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eClass action lawsuit accuses Mt. Gox of “substandard” security

eClass action lawsuit accuses Mt. Gox of substandard security

One of many enthusiasts in late 2011, Gregory Greene had found the Mt. Gox exchange while searching for ways to take part in the Bitcoin revolution. After reading the public commitment for the security of the transactions on their website, he was confident in their ability to protect his potential investment. Back then the exchange had 80% of all bitcoin transactions and Greene transferred US dollars to his account, after which he used their services to obtain bitcoins for them.


This description is included in the first class action lawsuit that has been filed with the Northern District of Illinois, US District court, against the Mt. Gox exchange which is based in Tokyo. Late last week after the collapse of the exchange, its CEO, Mark Karpeles, filed for bankruptcy in Japan.


The suit claims that the exchange “was in breach of its contract with the plaintiff and payment class by failing to protect their bitcoins and Fiat currency in an effective manner. Had Mr Greene known of the substandard security of the exchange, he would have paid less for their services, or not paid at all.”


Mt. Gox chief Karpeles announced last week that a loss of 850,000 bitcoins had taken place, which equates to theft of $475 million at today’s price.


The suit goes on with the accusation that “even worse, despite his repeated attempts, he was unable to withdraw his money from Mt. Gox since early February 2014, effectively losing his bitcoins with a present value of $25,000. The exchange was unable to provide its services to store and protect the bitcoins and it’s shutdown caused a sharp decline in the market value of the online currency.” Before the closing of the exchange on the Feb. 7 Greene’s bitcoins were double the value they are presently.


The Edelson law firm from Denver, Colorado are Greene’s representatives and on their page in Facebook they have reached out to other potential Mt. Gox victims, asking them to join the plaintiff class. “Our class action lawsuit against Mt. Gox is in the media! Contact us if you’ve suffered losses by the shutdown of the exchange,” the firm stated.