.

"BEST OPTION"

Once the world's biggest bitcoin exchange, Mt. Gox is slated to be liquidated after the Tokyo District Court granted the company's request to abandon plans to revive its business.

In return for settling separate class actions, the U.S. and Canadian customers will share in a 16.5 percent stake after Mt. Gox is sold to Sunlot, a firm backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley.

Sunlot has proposed buying Mt. Gox for one bitcoin, or less than $500, according to the Wall Street Journal. A sale to Sunlot must be approved by the Tokyo court.

In addition, the customers will split the 200,000 bitcoins that Mt. Gox said it found after seeking bankruptcy protection, and they will split up to $20 million in fiat currency held by the administrator for Mt. Gox.

"This is the customers' best option and the only chance they have for full restitution," said a statement from Jay Edelson of the Edelson law firm, the lead attorney in the U.S. case.

The settlement releases Mt. Gox's founder, Jed McCaleb, and Gonzague Gay-Bouchery, once the exchange's chief marketing officer. The pair committed to help pursue the class action against the remaining defendants: Mt. Gox CEO Mark Karpeles, parent company Tibanne, the company's banking partner Mizuho Bank Ltd and others.

The settlement needs to be approved by the Canadian and U.S. courts overseeing the class actions cases.

The U.S. class action is Gregory Greene et al v Mt. Gox Inc et al; United States District Court, Northern District of Illinois, No. 14-01437

The Canadian class action is David Joyce et al v Mt. Gox Inc et al, Ontario Superior Court of Justice, CV-14-500253-00CP

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Ian Geoghegan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Reuters Showcase

Artificial Intelligence

Artificial Intelligence

Google bolsters artificial intelligence efforts, partners with Oxford.  Full Article 

Addressing Concerns

Addressing Concerns

China's Xiaomi shifts some smartphone user data out of Beijing on privacy concerns.  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

Apple-1 Auction

Apple-1 Auction

Early Apple computer sells for $905,000 at auction.  Full Article 

No More Nokia

No More Nokia

Microsoft looks set to drop Nokia name from smartphones.  Full Article 

Deal Talk

Deal Talk

Apple ponders sapphire options, leaves door open for GT.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage