Mt. Gox Civil Suit Sees Japan’s Mizuho Bank Try to Stall Lawsuit to Compensation Crypto Investors
Mt. Gox Civil Suit Continues: Mizuho Bank Seeks To Delay Lawsuit To Await Compensation Outcome
The fight over Mt. Gox compensation continues this week. The latest news from the Mt. Gox debacle is that US investors and Japan’s Mizuho Bank have jointly asked a federal court in California to stay a case where the financial institution is being sued for creating transaction difficulties for users as Mt. Gox was collapsing.
Earlier this year, it was reported that Japan’s Mizuho Bank had made it difficult for customers to withdraw money from their Mt. Gox accounts as the exchange was collapsing.
One specific individual, Joseph Lack of California, sent $40,000 to the Mt. Gox bank account with Mizuho Bank. Mizuho Bank accepted the money transfer, but they did not allow Lack or any other customers to withdraw their money. Mt. Gox collapsed soon after.
Because of Mizuho Bank, customers were allegedly unable to withdraw funds from the Mt. Gox account with Mizuho Bank. Customers eventually lost their money when the exchange declared bankruptcy a few weeks later.
As reported by Reuters, lawyers for the plaintiffs are asking for a stay in the Mizuho Bank case until February 28, 2019. Mizuho Bank is also asking to delay the case.
The delay will give time for both the plaintiffs and the defendants to get a clearer picture over the Mt. Gox compensation debate. By February, we’ll know if plaintiffs are going to be compensated fully or partially for losses incurred during the collapse of Mt. Gox.
The Mt. Gox Trustee Has Raised $600 Million to Pay Back Mt. Gox Users
Mt. Gox was once the biggest exchange in the bitcoin community. Then, in 2014, the exchange discovered that hundreds of thousands of its bitcoins had been quietly siphoned away. The exchange collapsed soon after. Ever since, the case has been making its way through courtrooms in Tokyo and California.
Plaintiffs are expecting to receive compensation from the fallen exchange either partially or fully. This compensation comes from the Mt. Gox bankruptcy trustee, Nobuaki Kobayashi, who last month claimed that he had raised over $617 million USD by selling bitcoins that formerly belonged to Mt. Gox.
The bitcoins sold by the trustee were among the 200,000 bitcoins recovered by Mt. Gox soon after the hack was discovered. The exchange still lost approximately 600,000 bitcoins during the attack.
The $617 million of compensation is expected to be sufficient to pay claims from plaintiffs in full – not partially as was previously reported. The Mt. Gox trustee reportedly sold the bitcoins in a period from January to March 2018, which some believe is the reason why the price of bitcoin slumped during this period.
While the trustee has already raised $617 million, there are still more than 137,000 bitcoins in the Mt. Gox estate. These bitcoins are being reserved for additional clients who may still come forward.
If you lost bitcoins in the Mt. Gox attack, then you have until October 22 to lodge a claim. The trustee has acknowledged that claims could be approved by January 24, 2019. A proposed rehabilitation plan is expected to be submitted by February – which is why Mizuho Bank and plaintiff Joseph Lack are seeking to delay the civil suit until February.
Lack, a resident of California, claims to have lost $40,000 during the collapse of Mt. Gox. Lack sent $40,000 to the exchange’s account with Mizuho Bank. That $40,000 never appeared in the Mt. Gox account, and Lack was never able to recover his money. The Mt. Gox exchange website became non-responsive soon after.
Lack’s lawsuit claims that Mizuho Bank defrauded him by hiding the fact that they were not processing withdrawal accounts. Mizuho Bank allegedly continued accepting deposits to the Mt. Gox bank account without warning consumers that they were no longer accepting withdrawal requests from that account.
In response to the lawsuit, Mizuho Bank has insisted that they accepted money transfers passively: the bank took no specific action to defraud customers. Thus, the bank argues it cannot technically be held liable for anything. The appeal from Mizuho Bank was denied by the California courtroom, which sided with Lack and his lawyers.
Ultimately, the Mizuho Bank lawsuit will likely be paused until early 2019 when the compensation plan for Mt. Gox users becomes clearer. You have until October 22 to file a compensation claim, and the full decision on compensation is expected to be made by January or February 2019.