Mark Karpeles, the former CEO of defunct exchange Mt Gox, appealed to the U.S. federal judge in the state of Illinois to drop the fraud lawsuit filed by his former customers, citing that the U.S. court’s jurisdiction on his person doesn’t extend to Japan.
Representatives of Karpeles spoke with U.S. District Court Judge Gary Feinerman and stated that their client has insufficient relations in Illinois, and his business did not operate in the state to explain a lawsuit which accused the ex-CEO of conversion, negligence, and fraud, as stated in Law360.
The accusations are derived from the bankruptcy which Mt. Gox went through due to a hacking incident and an alleged embezzlement in 2014. In the hack, nearly one million bitcoins were stolen from, an amount which was worth at the time $400 million and almost 7 billion by today’s prices.
The Frenchman now lives in Japan and is facing an entry of default claim after Judge Feinerman directed the court appoint the former CEO as the principal respondent in the customer claims case.
Karpeles was given time until Friday, August 24, to counter the request for entry of default at a hearing which was programmed to happen on Tuesday, August 28. On that exact date, Karpeles’ attorneys submitted a motion to discharge the case, stating that he lacked the “minimum contacts” required for establishing ties in the state.
A passage from the motion read the following:
“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.”
Mt Gox creditors have been requested to file settlement claims with a deadline on October 22.
“Plaintiffs bear the burden of establishing personal jurisdiction,” Karpeles stated in his motion.“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 added that, “[nor] alleged injury arise out of the defendant’s forum-related activities.”
Also, Mt. Gox trustee Nobuaki Kobayashi, who is in charge of handling the customer reimbursement process, established last week an online system where customers can file claims for their lost Mt. Gox funds from four years ago.
The estate has in its possession 137,891 bitcoins, which is currently valued at $950 million. The creditors of the exchange have drawn a revised reimbursement plan earlier this month. All accepted and rejected claims submitted until October 22, 2018, will be publicised by the trustee on January 24, 2019.