U.S. class action over bitcoin losses names Mizuho as defendant

Sat Mar 15, 2014 11:14am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Tom Hals

(Reuters) - One of Japan's largest lenders, Mizuho Bank Ltd, has became ensnared in the U.S. legal fallout from the collapse Mt. Gox, the leading bitcoin exchange that lost more than $400 million of customers' digital currency.

The Japanese bank was added as a defendant on Friday to an existing lawsuit against Mt. Gox for allegedly aiding in a fraud by providing banking services to the exchange.

Mizuho held non-bitcoin currency on behalf of Tokyo-based Mt. Gox and its customers, according to the amended complaint by Gregory Greene, an Illinois resident who has said he lost $25,000 when Mt. Gox shut down last month.

Mt. Gox said in February it may have lost 750,000 of its customers' bitcoins in a hacking attack and filed for bankruptcy in Tokyo. Customers have suspected a massive fraud.

The company filed for a U.S. Chapter 15 bankruptcy on Monday, which shielded the company from lawsuits in U.S. courts. Canadian bitcoin traders filed a class action against Mt. Gox and Mizuho on Friday in the Ontario Superior Court of Justice.

The amended U.S. class action complaint was filed in Chicago federal court. It accused Mizuho of knowing of Mt. Gox's fraud, of not segregating funds that belong to Mt. Gox from those of its customers and of continuing to provide banking services that inflated losses for bitcoin customers.

"Mizuho profited from the fraud," said the complaint.

Mizuho seemed to be trying to distance itself from Mt. Gox in January, according to a recording of a conversation between the bank and Mt. Gox's chief executive, Mark Karpeles, that was published by the Wall Street Journal.   Continued...

Some of Bitcoin enthusiast Mike Caldwell's coins in this photo illustration at his office in Sandy, Utah, September 17, 2013. REUTERS/Jim Urquhart