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Friday, December 8, 2023 | Back issues
Courthouse News Service Courthouse News Service

Mt. Gox Users Agree to Class-Action Settlement

(CN) - Americans and Canadians burned by Mt. Gox's collapse have agreed to settle class-action claims that the bitcoin exchange defrauded them out of hundreds of millions of dollars.

The plaintiffs of two class actions -- filed in the United States and Canada -- said they would support a plan for Sunlot Holdings to buy the defunct bitcoin exchange, once the world's largest.

Bitcoin is a digital currency introduced in early 2009, the same year Mt. Gox launched its online trading platform.

The Tokyo-based exchange shut down on Feb. 24, after announcing it had lost about 850,000 bitcoins, worth more than $400 million, in a security breach. It later claimed to have found 200,000 bitcoins.

Gregory Greene, lead plaintif of the U.S. lawsuit, accused Mt. Gox of taking customers' money despite knowing that hackers had infiltrated the system. The exchange froze withdrawals in early February while it purportedly investigated a "bug" or "technical glitch."

CEO Mark Karpeles knew about the security problems underlying the hackers' theft, according to the lawsuit, and "was and is aware that he and his co-defendants were wrongfully obtaining bitcoins for fiat currency by shutting down the Mt. Gox exchange and capturing its users' property."

Mt. Gox has since filed for bankruptcy in the United States and Japan, and was given temporary protection from U.S. lawsuits in March.

Bitcoin founder Jed McCaleb, former marketing chief Gonzague Gay-Bouchery and Sunlot agreed to the settlement proposed Monday without acknowledging any wrongdoing.

McCaleb and Gay-Bouchery will reportedly help the plaintiffs pursue claims against the remaining defendants, including MtGox Inc., Mt. Gox KK, Tibanne KK and Karpeles.

In return, the U.S. and Canadian plaintiffs agreed to a 16.5 percent stake in the exchange after it's reopened by Sunlot, an investment firm partially owned by former child actor Brock Pierce.

Sunlot reportedly offered to buy the exchange for one bitcoin, or less than $500.

The settlement would also divvy up the 200,000 bitcoins that Mt. Gox says it found and would give plaintiffs up to $20 million in fiat currency held by the exchange's administrator.

"This is the customers' best option and the only chance they have for full restitution," Jay Edelson, lead attorney in the U.S. case, told Reuters.

The settlement still needs the approval of the judges overseeing the cases in the United States and Canada.

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