How to put Mt. Gox into involuntary bankruptcy in Japan.

[ISAWHIM]

No, you do not need to "wait for the call center to open". If you had significant funds in Mt. Gox, you need legal representation in Japan now, to be involved in the bankruptcy.

The purpose for filing bankruptcy protection is to STOP you from suing, and winning. So you don't put US at losses, taking our chunk of the losses, which have not even been distributed yet.

This is similar to a "chapter 11" filing, in japan... It does not make it so Gox owes nothing... it simply give Gox the chance to "make up the losses". This is not the type of bankruptcy you sue for, to get things back.

You do realize your coins will not be valued at todays prices, but at the price at which you deposited them, or obtained them. You will not be getting back an equal amount of BTC if you sue, only asset value. However, if you just wait... And let the investigation continue, allowing Gox to get back up and running, or sell... then you will be compensated for your BTC-BTC funds. Not to mention all the fees of the lawyer. (Or the taxes before you can actually get your asset-value, if you had not claimed them as long-term holdings, in an over-seas exchange.)

Good luck with that.

[Nagle]

No, you do not need to "wait for the call center to open". If you had significant funds in Mt. Gox, you need legal representation in Japan now, to be involved in the bankruptcy.

The purpose for filing bankruptcy protection is to STOP you from suing, and winning. So you don't put US at losses, taking our chunk of the losses, which have not even been distributed yet.

Civil rehabilitation in Japan doesn't stop everyone from suing. "Secured creditors" can still sue. It's more limited than US Chapter 11 in that respect. Whether Mt Gox depositors are secured creditors is a very important legal question. Given Mt. Gox's terms of service and the Japan Payment Services Act, they probably are. That's a key issue. Does anyone have a lawyer working on that?

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

[bitcoinvest]

No, you do not need to "wait for the call center to open". If you had significant funds in Mt. Gox, you need legal representation in Japan now, to be involved in the bankruptcy.

The purpose for filing bankruptcy protection is to STOP you from suing, and winning. So you don't put US at losses, taking our chunk of the losses, which have not even been distributed yet.

This is similar to a "chapter 11" filing, in japan... It does not make it so Gox owes nothing... it simply give Gox the chance to "make up the losses". This is not the type of bankruptcy you sue for, to get things back.

You do realize your coins will not be valued at todays prices, but at the price at which you deposited them, or obtained them. You will not be getting back an equal amount of BTC if you sue, only asset value. However, if you just wait... And let the investigation continue, allowing Gox to get back up and running, or sell... then you will be compensated for your BTC-BTC funds. Not to mention all the fees of the lawyer. (Or the taxes before you can actually get your asset-value, if you had not claimed them as long-term holdings, in an over-seas exchange.)

Good luck with that.

So you suggest to wait and see how Mark will handle the situation?

[CompNsci]

So you suggest to wait and see how Mark will handle the situation?

Absolutely not. Mark Karpeles is either criminally negligent or involved in criminal activity. In either case, he should not be the representative director for this action. We will be determining what legal motions can force him from this position and force both him and other officers out of any access to Mt. Gox files. The professionals need to take over now.

[papamoi]

just read this

he has been arrested in france for some fraud over payment on internet before coming to japan.

and he seems he has gone to japan as he had to avoid to be caught again (during 5 years).this should have been resulted in 3 months of prison.

http://gawker.com/does-mt-goxs-ceo-have-a-secret-history-of-online-payme-1534752110

[Nagle]

just read this

he has been arrested in france for some fraud over payment on internet before coming to japan.

and he seems he has gone to japan as he had to avoid to be caught again (during 5 years).this should have been resulted in 3 months of prison.

http://gawker.com/does-mt-goxs-ceo-have-a-secret-history-of-online-payme-1534752110

Keep digging for info on that. That's the kind of info that can be used to convince the judge in Japan to kick Karpeles out and put a trustee in.

[repentance]

You think i will get back my withdrawal 100% ? And what about the BTC.

Any answer you get on here is going to be pure speculation by people who have no direct involvement or experience with the Japanese legal systems.

Nobody knows how this is going to play out.  No matter how much you want someone to tell you that you might recover some funds, anyone who tells you that is just telling you want you want to hear.  There's simply not enough information available for people to make educated guesses right now and there are many factors which could change the possibilities.

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

I'm inferring from the MtGox announcement that there is a supervisor.  The announcement specifically states that customers should direct their questions to the call centre rather than the supervisor/investigator.  

The quickest way to get information about the supervisor is probably to contact one of the journalists who has been covering this.  It will be a matter of public record and organisations like the WSJ will probably get their hands on the filings quickly.  I'd just keep tweeting the various outlets which have been covering this.  One of them is likely to publish the filings sooner rather than later and it's probably going to be a quicker way of getting the information than retaining a Japanese lawyer to get it for you.

Also Nagle, do you have any information on payment for supervisors/trustees under the Japanese system?  I didn't really look into that in any depth so I'm unclear about whether the company is billed for their services (and the services of those assisting them) at an hourly rate as is the case here.

[mr_gocs]

Whether Mt Gox depositors are secured creditors is a very important legal question. Given Mt. Gox's terms of service and the Japan Payment Services Act, they probably are. That's a key issue. Does anyone have a lawyer working on that?

Not secured.
Mt.Gox nor their service isn't covered by any Japanese payment/finance related acts.
I'm a lawyer in Japan.

[mr_gocs]

You think i will get back my withdrawal 100% ? And what about the BTC.

Any answer you get on here is going to be pure speculation by people who have no direct involvement or experience with the Japanese legal systems.

Nobody knows how this is going to play out.  No matter how much you want someone to tell you that you might recover some funds, anyone who tells you that is just telling you want you want to hear.  There's simply not enough information available for people to make educated guesses right now and there are many factors which could change the possibilities.

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

I'm inferring from the MtGox announcement that there is a supervisor.  The announcement specifically states that customers should direct their questions to the call centre rather than the supervisor/investigator.  

The quickest way to get information about the supervisor is probably to contact one of the journalists who has been covering this.  It will be a matter of public record and organisations like the WSJ will probably get their hands on the filings quickly.  I'd just keep tweeting the various outlets which have been covering this.  One of them is likely to publish the filings sooner rather than later and it's probably going to be a quicker way of getting the information than retaining a Japanese lawyer to get it for you.

Also Nagle, do you have any information on payment for supervisors/trustees under the Japanese system?  I didn't really look into that in any depth so I'm unclear about whether the company is billed for their services (and the services of those assisting them) at an hourly rate as is the case here.

The supervisors are private lawyers but appointed by the court in regard to the case.
So they are paid by the court and they are completely neutral.

[papamoi]

You think i will get back my withdrawal 100% ? And what about the BTC.

Any answer you get on here is going to be pure speculation by people who have no direct involvement or experience with the Japanese legal systems.

Nobody knows how this is going to play out.  No matter how much you want someone to tell you that you might recover some funds, anyone who tells you that is just telling you want you want to hear.  There's simply not enough information available for people to make educated guesses right now and there are many factors which could change the possibilities.

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

I'm inferring from the MtGox announcement that there is a supervisor.  The announcement specifically states that customers should direct their questions to the call centre rather than the supervisor/investigator.  

The quickest way to get information about the supervisor is probably to contact one of the journalists who has been covering this.  It will be a matter of public record and organisations like the WSJ will probably get their hands on the filings quickly.  I'd just keep tweeting the various outlets which have been covering this.  One of them is likely to publish the filings sooner rather than later and it's probably going to be a quicker way of getting the information than retaining a Japanese lawyer to get it for you.

Also Nagle, do you have any information on payment for supervisors/trustees under the Japanese system?  I didn't really look into that in any depth so I'm unclear about whether the company is billed for their services (and the services of those assisting them) at an hourly rate as is the case here.

The supervisors are private lawyers but appointed by the court in regard to the case.
So they are paid by the court and they are completely neutral.

so what do you suggest as we have a bunch of btc stuck in there?

[mr_gocs]

You think i will get back my withdrawal 100% ? And what about the BTC.

Any answer you get on here is going to be pure speculation by people who have no direct involvement or experience with the Japanese legal systems.

Nobody knows how this is going to play out.  No matter how much you want someone to tell you that you might recover some funds, anyone who tells you that is just telling you want you want to hear.  There's simply not enough information available for people to make educated guesses right now and there are many factors which could change the possibilities.

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

I'm inferring from the MtGox announcement that there is a supervisor.  The announcement specifically states that customers should direct their questions to the call centre rather than the supervisor/investigator.  

The quickest way to get information about the supervisor is probably to contact one of the journalists who has been covering this.  It will be a matter of public record and organisations like the WSJ will probably get their hands on the filings quickly.  I'd just keep tweeting the various outlets which have been covering this.  One of them is likely to publish the filings sooner rather than later and it's probably going to be a quicker way of getting the information than retaining a Japanese lawyer to get it for you.

Also Nagle, do you have any information on payment for supervisors/trustees under the Japanese system?  I didn't really look into that in any depth so I'm unclear about whether the company is billed for their services (and the services of those assisting them) at an hourly rate as is the case here.

The supervisors are private lawyers but appointed by the court in regard to the case.
So they are paid by the court and they are completely neutral.

so what do you suggest as we have a bunch of btc stuck in there?

If some lawyer would answer this question or would imply there are some hopeful solutions, that must be lie or he doesn't really know the problem of this case.

In this case, at least now, only we can do is to wait for the letter from the law firm of mtgox's, sadly. This letter is for creditor's report which we will send back to the court. They announced that if you will not receive that, call the call center by yourselves.
Usually, then they will invite us a creditor's meeting to explain the situation, their plan, etc., but in this case, they said they have no idea at all when they will be able to have the meeting.

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

We can only wait and see for a while....My hundreds of btc is also stuck in there.

[darkmule]

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

Depends.  What did their terms and conditions/TOS/etc say?  Many contracts with corporations have explicit choice-of-law and forum terms, i.e. something like "In the event of any dispute concerning this Contract or the services sold hereunder, suit may be brought only in a court of competent jurisdiction in the State of California."

And/or

"Any dispute arising from this contractual relationship shall be governed by Delaware law."

Generally, the choice of law and forum clauses specify the venue and the applicable law, which is usually the same state and/or country/province/whatever.

Even when a country chooses to exercise jurisdiction over a dispute in derogation of a choice of forum clause, courts are usually deferential to choice of law provisions, as the nature of a choice of law clause essentially incorporates the relevant law into the contract as part of what the parties agreed when signing it.

It looks like the Gox fiasco is about to be litigated in multiple jurisdictions, so I guess we'll see how this all plays out in reality, but it'd be nice to know what Goxers actually contracted for when they clicked past some TOS to sign up without reading it.

[Nagle]

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

Depends.  What did their terms and conditions/TOS/etc say?  

They said this. (from archive.org):

Mt. Gox represents and warrants that:

* it will use all reasonable care and skill in facilitating the matching of offers of the Members on the Site via the Platform to conclude Transactions.
* all purchase and sale offers, as well as Bitcoin Purchase Transactions, made on the Platform, will be managed in an anonymous manner so that Buyers and Sellers will not know each other.
* the Transaction Price is calculated on the basis of actual matched offers made by Buyers and Sellers participating in the bidding process on the Platform combined with the applicable Commission.
* once offers to buy or sell Bitcoins are matched, such offers may not be withdrawn.
* Transfer of Bitcoins in a Transfer Transaction may not be withdrawn.
* it will hold all monetary sums and all Bitcoins deposited by each Member in its Account, in that Member's name as registered in their Account details, and on such Member's behalf.
* it shall comply with any and all laws and regulations relating to offering the Platform.

...
To the extent permitted by law, Mt. Gox will not be held liable for any damages, loss of profit, loss of revenue, loss of business, loss of opportunity, loss of data, indirect or consequential loss unless the loss suffered is caused by a breach of these Terms by Mt. Gox.

Mt Gox cannot be held liable for any malfunction, breakdown, delay or interruption to the internet connection, or if for any reason our site is unavailable at any time or for any period. Where our site contains links to other sites and resources provided by third parties, these links are provided for your information only. We have no control over the contents of those sites or resources, and accept no responsibility for them or for any loss or damage that may arise from your use of them.

In the case of fraud, Mt. Gox will report all necessary information, including names, addresses and all other requested information, to the relevant authorities dealing with fraud and breaches of the law. Members recognize that their account may be frozen at any time at the request of any competent authority investigating a fraud or any other illegal activity.

To the extent that a Member operates and uses the Site and the Platform other than in the course of its business ("Consumer"), nothing in these Terms shall affect the statutory rights of such Members.

Nothing in these terms excludes or limits the liability of either party for fraud, death or personal injury caused by its negligence, breach of terms implied by operation of law, or any other liability which may not by law be limited or excluded.

Subject to the foregoing, Mt. Gox's aggregate liability in respect of claims based on events arising out of or in connection with a Member's use of the Site and/or Platform, whether in contract or tort (including negligence) or otherwise, shall in no circumstances exceed the greater of either (a) the total amount held on Account for the Member making a claim less any amount of Commission that may be due and payable in respect of such Account; or (b) 125% of the amount of the Transaction(s) that are the subject of the claim less any amount of Commission that may be due and payable in respect of such Transaction(s).

There's no choice-of-law or arbitration provision.

Those are not unreasonable terms. They're better than Kraken's, for example.

[darkmule]

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

Depends.  What did their terms and conditions/TOS/etc say?  

They said this. (from archive.org):

Mt. Gox represents and warrants that:

* it will hold all monetary sums and all Bitcoins deposited by each Member in its Account, in that Member's name as registered in their Account details, and on such Member's behalf.
There's no choice-of-law or arbitration provision.

Those are not unreasonable terms. They're better than Kraken's, for example.

Yes, but the Constitution also looks really nice on paper.  It's a question of whether or not you actually get the rights it says you have that matters.

I'll note the bold language you quoted does appear to establish a fiduciary duty by Mt. Gox, which holds them to at least the standard of a bailee (holder of another's property entrusted to them).  Whether or not banking laws apply, this law might apply.

Also, even in the absence of a specific choice-of-law agreement, most countries have statutes or legal precedents defining what country's laws they use when the nucleus of operative facts occur in multiple countries.

[repentance]

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

Depends.  What did their terms and conditions/TOS/etc say?  Many contracts with corporations have explicit choice-of-law and forum terms, i.e. something like "In the event of any dispute concerning this Contract or the services sold hereunder, suit may be brought only in a court of competent jurisdiction in the State of California."

And/or

"Any dispute arising from this contractual relationship shall be governed by Delaware law."

Generally, the choice of law and forum clauses specify the venue and the applicable law, which is usually the same state and/or country/province/whatever.

Even when a country chooses to exercise jurisdiction over a dispute in derogation of a choice of forum clause, courts are usually deferential to choice of law provisions, as the nature of a choice of law clause essentially incorporates the relevant law into the contract as part of what the parties agreed when signing it.

It looks like the Gox fiasco is about to be litigated in multiple jurisdictions, so I guess we'll see how this all plays out in reality, but it'd be nice to know what Goxers actually contracted for when they clicked past some TOS to sign up without reading it.

I think you're misunderstanding the point he's trying to make.  You can sue in another jurisdiction for negligence, conversion, breach of contract, etc and win, but your judgement doesn't give you a superior claim in the insolvency proceedings (and under UN model law many nations actually take into account insolvency proceedings in another jurisdiction when determining litigation in their own backyard).  

MtGox is actually prohibited by law from paying any of their creditors at this point.  The insolvency is taking place under Japanese law, which effectively means that MtGox assets are now under the control of the Japanese legal system (via those appointed by the court).  No-one's getting more than other creditors unless they can establish themselves as a preferential/secured creditor (under the criteria required by Japanese law) or unless they pursue assets which aren't under the control of the Japanese legal system.

Also, the point of litigation is rarely to go to trial.  In the vast majority of cases the plaintiffs are hoping to force a settlement offer - something insolvent companies aren't in a position to make without the approval of the courts in the jurisdiction where their insolvency proceedings are taking place.

What people seeking to sue in other jurisdictions are hoping to do is inflate their claim by punitive/exemplary damages in the hope of recovering a larger portion of their losses than other creditors.  It's a trick as old as the book.

The supervisors are private lawyers but appointed by the court in regard to the case.
So they are paid by the court and they are completely neutral.

This is kind of interesting because elsewhere the fees of those appointed by the court are paid out of the insolvency estate (the hourly rate they can charge is set - it's hundreds of dollars per hour here plus additional fees for administrative staff, accountants, etc).  Are you saying that even if this takes thousands of hours of work to sort out (which it may well do) and the cost runs into millions, the government will pay for that and not a cent of those fees will come out of the remaining assets of MtGox?

[darkmule]

I think you're misunderstanding the point he's trying to make.  You can sue in another jurisdiction for negligence, conversion, breach of contract, etc and win, but your judgement doesn't give you a superior claim in the insolvency proceedings (and under UN model law many nations actually take into account insolvency proceedings in another jurisdiction when determining litigation in their own backyard).  

Actually, I think you're misunderstanding the point I was making.  We don't even really know what entities or human beings have possession of the actual assets of Gox, or where they're located physically, if they even are.  The Japanese bankruptcy might be the only action that matters, but it could be nothing more than squabbling over the contents of an empty shell, and the real assets are elsewhere long ago.

Pretty much anything anyone can say at this point is speculative, because this is terra incognita.  Nothing quite like this has ever happened before.

[repentance]

Actually, I think you're misunderstanding the point I was making.  We don't even really know what entities or human beings have possession of the actual assets of Gox, or where they're located physically, if they even are.  The Japanese bankruptcy might be the only action that matters, but it could be nothing more than squabbling over the contents of an empty shell, and the real assets are elsewhere long ago.

Pretty much anything anyone can say at this point is speculative, because this is terra incognita.  Nothing quite like this has ever happened before.

The Japanese court will have the power to locate and pursue assets (even offshore assets - note that MtGox included those in their Crisis Strategy so they've almost certainly included them in the filings).  It's not uncommon for there to be multiple companies involved in insolvency cases nor for assets to be located offshore.  It's not uncommon for funds to have been converted into something else, either (there are plenty of untraceable things which can be bought, regardless of what you use to purchase them).

The wild cards are personal liability - ie, can Mark and Jed be found personally liable for the losses and their assets attached (this can happen under certain circumstances in other jurisdictions) by the supervisor/trustee - government seizure, and whether BTC liabilities will be rolled into the civil rehabilitation (it can't possibly work if they are, so civil rehabilitation would just become the scenic route to liquidation).  We have no idea what proportion of remaining MtGox assets might be vulnerable to seizure by authorities (Japanese or foreign) in relation to criminal offences.  The US, at least, pursues asset substitution if it can't locate specified assets - meaning that it will seize something else of similar value (even if that thing is legally obtained) to assets it can't locate.

This is new ground and old ground at the same time.

[Nagle]

Pretty much anything anyone can say at this point is speculative, because this is terra incognita.  Nothing quite like this has ever happened before.

Nah. Things like this have happened before. There's not much new in the fraud business. Learn some financial history.

Suggested reading:

* "Extraordinary popular delusions and the madness of crowds" - a century old book, and all the major scams are described.
* "The Great Salad Oil Swindle" - 50 years ago, a scam involving trading in receipts for nonexistent salad oil. Sound familiar?
* "The Smartest Guys in the Room" - how Enron blew it.
* "Faking It in America" - how a 19 year old created a $100 million phony company.

Yes, those are all books. Big books with lots of words. You'll see precedents for just about every scam seen in the Bitcoin world.

The Bitcoin world is a lot less original than it thinks it is.

[medialab101]

Thanks for elucidating many of the details of this case. I have 2.5 million Yen tied up in Gox so I'm currently considering joining a class-action suit. What I've been wondering is if I have a better chance (as a permanent resident of Japan) joining a foreign suit or seeking legal recourse here in Japan. Will be following this thread closely.

[repentance]

* "The Smartest Guys in the Room" - how Enron blew it.

Make sure you read the book on this one.  The documentary leaves out an awful lot of really important stuff.  I think it's the most relevant to Bitcoin on so many different levels out of the books suggested.

Thanks for elucidating many of the details of this case. I have 2.5 million Yen tied up in Gox so I'm currently considering joining a class-action suit. What I've been wondering is if I have a better chance (as a permanent resident of Japan) joining a foreign suit or seeking legal recourse here in Japan. Will be following this thread closely.

You already have default legal recourse in Japan through the insolvency proceedings.  Nobody can really advise you whether it's "worth" taking legal action outside of those proceedings.  Someone in Japan is probably going to get a lot better advice about that from local litigation lawyers than someone in the US or the UK, though (my understanding is that Japan doesn't have class actions as such - it has multi-plaintiff actions and those have their own set of rules).