Japan’s Mizuho Bank Faces Lawsuit From Now-Defunct Mt. Gox Exchange User
Japan’s Mizuho Bank is Facing a Lawsuit from a Mt. Gox Customer
Japanese financial giant Mizuho Bank is being sued by a former Mt. Gox customer. According to Japanese reports and Bitcoin.com, Mizuho Bank is being accused of causing difficulties for Mt. Gox customers as they sought to withdraw their funds after the exchange collapsed.
Mizuho Bank was the banking partner used by Mt. Gox in Japan. Customers would send their money to the Mt. Gox account, with deposits and withdrawals handled by Mizuho Bank.
According to the lawsuit, Mizuho Bank stopped processing Mt. Gox withdrawals, but continued to accept deposits right before the exchange went under. In other words, customers were permitted to put funds into the platform but were not permitted to withdraw funds from the platform.
The lawsuit has been filed by several former Mt. Gox clients, who claim the Japanese bank has been secretive about its relationship with Mt. Gox.
Mt. Gox reportedly used Mizuho as its bank of choice. As Mt. Gox was going under, exchange CEO Mark Karpeles allegedly decided to keep the bank account open, and the bank tied to Mt. Gox continued to accept deposits.
The case specifically involves Joseph Lack, a California resident who sent $40,000 to the Mt. Gox account held by Mizuho Bank in January 2014.
The financial institution accepted the transfer. One month later, Mt. Gox went down and never came back up.
Lack recently completed an interview with Finance Feeds where he explained his side of the story – including why he feels he’s owed compensation.
Lack claims Mizuho Bank committed “fraud” by not processing withdrawals, although the institution continued to accept customer funds through wire deposits, earning transaction fees in the process. Lack claims the bank should have taken active measures to prevent withdrawals, instead of profiting from the exchange’s vulnerable customers as it collapsed.
Mizuho Bank Denies Allegation
Mizuho Bank has denied the allegations, claiming they were only passively accepting deposits – and not actively engaging in deception. However, the Japanese bank has so far been unable to get the case dismissed in the United States.
Thus far, the California court has sided with Lack, and that court has denied Mizuho’s decision to dismiss the case.
Mizuho doesn’t deny their involvement with Mt. Gox. They seem to be denying that what they did wasn’t criminal: they were passively accepting customer deposits and were not taking active steps to deceive customers:
“To accept a wire transfer is passive conduct, especially because, by its nature, a wire transfer is not a communication between people, but just a transmission of information electronically from a machine at one bank to a machine at another. Indeed, Lack is not alleged to have had any direct contact with Mizuho.”
Lack claims the bank should not have stayed silent, and he believes it was the bank’s obligation to stop accepting deposits.
The case, called Joseph Lack v. Mizuho Bank, could lead to an important decision. It’s estimated that 30,000 customers using the Mizuho account with Mt. Gox were residents of the United States. It seems likely that some of these customers lost more than the $40,000 lost by Lack.
For now, the case will proceed through the California court. We’ll keep you updated on the Mizuho Bank lawsuit and the Mt. Gox account dispute as it moves forward.