Mark Karpeles has urged a U.S. federal judge in the state of Illinois to dismiss a fraud lawsuit brought on by former customers of the now-defunct bitcoin exchange Mt. Gox, by insisting that the U.S. court has no personal jurisdiction over him in Japan.
Representatives for Mark Karpeles told U.S. District Court Judge Gary Feinerman that their defendant has no sufficient ties in Illinois, nor did he conduct any business in the state to justify a lawsuit from disgruntled former customers in the state who have accused the former Mt. Gox CEO of conversion, negligence , and fraud, according to Law360.
The accusations are in relation to Mt. Gox’s bankruptcy as a result of hacking and alleged embezzlement in 2014. At the time, Mt Gox lost approximately one million bitcoins, worth around $400 million at the time and nearly 7 billion in current day prices.
A French national living in Japan, Karpeles faced an entry of default claim against him after Judge Feinerman directed the court to name the former CEO as the lead defendant in the customer claims case on Monday, August 13. Karpeles had until Friday, August 24, to oppose the request for entry of default for a hearing that was to be held on Tuesday, August 28. On the day of the deadline, attorneys for Karpeles filed a motion to dismiss the case, claiming he did not have the required ‘minimum contacts” of established ties in the state.
In an excerpt from his motion to dismiss the claims against him, his attorneys said:
“Mr. Karpeles expressly asserts that this Court lacks personal jurisdiction over him and preserves this objection and argument for all purposes…Because this Court lacks personal jurisdiction over Mr. Karpeles, this proceeding against him must be dismissed with no further actions taken, including but not limited to the entry of any default.”
“Plaintiffs bear the burden of establishing personal jurisdiction,” Karpeles said in his motion while arguing he shouldn’t’ be named in the suit. “Blanket, conclusory assertions that this court has personal jurisdiction are insufficient.”
“[He hasn’t] purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state,” Karpeles’ attorneys argued further, “[nor] alleged injury arise out of the defendant’s forum-related activities.”
Meanwhile, Mt. Gox trustee Nobuaki Kobayashi – the man overseeing the customer reimbursement process – launched an online claim filing system last week for customers to register claims of funds lost at Mt. Gox four years ago. The estate currently holds 137,891 bitcoins, a little over $950 million in value at press time. The exchange’s creditors have outlined a revised repayments plan earlier this month. A list of all accepted and rejected claims – filed before a deadline on October 22, 2018 – will be revealed by the trustee on January 24, 2019.