CoinLab suing MtGox for $75 milliion?

[Nolo]

So you can be in the US and sue somebody in Japan? Don't you need lawyers in Japan to do that?

Nope.  Washington State has personal jurisdiction over Mt.Gox due to the contract Mt.Gox signed with CoinLab. 

[jgarzik]

More drama in bitcoin land, it seems.  reddit is worth reading too.

http://www.reddit.com/r/Bitcoin/comments/1dl6uz/coinlab_sues_mtgox/c9rfq4p

Reading the contract they signed, Mt.Gox is clearly in violation. You can't contract for exclusive access and then turn around and go "Oh, nevermind"

What do you want CoinLab to do? Sit around hoping Mt.Gox will follow through? Breach of contract is a reasonable and classic time to take it to the courts.

I think it's retarded of Mt.Gox to have signed the contract to begin with.

[Herodes]

Gox update:

https://mtgox.com/pdf/20130503_coinlab_lawsuit.pdf

[Inedible]

Gox update:

https://mtgox.com/pdf/20130503_coinlab_lawsuit.pdf

No mention of Pirate? No mention of the forum dwellers that dislike and distrust him?

[Nolo]

More drama in bitcoin land, it seems.  reddit is worth reading too.

http://www.reddit.com/r/Bitcoin/comments/1dl6uz/coinlab_sues_mtgox/c9rfq4p

Reading the contract they signed, Mt.Gox is clearly in violation. You can't contract for exclusive access and then turn around and go "Oh, nevermind"

What do you want CoinLab to do? Sit around hoping Mt.Gox will follow through? Breach of contract is a reasonable and classic time to take it to the courts.

I think it's retarded of Mt.Gox to have signed the contract to begin with.

I'm kind of coming to the same conclusion just based on the contract I'm reading.  I really want to see Gox's answer.  Won't get that for probably 30 days or so though. 

[repentance]

I bet this has totally fucked Mark's plans for the long weekend...

[Herodes]

First thing I notice:  There's a big typo in this complaint.  

I guarantee the drafting attorney meant to write in Paragraph 3: "This is an action for damages in excess of $75,000.00 excluding interest, attorneys’ fees and costs."

Instead the complaint says "$75,000,000.00".

The federal diversity statute 28 U.S.C. § 1332 requires the complaint to be in excess of $75,000.  I have never seen any federal complaint when any number other than $75,000 is written in this paragraph.

So the $75 million number that is being thrown around is quite simply wrong.  

I'll continue reading the complaint now.  That's as far as I got before I noticed that.  

Edit:  In fact, there is a liquidated damages provision in this contract.  So the MOST under any circumstances they could get would be $50 million.  I'll have to lookup WA state common law on liquidated damages though to determine how the court will analyze this provision.

FYI: The 75 millon sum is mentioned several places in the lawsuit document, and there's also mention of a 50 mill clause in the contract agreement between Gox and Coinlab, and it's also repeated in the filing papers, so it looks like it's 75 millions and not 75K.

[empoweoqwj]

MtGox wasn't raking in the $$$$$$$$$$$$ when the deal was put together. Perhaps they have decided the deal isn't worth doing now i.e. got greedy and have just pulled out. Whether CoinLabs gets any money out of MtGox only millions of dollars in lawyer fees will decide.

In the meantime, all this shit will be all splashed everywhere. Expect a new 2013 bottom on bitcoin prices, this isn't going to be pretty.

[ArticMine]

I'm tempted to say, I told you so, but at least it seems that my reservations (or rather questions) towards Vess were warranted.

Here's an old thread that could be relevant:
https://bitcointalk.org/index.php?topic=148147.0;all


I don't know what Coinlab is trying to achive by suing MtGox like this. First off, if they intend to do business on the US/Canadian market, they need to have trust in their userbase. Knowing about all the scammy operations in Bitcoin-land, any new player must be super careful to build confidence in the community and with customers. You don't build confidence by suing the largest Bitcoin exchange for 75million dollars. I don't know how hard they've tried to get MtGox to cooperate, as we all know it can be slow getting MtGox do do anything, as they're swamped with requests. But I would think Coinlab has more effective channels of communication than the usual customer service channel.

Also - if Coinlab want MtGox to cooperate, then suing them won't make them much more cooperative I would think. So it seems to me that Coinlab is burning bridges and attempting a very opportunistic lawsuit. I also read in the lawsuit that Bitcoin is the most successfull kind of digital money. As Bitcoin has less market share than Paypal for instance, I don't think that's an accurate statement.

I'm looking forward to a statement from Mark Karpeles regarding all of this.

Edit: Someone else in this thread claims it must be an error in the court document, and that it's not 75 million dollars but 75 thousand dollars. That's quite a difference..

One thing I must mention is that I posted a series of questions regarding the implications of the deal for Canadian MTGox customers and while I was provided with a prompt and appropiate response from MTGox, I have not to this day seen a reponse from Coinlab.  I also started a thread in speculaton back in March on this subject https://bitcointalk.org/index.php?topic=154400.0;all.  The response from Coinlab was

The deal's not in trouble.

We've moved a few key customers over, will announce more information soon.

We are in the market for a communications person -- send your resume's to support@coinlab.com.

I also am wating for the formal response to the legal complaint from MTGox. One thing I must say is that there is a lot more to these kind of contract disputes that first meets the eye so I would not rush to any conclusions before the court has passed judgement.

[Nolo]

First thing I notice:  There's a big typo in this complaint.  

I guarantee the drafting attorney meant to write in Paragraph 3: "This is an action for damages in excess of $75,000.00 excluding interest, attorneys’ fees and costs."

Instead the complaint says "$75,000,000.00".

The federal diversity statute 28 U.S.C. § 1332 requires the complaint to be in excess of $75,000.  I have never seen any federal complaint when any number other than $75,000 is written in this paragraph.

So the $75 million number that is being thrown around is quite simply wrong.  

I'll continue reading the complaint now.  That's as far as I got before I noticed that.  

Edit:  In fact, there is a liquidated damages provision in this contract.  So the MOST under any circumstances they could get would be $50 million.  I'll have to lookup WA state common law on liquidated damages though to determine how the court will analyze this provision.

FYI: The 75 millon sum is mentioned several places in the lawsuit document, and there's also mention of a 50 mill clause in the contract agreement between Gox and Coinlab, and it's also repeated in the filing papers, so it looks like it's 75 millions and not 75K.

I saw that.  If that was intentional, I do not have anything nice to say about CoinLab's attorney.  You don't do that in your complaint.  The $50 million is fine.  That's the liquidated damages provision. 

[Inedible]

I saw that.  If that was intentional, I do not have anything nice to say about CoinLab's attorney.  You don't do that in your complaint.  

Why isn't this a normal thing to do?

Edit: Fixing quote

[Nolo]

FYI: The 75 millon sum is mentioned several places in the lawsuit document, and there's also mention of a 50 mill clause in the contract agreement between Gox and Coinlab, and it's also repeated in the filing papers, so it looks like it's 75 millions and not 75K.

I saw that.  If that was intentional, I do not have anything nice to say about CoinLab's attorney.  You don't do that in your complaint.  

Why isn't this a normal thing to do?

It's tough to explain, but it's called "subject matter jurisdiction".  Federal courts are courts of limited jurisdiction.  One of the ways you can sue in federal court is if you have total diversity of parties.  Meaning all of the plaintiffs are from different states (or countries) than all of the defendants.  In addition to this, you must plead that you are asking for greater than $75,000 in actual damages, exclusive of interest and attorneys' fees.  I have NEVER seen any attorney state more than $75,000 here.  It's even possible you could piss the judge off, and he might dismiss your complaint for incorrectly citing the statute or you have overstated your claim (especially in light of the liquidated damages provision), which is a sanctionable offense in and of itself.

[lordgrows]

In the real world, although the jurisdiction is set to Washington state, there is still an international process to be followed as Gox does not have physical or legal presence in the US. To be served the court papers, it must be done through a court-to-court petition (rogatory letter, that cannot be sent by post office) the US court must request the Japanese court with jurisdiction over Gox to serve them the papers officially. Not only the japanese court can refuse ou delay it as much as possible (I've seen such cases take from 6 months to years just on this int'l paperwork come-and-go, it is usually a very very slow proccess even when the Hague Convention is applicable.

http://en.wikipedia.org/wiki/Letter_rogatory

Nothing is going to happen in the weekend. Or for a good number of weekends to come.

[Herodes]

From reddit:

http://www.reddit.com/r/Bitcoin/comments/1dl6uz/coinlab_sues_mtgox/

Hacker News (discussion forum for Y-Combinator which funded CoinLab) is zealously deleting any threads started to discuss this topic. They regularly surpress discussion of topics that might make them, or the companies they've funded, look bad. So, I think it's probably legit. The $75 million, on the other hand (if that's what you meant) is of course fine-cut bullshit.

I wouldn't worry too much about Mt. Gox. They have shitloads of money. All CoinLab has is SV hype courtesy of Paul Graham and his merry band of VC hooligans.

It was also downvoted on reddit, so it wasn't immediately visible. This is petty. If they do something and then can't take the heat, then they should get off the internet, you can't supress free speech online.

Edit: I think the correct statement is that Y-Comb funded Coinbase, not CoinLab, but to my understanding, Coinbase was one of the major customers of CoinLab ?

[Nolo]

In the real world, although the jurisdiction is set to Washington state, there is still an international process to be followed as Gox does not have physical or legal presence in the US. To be served the court papers, it must be done through a court-to-court petition (rogatory letter, that cannot be sent by post office) the US court must request the Japanese court with jurisdiction over Gox to serve them the papers officially. Not only the japanese court can refuse ou delay it as much as possible (I've seen such cases take from 6 months to years just on this int'l paperwork come-and-go, it is usually a very very slow proccess even when the Hague Convention is applicable.

http://en.wikipedia.org/wiki/Letter_rogatory

Nothing is going to happen in the weekend. Or for a good number of weekends to come.

The Hague Convention.  Damn that was fun in my Conflict of Laws class.   

[abbyd]

I'm tempted to say, I told you so, but at least it seems that my reservations (or rather questions) towards Vess were warranted.

Here's an old thread that could be relevant:
https://bitcointalk.org/index.php?topic=148147.0;all
...
So it seems to me that Coinlab is burning bridges and attempting a very opportunistic lawsuit.

I've had about enough of this Vess tea-bagger. This lawsuit reeks of frivolity and is well-timed to dump BTC valuation over the weekend.
How hard would it be for anyone with inside knowledge of the lawsuit to pre-sell, then get ready to buy after the panic (Guess what,
there are no "insider trading" laws regarding bitcoin)? There are any number of ways to profit from this lawsuit, and I don't regard
any of them as ethical. Worse still, the lawsuit is HORRIBLE for the bitcoin community and the currency's public image.  Mt Gox needs
competition, but this is precisely the wrong way to create it.

Maybe the thread titled "Should Peter Vessenes resign as CEO of the Bitcoin Foundation?" was NOT premature.
https://bitcointalk.org/index.php?topic=177679.0

[Herodes]

I'm tempted to say, I told you so, but at least it seems that my reservations (or rather questions) towards Vess were warranted.

Here's an old thread that could be relevant:
https://bitcointalk.org/index.php?topic=148147.0;all
...
So it seems to me that Coinlab is burning bridges and attempting a very opportunistic lawsuit.

I've had about enough of this Vess tea-bagger. This lawsuit reeks of frivolity and is well-timed to dump BTC valuation over the weekend.
How hard would it be for anyone with inside knowledge of the lawsuit to pre-sell, then get ready to buy after the panic (Guess what,
there are no "insider trading" laws regarding bitcoin)? There are any number of ways to profit from this lawsuit, and I don't regard
any of them as ethical. Worse still, the lawsuit is HORRIBLE for the bitcoin community and the currency's public image.  Mt Gox needs
competition, but this is precisely the wrong way to create it.

Maybe the thread titled "Should Peter Vessenes resign as CEO of the Bitcoin Foundation?" was NOT premature.
https://bitcointalk.org/index.php?topic=177679.0

There are talks about some selling not long ago that was done prior to this announcement. I won't mention any names though. But clearly there were a number of persons knowing about the lawsuit before it went public.

[Surpbitcoin]

The funny thing about this is, that were talking about bitcoins. I can see it now.

MtGox is ordered to pay 75 mill (which wont happen)

MtGox replies "we have no money to pay"

Really they have 1 million BTC but nobody can find it or prove it.

Gotta love BTC

[repentance]

Roger Ver is saying that he knew nothing about the lawsuit until news of it was posted on these forums.

A 75 million dollar lawsuit is a pretty huge thing to keep your investors in the dark about.

https://bitcointalk.org/index.php?topic=193922.msg2013531#msg2013531

[Herodes]

Roger Ver is saying that he knew nothing about the lawsuit until news of it was posted on these forums.

A 75 million dollar lawsuit is a pretty huge thing to keep your investors in the dark about.

https://bitcointalk.org/index.php?topic=193922.msg2013531#msg2013531

Well, I'm seeing Roger as a standup dude, but when there's talk about a lot of money, it's not that easy to know anymore.