Bitcoin Forum

It seems contrary to the spirit of bitcoin to resort to the courts over a purely commercial dispute. Absent some fraud or theft on the part of Gox, I would rather see this settled in private. That said, this raises the question of whether "exclusive license" means exclusive of the licensor...

Well they can definitely challenge the courts jurisdiction on the matter, and it would be up to CoinLab to prove that Mt. Gox was doing buisness in Seattle (Washington Western District).  It sounds like Mt. Gox doesn't want to sell off its US customer base, at least not yet.

7.  The Agreement provides that the Defendants “irrevocably consent to the personal jurisdiction of and venue in the state and federal courts located in King County, Washington with respect to any action, claim or proceeding arising out of or relating to this Agreement.”

8.  The Agreement provides that it shall be governed, construed and interpreted inaccordance with the laws of the State of Washington.

It is very unlikely they can challenge it successfully.  The contract contains a choice-of-forum provision specifying King County Washington and agrees to personal jurisdiction.

It's at least somewhat likely Gox can win there or anywhere, though.  We'll need to know more details before that can be judged, though.

Specifically:


Such choice-of-forum and choice-of-law provisions are routinely enforced.

Sounds as if coinlab just wants out of the contract. With all the problems with mtgox they are better off starting off from scratch. 60% of existing revenue from existing US costomers and 40% of new customers to go to mtgox is a pretty bad deal for coinlab when they can cobble up a much better exchange in the matter of weeks and take 100% of the profits.

Besides making many announcements and now suing Mt.Gox - have CoinLab actually helped Bitcoin in any way?

Have they done anything at all?

For such a clever group, I would expect more.

K. Liquidated Damages. Both Parties hereby agree that it may be impossible to determine the monetary harm
suffered by the non-breaching Party in the event that MtGox breaches section F.l or in the event that CoinLab breaches
section F.2 and that therefore, after careful consideration, the Parties agree that reasonable damages for such breach
shall be $50,000,000 USD, an amount the Parties agree is reasonable and fair given the nature of the Agreement

So either they did something brilliant or both teams should fire their attorneys because they are idiots.

I'm going with your second choice.

mtgox shot themselves in the foot on this one.

I'm surprised Gox has any foot left to shoot at all at this point...

I have more news on the Mt. Gox transition. Today, CoinLab regretfully filed a formal complaint in Federal Court against Mt. Gox.

In the last month, many of you have contacted me directly and asked for more details on our transition, and I would say (charitably) that I've been frustratingly vague -- I just haven't been able to talk about it.

I'm going to take this chance to talk about it. I'm not here to complain, our filing contains an accurate summary of events, but I want to talk about what I see as most important for Bitcoin right now.

Bitcoiners have, on average, lost more money due to technology difficulties, frozen / lost banking relationships and shady characters like pirateat40 than due to any part of Bitcoin's fundamental economics. I hate this fact, passionately. I have a vision in which high quality service and technology and ethics can be delivered to you, me, my kids, everyone who has a stake in Bitcoin.

It is my goal for CoinLab that we provide fundamental infrastructure to minimize these risks for everyone in our space, and I do mean everyone; from those on the Bitcoin Forums who dislike and distrust me personally, to the mom and pop cupcake makers in San Francisco, to my daughter who recently sold some knit products for .01BTC.

While I was willing to take a two year restriction on our venue (US and Canada only for two years was part of our contract), I have for a number of years now wanted to make sure that Bitcoin is properly situated for everyone's good.

When we spun up our initial alpha customers, they included companies that from one perspective could reasonably be deemed to be our competitors, some of the best companies in our space. We worked extremely hard to provide them great service, because I want to build our ecosystem; I want a robust economy and a broad base of service and product for everyone.

What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse; we were often left just apologizing to our alpha customers while their own businesses suffered. I'm just not willing to put any of our customers in that position -- if we can't do a good job for you, I won't promise that we can.

What I hope is that Mt. Gox has this same interest in the good of Bitcoin, and Bitcoiners, and finds a way to work this out.

So, what's next? I hope that we'll be able to provide some good news on that front soon, from a financing and technology perspective at the very least, and ideally with news that we've settled this dispute. In the interim, my biggest hope is that Mt. Gox does an excellent job keeping Bitcoiners safe and liquid and trading on the exchange.

Peter Vessenes

And the price of coin plummets....

Sorry, what? So, if I break into your house and steal the USB your private key is stored on (an example - I have no idea where you store your private key), you won't sue me or prosecute? You'll attempt to "settle in private", meaning you will ask for your money back, I'll laugh and ignore you?

What's your address?

Yeah, cash out of your coins into USD that MtGox holds lol.

When the market gets really crazy and bad news starts piling up, I don't try to profit anymore.  I'm happy with what I've made and can comfortably weather the storms.  No, the first thing I do is move my BTCs from exchanges into offline wallets.  I don't want them seized and I can move them so much more easily than USD.

best business ever.
start company, enter agreement,
not have it fulfilled
sue for 75 million.
retire

Precisely, emphatically, and wholeheartedly this ^^^.

The rest of my quote was cut off when I was quoted. I've added the rest of my quote back. The lol, is wtf are people doing that for? Selling all their coins for cash? If you're worried, sell your USD for cash and just like proudhon said, get them in your possession which bitcoin makes oh so wonderfully easy.

Holy shit. Who in their right mind would sign that when the section above in J shows year 1 and 2 being under a half million? It applies to both parties and is the stupidest thing they both ever signed. If anything, coinlabs put that in their. Their F2 is a 2 year thing, F1 is MtGox responsibility for the entire term. So either they did something brilliant or both teams should fire their attorneys because they are idiots.

Liquidated damages clauses in large transactions are routine.  Sun v. Microsoft, as one example, concerned in part a $35 million liquidated damages clause.

In this case, the clause might be unenforceable because the contract concerns a much smaller value than that between Sun and Microsoft, making the $50 million number more of a penalty than a way of simplifying the calculation of damages.  The purpose of contract law is not to award jackpots to lucky winners, but to put the non-breaching party in the position he would have been in had the contract been followed.

The purpose for this kind of clause is often, you don't trust who you are contracting with actually to carry out the agreement.  If Coinlab was acting in good faith (hard to know that yet), then the purpose of having such a big number is to have a big club to enforce compliance.  Gox was obviously stupid to sign an agreement with a clause like this and then not carry it out.  Coinlab might have been stupid, too, if they were the first to breach.

I doubt the $50 million number would be upheld.  It might be a Sword of Damocles, but it's a toy plastic sword.

Since yesterday is the first time I've actually had no bitcoins anywhere other than my own private offline wallets.  I've typically kept at least a little bit in online wallets or an exchange or two, but I think I'm done with that until this infrastructure matures more and I have more trust in third parties.

the CCCB would be able to provide protection for Mtgox if required for Bitcoin stability, and will be watching the matter very closely

Coinlab should just start their own NA exchange and move on,

They may actually be under some obligation to do so.  If part of the damages they are claiming will end up involving the loss of opportunity to participate in the BTC market, and they have already put money toward getting "legal," they have an obligation to mitigate their damages by finding another partner.  This might be tricky, as depending on how reasonable/unreasonable their claims in this case are, any potential partner may wonder if they're just going to get sued in a couple months after signing a contract.

It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.

Not just coinlab: "F.2. CoinLab shall not, directly or indirectly (including through legal entities ultimately owned by the same person or persons as CoinLab) provide services similar to the Services on any website". When I read the 'owned by the same persons' bit, my eyes kinda bugged out.  Unless I'm confused about the involved parties, I believe that coinlab may be in default. God knows how this contract would be read though. I imagine that a lot more context will be needed to actually ascertain the minds of the involved parties here.

It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.

If either of them wins the case, the contract basically no longer exists.  What I think might be justice in this case is if they find that both sides breached the contract, then enforce the liquidated damages clause against both of these chumps, so that the awards cancel each other out, and say both sides get to pay their own costs and fees.  That would serve them both right.

So is this just gonna be radio silence until we find out we've all been Corzined and our account balances were seized to satisfy the judgment?

I guess if that did happen we certainly shouldn't expect to hear any forewarning.

No, no court will seize other peoples money to pay MtGox' debt to the scammer Peter Vessenes and his gang.

Yes, we will.  First the U.S. court must conclude the case with a sentence, and MtGox must accept it (i.e. not appeal the judgement).  If MtGox don't pay in time, the scammers have to go to Japan and ask a japanese court to seize the money.

OK, this is going to be interesting...
Does anybody have background information on this:
Who was unwilling (not capable?) to fulfill their part of the agreement? Did MtGox i.e. intentionally take the risk of loosing 50+Mio%?

They may actually be under some obligation to do so.  If part of the damages they are claiming will end up involving the loss of opportunity to participate in the BTC market, and they have already put money toward getting "legal," they have an obligation to mitigate their damages by finding another partner.  This might be tricky, as depending on how reasonable/unreasonable their claims in this case are, any potential partner may wonder if they're just going to get sued in a couple months after signing a contract.

However, they can't just let their investment go to waste and complain about what victims they are and expect to get that investment fully paid by Gox.  That's not going to happen unless they do something to move into the market they claim they want to move into.  It's sort of like a large scale version of a typical mitigation case, where someone reneges on a lease and moves out and stops paying rent.  You don't just get to sit there and sue them and get the whole amount of the lost rent (unless the agreement provides for that).  You have to try to fill that space.  If you don't, you get either a reduced amount or perhaps even nothing.