The Tokyo District Court on Wednesday dismissed a lawsuit by a man seeking repayment for bitcoins he kept in an account at the bankrupt exchange Mt. Gox Co., with the ruling saying the virtual currency is “not subject to ownership” claims.
Last June, the Kyoto resident had 458 bitcoins worth around ¥31 million in an account with Mt. Gox, the Tokyo-based exchange that filed for bankruptcy protection from creditors in February after claiming that tens of millions of dollars worth of the virtual currency and client funds disappeared from its computer system.
Its CEO, Mark Karpeles, was arrested by Tokyo police last week for allegedly inflating his personal account by manipulating virtual currency data.
At the Tokyo court, the plaintiff challenged the bankruptcy receiver of Mt. Gox without representation by a legal professional.
A lawyer closely following the Mt. Gox affair said: “It will be difficult to simply seek to refund (bitcoins) under law. You have to consider a lawsuit from a different legal perspective.”
Presiding Judge Masumi Kurachi said the Civil Code envisages proprietorship for tangible entities that occupy space and allow for exclusive control over them.
The judge said it is evident bitcoins do not possess the properties of tangible entities and acknowledged that they also do not offer exclusive control because transactions between users are structured in such a way that calls for the involvement of a third party.
Following Mt. Gox’s bankruptcy, some Mt. Gox clients have filed civil lawsuits seeking damages, arguing that the exchange was negligent in properly managing the system, in place of demanding a refund of the bitcoins they held in their accounts.
Many customers have also joined the bankruptcy proceedings as creditors, hoping for some repayments from what is left of Mt. Gox’s assets.
On Wednesday, investigative sources alleged that Karpeles, a 30-year-old French national, told his lawyer that the accounts under his name in the company’s system were also used for corporate business.
Karpeles was arrested on Saturday for allegedly padding his dollar accounts with the exchange by $1 million. He has denied the allegations leveled by Tokyo police.