UK lawyer says ‘hundreds’ ready for bitcoin class action

By March 4, 2014Bitcoin Business
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UK lawyer says 'hundreds' ready for bitcoin class action

PARIS (Reuters) - More than 400 people have signaled they would join a class action against Mt. Gox, the world's biggest marketplace for the digital currency bitcoin before its abrupt collapse, British-based law firm Selachii said.

It would be the latest effort to try to recoup some of the $480 million in losses that Mt. Gox has blamed on a hacking attack that drove it into bankruptcy. The exchange is already being sued by a U.S. customer for alleged negligence and fraud.

Selachii has received over 400 expressions of interest in joining a class action, according to the law firm's co-founder Richard Howlett. After ending submissions on Friday the firm will tally the list of claimants and file a suit in London against the parent company of Mt. Gox, K K Tibanne, and Mt. Gox chief Mark Karpeles, he said.

"There are already over 400 people who are joining in ... From every country you can think of," Howlett said.

Neither Karpeles nor his lawyer were available to comment.

Class actions, also known as representative actions, are rare under English law. The court at first instance considered only two cases reported since the introduction of new rules in 2000, Thomson Reuters-owned legal publisher Practical Law said on its website.

Although Selachii's Howlett said it was still impossible to say what had really caused the collapse, he said the suit would focus on customer complaints about a lack of disclosure by the exchange and customer deposits made in the immediate run-up to its collapse.

"On the back of the Mt. Gox collapse a lot of people say they feel the truth is not being stated," Howlett said.

If Selachii does file the suit, it will be the firm's first class action. The benefits for claimants are that legal fees will be spread across a big number of people, Howlett said.

At a news conference on Friday at the Tokyo District Court, Karpeles said he was very sorry and blamed Mt. Gox's collapse on a "weakness in our system," but predicted that the bitcoin market would continue to grow.

Bitcoin, unlike conventional money, is bought and sold on a peer-to-peer network independent of central control. Its value has soared in the last year, and the total worth of bitcoins created is now about $7 billion.

Mt. Gox said it may have lost 750,000 of its customers' bitcoins and 100,000 of its own, equal to about 7 percent of bitcoins worldwide, for a total loss of about $480 million.

The exchange reported having 127,000 creditors, liabilities of 6.5 billion yen ($64 million) and assets of 3.84 billion yen ($38 million).

Global regulators are also delving into the risks of bitcoin. Manhattan U.S. Attorney Preet Bharara has sent subpoenas to Mt. Gox and other exchanges to seek information on how they handled recent cyber attacks, a source familiar with the probe told Reuters last week.

"There are lots of unanswered questions," said Selachii's Howlett. "Some people have had their life savings disappear."

(Reporting by Lionel Laurent; Additional reporting by Ritsuko Ando in Tokyo; editing by Mark John and Jane Merriman)

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