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Author Topic: CoinLab suing MtGox for $75 milliion?  (Read 19414 times)
Herodes
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May 04, 2013, 03:21:28 PM
 #201

What are the chances of the money and bitcoins being frozen until this is settled?
   

Zero unless Coinlabs sue them in Japan. But then only Fiat assets frozen.

In the recent BTC24 case fiat accounts were frozen in Germany instantlly and in Poland a day later, when the request from Germany arrived.

That's because it was requested by the German state prosecutor.
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May 04, 2013, 03:29:02 PM
 #202

That's because it was requested by the German state prosecutor.

True, and it was a criminal case, not a civil lawsuit.
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May 04, 2013, 08:53:42 PM
 #203

What are the chances of the money and bitcoins being frozen until this is settled?

Money: the farther removed from the jurisdiction the lawsuit was commenced in, the less likely that is to happen. In this case it's a toss up - although if you're going to ask a court to freeze the accounts you'd better have a good reason why (ie: the person is about to clear the accounts out and run or they have a history of moving the money around to evade courts/collections, etc). In this case mtgox would need the money liquid so they can carry on day-to-day business. It's probably not likely that the company will just pack up and disappear overnight (although that wouldn't be unprecedented) and forcing mtgox to collapse isn't going to help coinlab collect money from them if they are awarded any at trial. So in this case probably not super likely but definitely a possibility.

BTC/LTC/etc.: Not a chance. As long as a crypto-currency has no regulating body that can control it, who exactly would "freeze" the coins? This is one of the things that appeals to people are BTC/LTC. For example, the government can't come in and say "yeah we're broke so anyone with money in a bank account.. well 30% of that is now ours" (I think the situation in Europe was, at least partially, responsible for the rapid rise of the BTC recently... people want to put their money where only they have access to it).


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May 04, 2013, 09:02:29 PM
 #204

BTC/LTC/etc.: Not a chance.
Well, two questions:
1) If someone from the court said to Gox, "You can't allow any BTC withdrawals until the case is settled," would they comply?
2) Is there anyone who can, or would, say that to them?

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May 04, 2013, 09:10:03 PM
 #205

I have never said that it is impossible - only that big lawsuits like this move at a glacial pace when they are dealing with domestic parties and assets - the fact that the company that is being sued here and its assets are in many foreign jurisdictions will only slow this process down further.

So like I originally said, this might not be a huge pressing concern for mtgox as it isn't likely something drastic would happen overnight.

Then we're agreed on that part.  Also, the number of lawyers with experience in enforcing judgments internationally is limited.  They don't come cheap and if you have to fly them to where you are, they're flying first class.

I also don't believe they're going to get anything like assets frozen before getting a judgment, unless they do something dumb like try to hide them and get caught.  No court in its right mind would basically destroy a business based on a breach of contract case the other side might not even win.  For one thing, seizing Gox assets would basically instantly destroy the value of the company and render it unable to pay any judgment.

Quote
That aside, even if Japan has agreed in certain areas to have the same law as the USA that definitely does not mean an order from an American court will be enforced in Japan. Even if the Japanese court is satisfied that the American court made the correct decision in law it still might decide that America was not the correct forum or that according to their laws the proper jurisdiction was Japan. In that case you'd have wasted tens of thousands and months/years of your time to get a court order that is worthless.

But not this part.  Generally, as a matter of international comity, and pursuant to treaties to which both Japan and the United States are party, courts from one country do not act as appeals courts for those of another.  So long as the proper procedure is followed, the United States and Japan will enforce a breach of contract judgment from a court in the other country.

Japan, just as the United States, enforces choice of law and choice of forum provisions, and this contract has an unambiguous agreement to jurisdiction and which law applies.  Neither a Japanese nor an American court are going to tell the court of another country that they got their own law wrong.  I'm not going to say something like this would never happen or that courts never play favorites with a local company, but it's very unlikely in this case.

You might see something like this where one party gets a default judgment against the other, with the other having basically contended there was no jurisdiction the whole time and then collaterally attacking it only when the other side tries to domesticate the default judgment.  But you're really not going to see a Japanese court say a U.S. court doesn't understand its own law.

The U.S. and Japan have deep and lasting business relations, and you don't want to sour that by making contracts between companies unenforceable, because people will stop doing business. 
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May 04, 2013, 09:55:52 PM
 #206

Well, two questions:
1) If someone from the court said to Gox, "You can't allow any BTC withdrawals until the case is settled," would they comply?

That's up to gox. If they're serious about the court action it would behoove them not to piss off the judge. That wouldn't really be "freezing" as much as "complying with a court order" though. Freezing accounts basically means preventing people from being able to take their money and run. If gox was going to do that then they surely wouldn't obey the court order.

If they didn't comply with the order coinlab would go back to court to ask for contempt or another remedy but if they are ignoring the first court order odds are they aren't going to follow any further ones (this is where the "freezing" would come into play, but like I said it would be pretty hard to freeze crypto coins).

Quote
2) Is there anyone who can, or would, say that to them?

A judge/court in a jurisdiction that has the teeth to back up their order. I don't know anything about Japanese law but since gox is owned by a Japanese company I would imagine a Japanese court could take action against them. Even if they bank accounts are in another country a Japanese court could at least mess with what is in Japan (for example, cancelling their business licence or revoking their charter.. or perhaps piercing the corporate veil and allowing coinlab to take action against the personal assets of the owners of the company.



I also don't believe they're going to get anything like assets frozen before getting a judgment, unless they do something dumb like try to hide them and get caught.  No court in its right mind would basically destroy a business based on a breach of contract case the other side might not even win.  For one thing, seizing Gox assets would basically instantly destroy the value of the company and render it unable to pay any judgment.

Exactly - coinlab would have to make a pretty convincing case for something like the management at gox were preparing the move the assets out of the jurisdiction to frustrate judgment for the court to do something like that.

Quote
But not this part.  Generally, as a matter of international comity, and pursuant to treaties to which both Japan and the United States are party, courts from one country do not act as appeals courts for those of another.  So long as the proper procedure is followed, the United States and Japan will enforce a breach of contract judgment from a court in the other country.

I saw this in my googling, anyone following this particular discussion might find it interesting (I can't comment on the factual correctness of the document but at first blush it doesn't strike me as suspicious) 

http://www.tomeika.jur.kyushu-u.ac.jp/procedure/Overview02_judgments.html

Here's a snip:

Quote
A final and conclusive judgment of a foreign court shall have its effect only upon the fulfillment of the following conditions:
(i)   that the foreign court would have jurisdiction pursuant to the law or treaties;
(ii)  that the unsuccessful defendant received service of a summons or order as required for the commencement of proceedings (except by publication in a bulletin board at the court or by similar methods), or appeared in the action without receiving such service;
(iii)   that the contents of the judgment of a foreign court and its proceeding are not contrary to the public order or good morals in Japan ;
(iv)  that reciprocity is assured.


We have already discussed (i) being jurisdiction. I agree that they will be concerned about proper procedure and failure to follow that could easily result in judgment not being enforced (such as if the defendant was not properly served and didn't have a fair chance to defend themselves that wold probably qualify as in (ii) above).

However I think there are other considerations as well (which I might have mentioned earlier) which are touched on in (iii) - if the Japanese court thinks the decision is improper they are under no obligation to enforce it.

Quote
Japan, just as the United States, enforces choice of law and choice of forum provisions, and this contract has an unambiguous agreement to jurisdiction and which law applies. 

Those jurisdictional choices are like waivers that try to exempt someone from gross negligence - far from bulletproof. The parties could agree that the moon was the proper jurisdiction but that doesn't mean you'd be unsuccessful bringing an application before a Japanese court. Regardless of what the parties agree vis-a-vis jurisdiction I would imagine most courts on the planet would want to satisfy themselves that they are the proper jurisdiction for any application brought before them. Sure one party could argue "hey we agreed on the USA!" but the moving party could easily say "yeah well Japan is forum convienens for this because the paties are here and so is all of the best evidence" and if the Judge accepted that argument the case is very likely going to go ahead there regardless of what it says in the contract. It could very well be that there is a law in Japan that says regardless of contract all cases involving a Japanese company must be sued in a Japanese court. I doubt that law exists but just as an example that would override that contract.

A judge isn't bound by what is written in a contract, only by power given to them by the law. They don't have a problem striking any or all of a contract if they believe it is in the interest of justice / complying with their law.

Quote
Neither a Japanese nor an American court are going to tell the court of another country that they got their own law wrong.  I'm not going to say something like this would never happen or that courts never play favorites with a local company, but it's very unlikely in this case.

Sorry that's not what I was trying to say. It's not a Japanese court saying to an American court "you got American law wrong". It would be a Japanese court saying "it doesn't matter what you said in the USA, you want to enforce an order against a person/property that is located in and falls under the laws of Japan and we get to decide whether or not that order gets enforced". As I said above even if everything else the American court did was correct, the Japanese court could find fault with only one thing (like perhaps in the USA it isn't required to serve the defendant - I know it's not but for argument's sake... and Japan could say "hey in Japan we have a requirement that a defendant have a fair chance to make a case in their own defence before an order is made - since that didn't happen in this case we aren't enforcing".

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May 12, 2013, 03:44:11 AM
 #207

Anyone got any updates ? It's a shame this is hidden in 'service discussion'. It should've been in the main forum, as it's a rather important issue. Anyone been in touch with any of the parties and learned more about the case?
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May 12, 2013, 11:56:52 AM
 #208

Quote
That aside, even if Japan has agreed in certain areas to have the same law as the USA that definitely does not mean an order from an American court will be enforced in Japan. Even if the Japanese court is satisfied that the American court made the correct decision in law it still might decide that America was not the correct forum or that according to their laws the proper jurisdiction was Japan. In that case you'd have wasted tens of thousands and months/years of your time to get a court order that is worthless.

But not this part.  Generally, as a matter of international comity, and pursuant to treaties to which both Japan and the United States are party, courts from one country do not act as appeals courts for those of another.  So long as the proper procedure is followed, the United States and Japan will enforce a breach of contract judgment from a court in the other country.

A global law firm's take on the issue: Japan: enforceability of foreign civil judgments in Japan.

Would a freezing order would be enforceable? It is not a final and conclusive order.

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May 12, 2013, 01:46:19 PM
 #209

Anyone got any updates ? It's a shame this is hidden in 'service discussion'. It should've been in the main forum, as it's a rather important issue. Anyone been in touch with any of the parties and learned more about the case?

There's nothing more to learn in any such case until the court date. Nobody comments on pending suits.

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May 12, 2013, 02:13:12 PM
 #210

Anyone got any updates ? It's a shame this is hidden in 'service discussion'. It should've been in the main forum, as it's a rather important issue. Anyone been in touch with any of the parties and learned more about the case?

Nobody comments on pending suits.

I don't know. If Mt. Gox's lawyers are anything to go by so far, they're probably writing a press release that will jeopardise their trail as we speak.

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May 12, 2013, 02:18:29 PM
 #211

Would a freezing order would be enforceable? It is not a final and conclusive order.

The nested quotes in this are a bit confusing.  I didn't write the directly quoted text.

However, I'm not sure such an order would be enforceable through the method used for domesticating a final judgment.  I'm pretty sure it wouldn't be.  I'm not sure if there would be some alternative.  My guess would be yes, but I'm not going to go much further than that, because I don't think a court in either the U.S. or Japan would grant such an order in the first place.

So far as I can tell, Gox is still operating and solvent and freezing its assets would just bankrupt it (making it unlikely any judgment could be paid).
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May 12, 2013, 08:22:26 PM
 #212

Anyone got any updates ? It's a shame this is hidden in 'service discussion'. It should've been in the main forum, as it's a rather important issue. Anyone been in touch with any of the parties and learned more about the case?

Nobody comments on pending suits.

I don't know. If Mt. Gox's lawyers are anything to go by so far, they're probably writing a press release that will jeopardise their trail as we speak.

Allow me to retract my ill thought-out, rash earlier statement. Obviously you are correct.

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May 14, 2013, 12:43:30 PM
 #213

Would a freezing order would be enforceable? It is not a final and conclusive order.

Yes a freezing order can be made enforceable as in the criteria in the link I posted above or the similar link in your post.

When they say "final" they mean that it is a final order on that specific issue, not of the entire matter.

I can appreciate that this is confusing but what would happen is that a motion would be brought in the course of the lawsuit to have some accounts frozen for a duration and reason (ie: freeze 75,000,000 in this account in case we win our claim for 75,000,000 so there will be funds available to pay it - while I think it is unlikely that they'd get such an order let's assume that they do for purposes of this discussion). There will be some sort of order on that motion either allowing the freezing or dismissing the motion. So while the actual lawsuit itself is still making its way through the court, there could be a final order made on the issue of freezing accounts until the main trial is resolved.

However if there is an interim order on the motion (perhaps the judge orders a temporary freezing of funds for a week while he makes his decision on whether or not to freeze the funds for the duration of the lawsuit) that would not be enforceable in Japan since it is not a final order on the motion.

Does that make sense?
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May 14, 2013, 02:31:49 PM
 #214

Makes perfect sense.
Unfortunately i this hypothetical scenario Gox would get their share out and the 75kk would be the customers cash.
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May 14, 2013, 07:08:52 PM
 #215

Just tried to withdraw money from MtGox to my Dwolla account, here's what I got as a response from Dwolla:

Dwolla Support
MAY 14, 2013  |  01:44PM CDT
<name removed>,

Due to recent court orders by the Department of Homeland Security and U.S. District Court for the District of Maryland seizing the account of Mutum Sigillum LLC (“Mt. Gox”), Dwolla is immediately no longer legally able to service Mutum Sigillum LLC’s account.

As a result if you have not seen funds arrive in your Dwolla account from this merchant then this will not be occurring with Dwolla. You will want to contact Mutum Sigillum LLC (https://mtgox.com/contact-us) to inquire on how to go about withdrawing these funds.

Sincerely,
Dwolla Support
www.dwolla.com
www.trydwolla.com (Send someone free money on us to get them started)
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May 14, 2013, 07:13:14 PM
 #216

 Shocked

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May 14, 2013, 08:10:28 PM
 #217

Just tried to withdraw money from MtGox to my Dwolla account, here's what I got as a response from Dwolla:

Dwolla Support
MAY 14, 2013  |  01:44PM CDT
<name removed>,

Due to recent court orders by the Department of Homeland Security and U.S. District Court for the District of Maryland seizing the account of Mutum Sigillum LLC (“Mt. Gox”), Dwolla is immediately no longer legally able to service Mutum Sigillum LLC’s account.

As a result if you have not seen funds arrive in your Dwolla account from this merchant then this will not be occurring with Dwolla. You will want to contact Mutum Sigillum LLC (https://mtgox.com/contact-us) to inquire on how to go about withdrawing these funds.

Sincerely,
Dwolla Support
www.dwolla.com
www.trydwolla.com (Send someone free money on us to get them started)

Is this because of this lawsuit though?

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May 14, 2013, 11:46:15 PM
 #218

I thought Homeland securities mandate was to make and enforce regulations for "Public Health Security" and "Bio terrorism-Preparedness" and "Response to terrorism" in general.

Do they really have nothing better to do?


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May 15, 2013, 01:15:48 AM
 #219

I thought Homeland securities mandate was to make and enforce regulations for "Public Health Security" and "Bio terrorism-Preparedness" and "Response to terrorism" in general.

Do they really have nothing better to do?

Apparently not. Coinlab claims they have all necessary licenses and connections ready, so why don't they just start accepting their own US customers ? I would think any decent exchange would quickly catch up business. And if it was easier to get money in and out of the Coinlab exchange, I would think a lot of people from the US would move to this exchange. No matter the pending court case, people's memory is short anyway.

If they have a trading engine and account system and interface with the Sillicon Valley Bank ready, why don't they just start to accept customers, instead of wasting time on a lawsuit, that probably will never go anywhere. Actually it would be quite interesting if MtGox declared bankruptcy, and all customers got their fiat and btc back, and Mark retired on the money he'd made. Then Coinlab would be looking into a void.

Other exchanges would rise to take MtGox's place.
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May 15, 2013, 01:22:07 AM
 #220

Ok there is the classic battle of the forms as to which jurisdiction apply

but in the case where both parties agree to a jurisdiction, then the matter is 99% of the time heard there, and most other countries court will accept this in a civil case.

If they get an order against mtgox that's just the beginning. Even if a court is quick to grant relief against mtgox that does not mean enforcing that order will be anywhere close to easy. They could get an order today saying mtgox owes them $75,000,000 - that doesn't mean they'll ever see a dime of the money.


Well there you go just in-junct (freeze) their local accounts, that was easy! and done without Mt. Gox even knowing!!!!
Ex-parte

as I specifically said
"You just in-junct Mt. Gox from removing funds"


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