New Ontario class action against Mt Gox

Plaintiffs keep rolling against defunct bitcoin exchange

On March 14th, lawyers for four plaintiffs filed suit in Toronto against Mt Gox, the bitcoin exchange embroiled in ongoing scandal. Defendants include several corporations in the Mt Gox Group of companies and Mark Karpeles, a majority shareholder in those companies and Mt Gox’s CEO.

The notice of action for the lawsuit is here.

Among other relief, the plaintiffs are seeking certification of the action as a class action under the Ontario Class Proceedings Act, 1992; their appointment as representative plaintiffs for the class; and, C$500M in damages. The proposed class in the proceeding includes all persons in Canada that paid a fee to Mt Gox to buy, sell, or trade bitcoins and all persons in Canada that had bitcoins or fiat money stored on Mt Gox on February 7th of this year. The plaintiffs thus far claim that they’re owed anywhere from a few thousand dollars to 100 bitcoins (close to C$70,000 at today’s exchange rate).

While counsel to the plaintiffs in this action don’t have a copy of the notice of action up on their website, they do have a presser up online. (It’s common for plaintiffs’ counsel to post communications like this both to communicate with and control the proposed class.) Canadian counsel appear to be working alongside the US firm that has brought a class proceeding against some of the same defendants in the U.S. District Court for the Northern District of Illinois and that obtained a temporary restraining order against those defendants on March 11th.

The notice of action contains the usual laundry list of alleged misdeeds including contractual breach, fraudulent and negligent misrepresentation, conversion, and unjust enrichment.

The Mt Gox defendants can be counted on to try to use its ongoing — and perhaps future — bankruptcy filings and proceedings to stay this and other litigation.

Most of the defendants seem to be outside of Canada and the United States. Those defendants will have 60 days to respond to the notice of action after service. Stay tuned to see what happens in this latest litigation round.