Judge rejects class certification in $400M Mt Gox fraud lawsuit
A federal judge has rejected a bid for class certification from clients of the defunct Japanese Bitcoin exchange Mt. Gox, which was forced into bankruptcy in 2014 following a major hack.
Judge Gary Feinerman made the declaration in the U.S. District Court for the Northern District of Illinois on Tuesday, June 22 saying it would require 30,000 "mini-trials” to find otherwise.
The move handed a victory to former Mt. Gox CEO Mark Karpeles, who has argued that a compensation plan in Japan would serve better than litigation in the United States.
Before a class action lawsuit can proceed, the class must be certified which ensures that the plaintiffs have enough similarities to proceed with litigation against the defendant as part of one larger case.
Greene originally opened an account with Mt. Gox in early 2012, and claimed to have relied on representations made in the exchange’s terms of service in assessing the platform’s security.
During a deposition in June 2018, Greene noted that he could not “remember” the terms displayed on the website. The judge argued that whether 30,000 users read or understood the contents of the terms of service “cannot yield a common answer across all or even most of the class.”
In essence, the class action cannot be certified unless there are similar circumstances for all of the plaintiffs, 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 all or most Mt. Gox users were aware of the terms, that doesn't mean all or most understood what they allegedly promised the way Greene 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 class certification following a rejection in 2018 by Judge Feinerman stating at the time that testimony from the lead plaintiff showed he was too vulnerable to unique defenses.
The lawsuit resulted from the shutdown of Mt. Gox in February 2014, which came after it admitted that it had lost $400 million in BTC. In March 2019, Karpeles was acquitted of embezzlement charges but found guilty of tampering with financial records.
Back to the list