Mt. Gox CEO's motion to dismiss is denied

Quick Takes

  • Motto v. Karpeles
  • The Court’s opinion denies a motion to dismiss filed by the Mt. Gox’s CEO on personal jurisdiction ground
  • Plaintiffs sued Karpeles for losses that they suffered after the exchange “went dark.”
  • This lawsuit will stay in Illinois federal court and proceed against Mark Karpeles personally

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP". This week’s guest post by Preston Byrne is “PJB”

[related id=1]Motto v. Karpeles, 2019 U.S. Dist. LEXIS 39254 (N.D. Il., March 12, 2019). [SDP]

Litigation has a long tail, class actions in particular. This opinion deals with the Mt. Gox cryptocurrency exchange collapse in February 2014, and denies a motion to dismiss filed by the company’s CEO on personal jurisdiction ground.

Mark Karpeles was Mt. Gox’s President and CEO. Per the opinion (which relies on the complaint) As Mt. Gox’s President and CEO, Karpeles “controlled all aspects of Mt. Gox’s business from the ground up,” including software design and operation, public and customer interactions, and accounting practices. However, Karpeles was not responsible for “Mt. Gox’s day-to-day accounting” and did not personally respond to Motto’s and Greene’s communications to Mt. Gox. Karpeles also never made any specific decision to operate in Illinois and was unaware of which or how many Mt. Gox accounts were associated with Illinois.” (Note — the Court treats all of the allegations in the Complaint as true for purposes of this kind of motion. They haven’t been fully litigated yet, so they are all still allegations and it remains possible that the Plaintiffs will be unable to convince a judge or jury that they are true).

Plaintiffs sued Karpeles for losses they suffered after the exchange “went dark.” They alleged that he misrepresented the security and stability of the exchange and plead state claims arising out of the exchange’s collapse. It went to bankruptcy in Japan, and Karpeles was arrested by Japanese police and “[d]ue to these criminal proceedings [is] currently prohibited from leaving the country.”

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