Mark Karpeles, former CEO of the infamous and now defunct Mt. Gox crypto exchange, will have to face a 2014 lawsuit alleging fraud. 

Karpele’s legal team had requested a summary judgment, but that was dismissed earlier this week by US District Court Judge Gary Feinerman. 

The judge rejected Karpele’s assertion that the case’s sole remaining plaintiff, Gregory Greene, had altered his arguments and added many new allegations, concluding that Greene had merely “added detail with the aid of discovery.” 

Greene lost 42,9 Bitcoin (BTC) when Mt. Gox collapsed in early 2014, and alleges that Karpeles falsely represented how secure users’ funds were with the exchange. He alleges that Mt. Gox’s terms of service promised the platform would provide secure custody for clients’ assets, and allow them to “safely and quickly” bull, sell, trade and withdraw. 

However, Karpele has responded by saying that when Greene opened his account in early 2012, Mt. Gox didn’t even have any terms of service. 

At the time of Mt. Gox’s collapse, Greene’s BTC would have been worth around USD $26,000, but at today’s prices it would be worth nearly $404,000. 

On 14 March 2019, Karpeles was sentenced to 30 months in prison, suspended for 4 years, for falsifying data to inflate Mt. Gox’s holdings by $33.5M. He was however found not guilty of other charges including embezzlement and aggravated breach of trust. 

AYO.NEWS says:

The whole Mt. Gox fiasco is surely one of the lowest points in crypto history, and it seems rather desperate to argue the exchange had no terms of service as a defence. If Greene’s case is successful, it could well open the floodgates for more claims. 

Staying with crypto crime, yesterday we reported that Centra Tech founder Robert Farkas has pleaded guilty to a $25M ICO scam, and is facing up to 87 months in jail and a $250K fine. 

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