Founder of failed crypto exchange, Mt Gox, hit with lawsuit over management

27 Jun, 2019 | Updated: 27 Jun, 2019
by Colin Hawkins
News
Founder of failed crypto exchange, Mt Gox, hit with lawsuit over management

Mt. Gox founder, Jed McCaleb, is facing a lawsuit over his managing of the failed crypto exchange.

Former traders from the platform, Joseph Jones and Peter Steinmetz alleged that McCaleb’s representation of the exchange was fraudulent and negligent. They blame this misleading behavior on why they lost their Bitcoin when the exchange was hacked in 2014.

Launched in July 2010, the Mt. Gox crypto exchange was hacked in February 2014, with losses of around 850,000 BTC. This was the equivalent to $400 million at the time.

The complaints by the former traders were submitted on May 19 to a California court, and claim that the exchange was already suffering from safety issues in January 2011, one year after their launch. These safety issues include two security breaches, which resulted in the loss of “thousands of a Mt. Gox user’s Bitcoin.” They claim that even though McCaleb was immediately made aware of the incident, he did not publicly disclose the hack or take action of any kind.

An excerpt from the complaint goes into more details on the allegations:

“Plaintiffs are further informed and on that basis allege, that McCaleb schemed with Karpeles about how to deal with the missing 80,000 Bitcoin and given the fact that Mt. Gox was already profitable in early 2011, that Mt. Gox would be able to easily recover or account for the missing 80,000 Bitcoin. These Bitcoin, and hundreds of thousands of more Bitcoin would either be stolen, lost, or otherwise, and never recovered by Mt. Gox.”

The full complaint can be viewed below:

Steinmetz, Jones v.s. McCaleb by on Scribd

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Read more about: Mt. Gox Jed McCaleb

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