Mt.Gox Multi-plaintiff Suit

[Gyrsur]

*listen*

[Bungeegum]

I have €1700 at Mt. Gox, I'd like to join suit too, but I have 0 knowledge of how the legal system works 
I wanted to verify my account, but they denied multiple times (I'm not a native speaker and I'm from the EU) they took more than a month to react to my account verification demand. And when I asked for support in verifying my account, they took weeks to respond and weren't helpful at all...

I'm a college student, and that was most of my savings..

Can someone send me some links to learn about bankruptcy and suing for bankruptcy [and how the system works in the EU & Japan]

Any help/info is welcome. 

Check regularly on mtgox.com and read the faq's.
Join here http://www.mtgoxrecovery.com/ so you get the emails.

There should be in the future "a filing for proof of claims" which means you have to watch mtgox.com to file the claim by filling the document when necessary.

I've got $916 and 543btc left at gox to put things in perspective...don't eat yourself too much because of your 1700eur you still young and can make yours back easily and much more... just be optimistic and think positively and everything will work out. 

Cheers.

Thanks, you're right, I won't beat myself up because of it. I joined mtgoxrecovery.com. Thank you for posting the link!

Cheers.

[boumalo]

Was it really so that according to the TOS of Mt.Gox, the instant I deposit my BTC to them, it becomes their "assets" that they "owe" me, instead of "customer funds" that they must "safeguard" for me?

If this question is resolved in the only sane manner that it can be ("customer funds" unless EXPLICITLY otherwise stated), it also becomes clear why the contents of the safety deposit boxes are not auctioned when a bank becomes bankrupt, and your car is not sold if you were having it painted when the painting shop goes broke. Instead, you property is returned.

Anyone?

Simply put yes! It is how they justify all the regulations around the firms that provide a financial service or a money exchange (different regulations) when the simple market rule of the client choosing a safe bank to deposit its money would be more efficient

[Nagle]

Was it really so that according to the TOS of Mt.Gox, the instant I deposit my BTC to them, it becomes their "assets" that they "owe" me, instead of "customer funds" that they must "safeguard" for me?

If this question is resolved in the only sane manner that it can be ("customer funds" unless EXPLICITLY otherwise stated), it also becomes clear why the contents of the safety deposit boxes are not auctioned when a bank becomes bankrupt, and your car is not sold if you were having it painted when the painting shop goes broke. Instead, you property is returned.

Anyone?

It's a tough question. If Mt. Gox had been a licensed payment service under the Payment Services Act in Japan, then the money belongs to the customers, and if it "disappears", that's theft.  But Mt. Gox wasn't registered, and the Japan Financial Services Agency declined to claim jurisdiction.

If Mt. Gox had been a bank, then they would have been covered under the Japan Deposit Insurance Company policy up to Y10 million. But Mt. Gox wasn't a bank; they don't get that coverage.

I've seen legal opinions both ways on this. This matters; it determines whether Karpeles goes to jail, as well as the order of priority of creditors.

[rpietila]

I've seen legal opinions both ways on this. This matters; it determines whether Karpeles goes to jail, as well as the order of priority of creditors.

It is afaik even possible that the TOS are declared unenforceable by the court, so that they can just pool all the valuables that they find and distribute them without regard to owner, since they are commingled by Mark's actions anyway.

In every case, Mark should go to jail for blatantly breaking his own TOS by operating a ponzi with customer funds, and causing the situation where customer funds are not segregated.

[JorgeStolfi]

In some other thread, it was claimed that the liquidator will probably ignore whatever accounting MtGOX did internally, and consider only all your deposits into MtGOX minus all your withdrawals; converting dollar, euro, and BTC deposits/withdrawals to yen at the prevailing market rate at the time of the action.  If the balance is positive (you deposited more yen than you withdrew), then that is your cliam; if it is zero or negative, you have no claim and it would be pointless to apply.

Likewise the BTC in MtGOX wallets, and any other valuable assets, will probably be converted to yen by auction, and added to the bank account balances for the final distribution, proportional to the claims.

At least two people have confirmed that this is the standard procedure under US law (one pointed to Madoff's case as an example) and claimed that Japanese courts follow the same principle; and I haven't seen anyone disputing those claims.  

This is also arguably the "least unjust" criterion, and consistent with the general principle that lost opportunities and hypothetical profits ("if I had not given those BTC to MtGOX in September, I could be selling them today for 10'000$") are not actual losses in the eye of the law.  It has also many practical advantages, such as not depending on a database that may have been doctored: deposits and withdrawals, but not trades, can be confirmed by external sources.

EDIT: I presume however that the court will not consider people who had closed their accounts, or were covered by the clause in the TOS that allows MtGOX to close any account that has been inactive for 6 months. (Someone claimed this clause exists, I haven't checked). 

[sturle]

This is also arguably the "least unjust" criterion, and consistent with the general principle that lost opportunities and hypothetical profits

Absurd.  Considering the fact that a lot of people were actively speculating in the bankruptsy of MtGox, and bought huge amounts of BTC (deposits) during the final days, this will be very unjust and opens for very simple pumping of claims.  E.g. if I moved the BTC from my bot account, which is made up entirely by trading profits (withdrawals >> deposits), and worth 0 in this kind of liquidation, to my verified account, I would turn a claim of 0 into a claim of a huge amount.  If final balances are used, this kind of cheating would be impossible because a nagetive balance is impossible.

The Madoff case isn't similar to MtGox at all, IMHO.  Try an online poker site bankruptsy instead.  Would someone who deposited a ton of USD years before the bankruptsy, and lost it all in poker, suddenly have a claim?  While the winners who didn't withdraw in time got nothing?

[rpietila]

It is true that Mt.Gox internal accounting already has many versions circulating in public. It should be clear to all the ordinary accountholders what their account balance is, but the Mt.Gox insiders may have just added huge balances to themselves, in addition to possible thefts of BTC and privileged withdrawals.

Needless to say, having a claims process that requires independent proof from individual accountholders concerning their account activities, is unfeasible no matter how fair it was.

The Mt.Gox situation cries foul play to high heaven, and unfortunately there is no easy way out regarding how to distribute what remains. The first thing should be to recognize that this is a criminal case and leave the estate untouched until the criminals are prosecuted.

[JorgeStolfi]

This is also arguably the "least unjust" criterion, and consistent with the general principle that lost opportunities and hypothetical profits

Absurd.  Considering the fact that a lot of people were actively speculating in the bankruptsy of MtGox, and bought huge amounts of BTC (deposits) during the final days, this will be very unjust and opens for very simple pumping of claims.  E.g. if I moved the BTC from my bot account, which is made up entirely by trading profits (withdrawals >> deposits), and worth 0 in this kind of liquidation, to my verified account, I would turn a claim of 0 into a claim of a huge amount.  If final balances are used, this kind of cheating would be impossible because a nagetive balance is impossible.

We already discussed this on another thread.  Doing that would be trying to defraud the court, like a furniture store claiming a debt that was actually paid.  If you were to claim 0 withdrawals (in writing, as part of a judicial procedure) and your bot account eventually got tied to you by the auditors, you would be in real trouble.

The Madoff case isn't similar to MtGox at all, IMHO.  Try an online poker site bankruptsy instead.  Would someone who deposited a ton of USD years before the bankruptsy, and lost it all in poker, suddenly have a claim?  While the winners who didn't withdraw in time got nothing?

It would be useful to have concrete examples of that, yes.

But I wonder whether poker site failures ever resulted in bankruptcy proceedings.  Such sites must have had very few assets left to pay for bankruptcy, and civil suits would not yield much.  Unless the owers could be charged with fraud, in which case their personal assets would be seized.

In an eventual bankruptcy of a poker site, the criterion must depend on how the court sees the deposits.  I am totally guessing now, but if the money you deposited is viewed as advance payment for the service of allowing you to play, then your claim would be proportional to the service that you paid for but did not get: namely, the total amount you deposited, minus the amount you withdrew, minus the total stake of the games that you got to play in the site.   So, if you deposited 50$, made 10 bets of 3$ each, and withdrew 15$, all before the site closed, then your claim would be 50 - (10 x 3) - 15 = 5$, irrespective of how the bets went.  This hypothetical criterion would probably result in very few positive claims.

[JorgeStolfi]

Needless to say, having a claims process that requires independent proof from individual accountholders concerning their account activities, is unfeasible no matter how fair it was.

But that is unfortunately necessary, and seems to be the standard way.  Large companies that go bankrupt may have thousands of creditors, some with hundreds of unpaid bills or undelivered products.

One advantage of the input-output criterion above is that the creditors would need to furnish proof only of their deposits (for which they must have got printed records), not for all their trades in the site; and then subtract the total withdrawals from that to get the claim amount.   Since one cannot prove a non-withdrawal, it should be the liquidator's task to check that the client did not withdraw more than what he stated.

The Mt.Gox situation cries foul play to high heaven, and unfortunately there is no easy way out regarding how to distribute what remains. The first thing should be to recognize that this is a criminal case and leave the estate untouched until the criminals are prosecuted.

I may be wrong, but it does not seem necessary to wait for the criminal case before distributing the remains to the creditros.  Any assets eventually seized from the criminals would be distribued at a later time, to the same creditors, in the same proportions.   Even if the criminal investigation finds that some clients were involved in the crime, their share could be seized back and distributed to the other creditors.  

In any case, from what I read, the owners and managers should not get anything, until all other claims are paid -- even if they are innocent.

EDIT: line break, "In any case"

[sturle]

This is also arguably the "least unjust" criterion, and consistent with the general principle that lost opportunities and hypothetical profits

Absurd.  Considering the fact that a lot of people were actively speculating in the bankruptsy of MtGox, and bought huge amounts of BTC (deposits) during the final days, this will be very unjust and opens for very simple pumping of claims.  E.g. if I moved the BTC from my bot account, which is made up entirely by trading profits (withdrawals >> deposits), and worth 0 in this kind of liquidation, to my verified account, I would turn a claim of 0 into a claim of a huge amount.  If final balances are used, this kind of cheating would be impossible because a nagetive balance is impossible.

We already discussed this on another thread.  Doing that would be trying to defraud the court, like a furniture store claiming a debt that was actually paid.  If you were to claim 0 withdrawals (in writing, as part of a judicial procedure) and your bot account eventually got tied to you by the auditors, you would be in real trouble.

So what?  I could have sold my bot's profits to someone else.  This doesn't change a thing.  It would be very easy to turn a complete loss to a high profit, and I am certain that some people have speculated in exactly this outcome.

The Madoff case isn't similar to MtGox at all, IMHO.  Try an online poker site bankruptsy instead.  Would someone who deposited a ton of USD years before the bankruptsy, and lost it all in poker, suddenly have a claim?  While the winners who didn't withdraw in time got nothing?

It would be useful to have concrete examples of that, yes.

But I wonder whether poker site failures ever resulted in bankruptcy proceedings.  Such sites must have had very few assets left to pay for bankruptcy, and civil suits would not yield much.  Unless the owers could be charged with fraud, in which case their personal assets would be seized.

In an eventual bankruptcy of a poker site, the criterion must depend on how the court sees the deposits.  I am totally guessing now, but if the money you deposited is viewed as advance payment for the service of allowing you to play, then your claim would be proportional to the service that you paid for but did not get: namely, the total amount you deposited, minus the amount you withdrew, minus the total stake of the games that you got to play in the site.   So, if you deposited 50$, made 10 bets of 3$ each, and withdrew 15$, all before the site closed, then your claim would be 50 - (10 x 3) - 15 = 5$, irrespective of how the bets went.  This hypothetical criterion would probably result in very few positive claims.

Not only would it result in very few positive claims, it would result in most of what's left (if more than a few dollars) are left unclaimed.  Would make it very profitable to start a poker site, spend a dollar more than you owe your customers and declare bankruptsy.

There must be dozens of cases.  Just google for "online poker site bankrupt".  At least one of them must have had the decency to declare bankruptsy before all user deposits were spent.

[JorgeStolfi]

So what?  I could have sold my bot's profits to someone else.  This doesn't change a thing.  It would be very easy to turn a complete loss to a high profit, and I am certain that some people have speculated in exactly this outcome.

I don't get your point. The court does not care about any deals you may have made outside or inside the system.

The auditor will find an unverified account with lots of withdrawals, and will try to identify its owner.  If emails, http logs, or other evidence connect that account to you, and you did not subtract those withdrawals from your claim, you are fried. (Here in Brazil, the penalty for making a false statement in an official document for personal advantage is 1 to 5 years in jail, apart from other crimes incurred.)

If the auditor fails to identify the owner of that account, well, lucky of you.  It would be just as if you had stolen a pile of cash from the supermarket's cash register, and by luck the security camera was not working at the time.  Some people do make plans like that, indeed.

There must be dozens of cases.  Just google for "online poker site bankrupt".  At least one of them must have had the decency to declare bankruptsy before all user deposits were spent.

Thanks, but I would not be so indelicate as to take that pleasant task away from you. 

[JorgeStolfi]

[The hypothetical poker bankruptcy criterion]  would make it very profitable to start a poker site, spend a dollar more than you owe your customers and declare bankruptsy.

Yes indeed.  Could perhaps that explain why there were so many bankrupt poker sites?

Doing that with a bitcoin exchange is even more fun and profitable.  Just claim that there was a hack. 

This university outsources its janitorial services.  Every couple of years, the contractor declares bankruptcy, after accumulating huge debts in labor benefits and taxes, and fires all its janitors and managers.  The university then solicits again bids for janitorial services; the best bid is usually from a newly created company, that hires back all those janitors and managers.  Can't avoid that, unfortunately...

[sturle]

So what?  I could have sold my bot's profits to someone else.  This doesn't change a thing.  It would be very easy to turn a complete loss to a high profit, and I am certain that some people have speculated in exactly this outcome.

I don't get your point. The court does not care about any deals you may have made outside or inside the system.

My point is that I could get exactly the same outcome by selling the BTC in my bot account to someone else with transfer inside of MtGox, as if I had transferred to my verified account on MtGox.  They would have to see this as a withdrawal from the bot account and a deposit on the buyer's account.  Otherwise a lot of deposits will turn out to be worthless.  In the days of 80% market share most of my BTC withdrawals from MtGox were sales to other people with a MtGox account, who just wanted to bootstrap their account through a domestic bank transfer instead of all the hassle of transfering money to Japan.  Internal transfers all the way. 

In the good old days you could deposit and withdraw fiat via internal transfers as well (redeemable codes).  Old codes were redeemable until the end, and BTC codes could be made via the API until the end.  What if someone with a new account makes a claim based on a reemable code of 1000 BTC?

The auditor will find an unverified account with lots of withdrawals, and will try to identify its owner.  If emails, http logs, or other evidence connect that account to you, and you did not subtract those withdrawals from your claim, you are fried. (Here in Brazil, the penalty for making a false statement in an official document for personal advantage is 1 to 5 years in jail, apart from other crimes incurred.)

I think you greatly overestimate the amount of work they are going to put into it, if they choose the simple solution.  There are going to be a lot of false positives (they are going to identfy the accounts of many of my customers this way, because they only received BTC from my MtGox account), and it is irrelevant due to the reason I mentioned above.

There must be dozens of cases.  Just google for "online poker site bankrupt".  At least one of them must have had the decency to declare bankruptsy before all user deposits were spent.

Thanks, but I would not be so indelicate as to take that pleasant task away from you. 

Sorry, I don't have the required insight into US legalese, or even how to find the relevant documents.

[Praeconium]

What does latest announcement regarding holding talks in US actually mean?

[mastor_blastor]

What does latest announcement regarding holding talks in US actually mean?

I read through the "Amended Recognition Petition", and this is what i gathered:

1. It recognizes that the main proceeding is the Japan bankruptcy proceeding.
2. It specifically gives Nobuaki Kobayashi (The duly authorized foreign representative) the right to examine witnesses, take evidence or deliver information concerning Mt Gox's assets, affairs, rights, obligations or liabilities of all of the Debtor’s assets within the territorial jurisdiction of the United States.

It does not mention Sunlot or any of that stuff at all.

[Nagle]

What does latest announcement regarding holding talks in US actually mean?

This hearing is because the trustee in Japan asked for Chapter 15 bankruptcy in the US, which is an unusual procedure used in international bankruptcies. The hearing is to establish that the bankruptcy in the US is part of the main one in Japan. A US judge has to sign off on that.

How much else will happen at that hearing isn't clear. The Sunlot crowd might try something.

[pierk]

Can I get in on this?

[Galli]

Do we have to do anything in regards to the hearing in Texas? I received a vague email stating that I should follow the requested action in the attachment but the attachment looked more like a protest filing than a "please include me, i'm desperate" thing

This process is wildly confusing...