• Bloomberg


Mt. Gox Co. principal Mark Karpeles is beyond the reach of a U.S. court where he and the bankrupt bitcoin exchange are being sued for consumer fraud by two American depositors, his attorney told a federal judge.

Karpeles and Tibanne KK, another of his firms named in the lawsuit filed in Chicago federal court in February, will submit papers asking U.S. District Judge Gary Feinerman to rule he has no jurisdiction over them, defense lawyer Eric Macey said in court Monday.

Karpeles, who lives in Japan, has never been to the U.S. and was not properly served with the complaint that started the suit, Macey said after the proceeding. Feinerman gave the lawyer until April 28 to file papers making his arguments.

Once the world’s biggest bitcoin exchange, Mt. Gox filed for bankruptcy in Tokyo on Feb. 28 after announcing it could not account for more than 700,000 customers’ bitcoins plus 100,000 of its own and halted client withdrawals. The company has since said it located about 200,000 of the missing coins and that the balance, valued at more than $268 million, may have been stolen.

Each unit of the virtual currency was worth $446.83 as of Monday, according to the value-tracking website CoinDesk.

“We think there’s jurisdiction,” Jay Edelson, the depositors’ attorney, told Feinerman.

Depositors Gregory Greene of Illinois, who claims he lost access to about $25,000 worth of currency, and Joseph Lack, who allegedly lost about $40,000, have accused Tokyo-based Mt. Gox, its U.S. affiliate, Karpeles and Tibanne of fraud.

Mt. Gox filed papers March 9 at the U.S. bankruptcy court in Dallas seeking American court recognition of its status in Japan and temporarily preventing its pursuit by creditors in the U.S.

Feinerman last month said he will block the Chicago plaintiffs from proceeding against the Japanese business, while allowing them to move forward against the U.S. affiliate, Karpeles and other defendants.

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