Judge Rejected Class Certification From Clients Of Mt Gox Fraud Lawsuit

A Judge rejected class certification from clients of the defunct Japanese BTC Exchange Mt Gox which was forced into bankruptcy in 2014 after the major hack that we reported about in our previous crypto news.

A federal judge rejected class certification from the Mt. Gox clients as he made the declaration in the US District Court for the Northern District of Illinois saying it will require 30,000 mini-trials to find otherwise. The move handed a victory to the Mt Gox CEO Mark Karpeles who argued that a compensation plan in Japan will serve better than litigation in the United States. Before the class action lawsuit is able to proceed, the class has to be certified which ensures that the plaintiffs have enough similarities to proceed with the litigation against the defendant as a part of the larger case.

The judge reasoned that the lead plaintiff’s theory about the fraud in the $400 million suits turned on the Karpeles drafting and the dissemination of the Mt Gox terms of the alleged mass-interpenetration according to Law 360. Greene opened an account with Mt Gox in 2012 and claimed to have relied on the representation made in the exchange’s terms of the service in assessing the security of the platform. During the deposition in June 2018, Green noted that he was not able to remember the terms displayed on the website as the judge argued that whether the users understand root the contents of the terms of services cannot yield the common answer across all over or most of the cases.

The class action cannot be certified unless there are similar occasions for all of the plaintiffs as Judge Feinerman added:

“No reasonable fact-finder could simply assume that all or most of those users read or otherwise learned of the terms.”

He added that even if the users were aware of the terms, it doesn’t mean most of them understood that they allegedly promised the way Gerene did:

“Holding over 30,000 mini-trials to determine how each class member understood, and whether each class member relied upon a contract they accepted nearly a decade ago would present insurmountable difficulties.”

This is the Mt. Gox customers’ second attempt at obtaining the class certification following the rejection in 2018 by Judge Feinerman stated that the testimony from the lead plaintiff showed he was too vulnerable to the unique defense. The lawsuit resulted from the shutdown of Mt. Gox in 2014 which came after it admitted that it lost $400 million in BTC while Karpeles was acquitted of the embezzlement charges but then found guilty of tampering with the financial records.