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Mt Gox Founder Slapped with Lawsuits

June 26, 2019 16:42
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The saga of now defunct cryptocurrency exchange, Mt Gox, is far from over. The Chief Executive Officer (CEO) of the exchange, Jed McCaleb, is now facing more lawsuits over his handling of the fracas.

News portal, Nasdaq, stated two plaintiffs Joseph Jones and Peter Steinmetz, filed a complaint with a court in California on May 19, accusing McCaleb of “fraudulent” and “negligent” misrepresentation of the exchange, which partially led to their loss of bitcoin when Mt. Gox suffered a major hack in 2014.

Earlier this year in March, the other CEO of the now-defunct exchange, Mark Kapelès, the person in the eye of the storm, was given a suspended sentence by a court on Friday. Prosecutors of a Japanese court had petitioned Kapeles to be sentenced to 10 years in prison under charges of embezzlement and fraud.

This is not the first time, such a request has been put forward by the prosecutors. To provide a little context to this case: Mt. Gox exchange filed for bankruptcy in 2014, when its security was breached and millions of dollars worth Bitcoins were lost sometime in 2011-12. As earlier reported by Crypto-News India, at the time, the exchange still had a lot of funds which were seized by the government and is controlled by a trustee now. This trustee is responsible for overseeing redistribution of assets to creditors.

The news portal, reported that the plaintiffs alleged that safety issues had already existed at Mt. Gox as early as January 2011, when two security breaches led to the loss of “thousands of a Mt. Gox user’s bitcoin.” While McCaleb was immediately aware of the issue, he still took no follow-up action and did not make the hack public.

The complaint read, “Rather than inform the public that these users were not refunded, nor stay to repair the security issues, McCaleb sold a majority of his interest in Mt. Gox to Mark Karpeles.”

Karpeles was let off the hook, despite evidence to the contrary.


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