Mark Karpeles, the former CEO of bankrupt bitcoin exchange Mt. Gox, has been refused a motion to stay a U.S. court case brought by former investors.
Earlier this week, Karpeles had filed the motion to stay in “light of ongoing civil rehabilitation proceedings in Japan that are likely to provide full recovery” to the plaintiffs, Gregory Greene and Anthony Motto. The plaintiffs brought the case saying that they hold Karpeles “personally liable” for any losses they occurred from their investments in bitcoin made through Mt. Gox.
Judge Gary Feinerman of the Northern District of Illinois court ruled Thursday, however, that Karpeles’s motion is denied.
Mt. Gox officially filed for liquidation in April 2014 after claiming to have been hacked for 850,000 bitcoins, although some was later found in a “forgotten” wallet.
In his motion, Karpeles said that “through a series of events, notably the recovery of a significant amount of lost bitcoins and the rise in the value of bitcoins, the likelihood that Plaintiffs and others will obtain a full recovery in Mt. Gox’s Japanese legal proceedings is high.”
“In light of the status of the Japanese proceedings, this case should be stayed in order to conserve judicial resources and to preclude unnecessary legal expenses.”
Following the judge’s denial, a status hearing will now be held on May 1.
Karpeles is also facing a court case in Japan, where prosecutors are seeking a 10-year sentence for embezzlement over claims he used about $3 million of customers’ funds for his own personal use, among other allegations. In his closing arguments in a Tokyo court in December 2018, Karpeles restated his innocence in the case.
Earlier last year, he apologized for the company’s bankruptcy, saying, “I never imagined things would end this way and I am forever sorry for everything that’s taken place and all the effect it had on everyone involved.”
The defunct exchange first opened up the claims process for creditors last August, after the Japanese bankruptcy court overseeing the proceedings shifted the case to one of civil rehabilitation. That ruling meant creditors could file for their original cryptocurrency holdings, rather than a fiat equivalent based on crypto prices in 2014. The deadline for claims has now passed.
Mark Karpeles image via CoinDesk archives