By Mark Verstraete — Edited by Sarah O’Loughlin
Greene v. MtGox Inc., No. 1:14-cv-1437 (N.D. Ill. Feb. 27, 2014)
Complaint hosted by Scribd
Joyce . MtGox Inc. (Mar. 14, 2014), No. cv-14-500253-00CP (Can. Ont. Sup. Ct. J.)
Complaint hosted by Ars Technica
Putative class action suits have been filed against Mt. Gox—the now defunct online bitcoin exchange—in both the United States and Canada. In Febrauary 2014, Mt. Gox halted withdrawals after being hit with a sustained distributed denial-of-service (DDoS) attack. Several days later, it filed for bankruptcy when 850,000 bitcoins were stolen.
The U.S. suit, Greene v. MtGox Inc., No. 1:14-cv-1437 (N.D. Ill. Feb. 27, 2014), proposes two classes of Plaintiffs:
(1) “Payment Class: All persons in the United States who paid a fee to Mt. Gox to buy, sell, or otherwise trade bitcoins.”
(2) “Frozen Currency Class: All persons in the United States who had bitcoins or Fiat Currency stored with Mt. Gox on February 7, 2014.”
Complaint, Greene, at 10. The two proposed classes allege several causes of action against Mt. Gox, including consumer fraud, negligence, and conversion. In their negligence claim against Mt. Gox, the plaintiffs allege that Mt. Gox breached its “duty to employ procedures to detect and prevent the improper access and misuse of Plaintiff’s and the Classes’ bitcoins,” and that this breach caused the “Plaintiff and the Payment Class [to] suffer economic injury and other damages.” Id. at 19.
In Canada, a proposed class action suit was filed on March 14, 2014 in the Ontario Superior Court of Justice. Joyce . MtGox Inc. (Mar. 14, 2014), No. cv-14-500253-00CP (Can. Ont. Sup. Ct. J.). In their complaint, the plaintiffs request “damages in the amount of $500,000,000 or such other sum as this Honourable Court finds appropriate.” Complaint, Joyce, at 4.
The complaint alleges that in February 2014, Mt. Gox halted all withdrawals from its Bitcoin exchange but continued to allow users to transfer Bitcoin and other currency into their accounts. Over the next few weeks, news reports revealed a security breach that had affected Mt. Gox. “After this news broke, the price of bitcoins plummeted, creating a disruptive ripple effect that has nearly shut down the industry and left Mt. Gox users unable to trade bitcoins and cut their losses against a falling market if they wished to do so.” Id. at 7. The plaintiffs further allege that Mt. Gox “users’ currency has been converted and captured by the Mt. Gox Defendants for their own purposes.” Id.