Former customers of ill-fated Bitcoin exchange Mt. Gox have secured an important win at the California Central District Court in a case targeting Mizuho Bank, which has been accused of creating transaction difficulties for MtGox’s customers, thus causing them to suffer losses.
Mizuho has tried to rebuff the claims but, according to documents recently filed with the Court and seen by FinanceFeeds, the bank could not dismiss the motion against it, as the Court agreed that the plaintiffs’ claims about Mizuho’s fraudulent concealment are plausible.
Let’s recall what the case is about.
On January 24, 2018, plaintiff Joseph Lack filed a putative class action complaint on behalf of himself and others similarly situated against Mark Karpeles and Mizuho Bank Ltd. In the complaint, Lack alleges claims against Karpeles and Mizuho related to the 2014 collapse of the Mt. Gox Bitcoin exchange.
In or around 2013, Mizuho became concerned by Mt. Gox’s growing transaction volumes and reports that US authorities were investigating Mt. Gox for money laundering. Mizuho wanted to distance itself from Mt. Gox and sought to end its business relationship with the exchange. But to avoid reputational harm, avoid regulatory scrutiny, and continue accepting transaction fees, Mizuho wanted Mt. Gox to be the one to terminate the relationship.
When Karpeles refused to close Mt. Gox’s account at Mizuho, the bank instituted a series of policies it kept secret from the public that were designed to frustrate Mizuho’s relationship with Mt. Gox. Thus, Mizuho sharply limited and then ultimately stopped processing international wire withdrawals from Mt.Gox’s Mizuho account. Mizuho, however, continued to accept international cash deposits into the Mt. Gox account.
In January 2014, plaintiff Joseph Lack, a resident of California, joined Mt. Gox. Upon joining, Lack wired $40,000 to Mt.Gox’s Mizuho account. Mizuho accepted the transfer and collected the transaction fee. On February 24, 2014, the website of the exchange went dark. Lack waited in vain for his deposit to appear in his Mt Gox account. He did not succeed in getting his money back.
Accordingly, Lack brought an action against Karpeles and Mizuho.
As per the recent court filings, the Court finds that Lack plausibly alleges that Mizuho had a duty to disclose material information to Lack. Also, Lack plausibly alleges that Mizuho intended to defraud him by concealing that the bank was no longer accepting withdrawal requests. Furthermore, the plaintiff plausibly alleges that Mizuho caused him damage.
Thus, the Court denied Mizuho’s motion to dismiss the fraudulent concealment claim against the bank.
The case, captioned Joseph Lack v. Mizuho Bank, Ltd., et al (2:18-cv-00617), continues at the California Central District Court.
The post Court agrees with ex-MtGox customers about Mizuho’s fraudulent concealment of material info appeared first on FinanceFeeds.