Mt. Gox CEO Refuses to Come to the U.S. in Financial Crimes Probe
April 16, 2014 3:50 PM
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Meanwhile Tokyo Court rules that Mt. Gox can't be rehability, and that Mr. Karpelès must be investigated
Bitcoin robber baron
Mark Marie "MagicalTux" Robert Karpelès
has reportedly "lawyered up" according to a report by
. Mr. Karpelès needs all the legal advice he can get as he is currently under investigation in the U.S. by the
Financial Crimes Enforcement Network
(FinCEN), the law enforcement wing of the
U.S. Department of the Treasury
I. Pleading the Fifth
having his U.S. assets frozen
and having "magically" found
200,000 of the 850,000 Bitcoins
claimed hackers stole
, Mr. Karpelès continues to face tough questions about whether he still holds the remaining missing Bitcoins (which he continues to insist are stolen). His opponents in court believe
he stole their coins
in a shameless cash grab and are fighting to try to prevent the Tokyo Court from authorizing
Mr. Karpelès' bankruptcy and proposed liquidation of Mt. Gox KK
as it currently stands.
The FinCEN has subpoenaed Mr. Karpelès, demanding he travel to the U.S. to appear in court to answer questions under oath. His answer is simple, according to his lawyers -- no way.
Mark Karpelès has refused to come to the U.S. to testify about his possible financial crimes.
[Image Source: Mark Karpelès on Flickr; Fair Use clause
TITLE 17 > CHAPTER 1 > § 107
Mr. Karpelès has indicated that he will fight any sort of extradition effort,
In a court filing his lawyers write:
Mr. Karpelès is now in the process of obtaining counsel to represent him with respect to the FinCEN Subpoena. Until such time as counsel is retained and has an opportunity to 'get up to speed' and advise Mr. Karpelès, he is not willing to travel to the U.S.
The FinCEN had requested in their subpoena that Mr. Karpelès travel to Washington D.C. on Friday to testify.
II. No Rehabilitation Possible
The Tokyo High Court dealt a key blow to Mt. Gox KK on Tuesday. The court ordered that so called "civil rehabilitation proceedings" -- basically, Mr. Karpelès' proposed plot to avoid liquidation by rebranding Mt. Gox and selling it to an investor -- would be impossible due to the business' tarnished image and potentially criminal conduct. The court also ruled that for the bankruptcy to proceed, Mr. Karpelès must be investigated for fraud.
The Tokyo District/High Court [Image Source: Atom Tokyo]
on Mt. Gox's website (translated
MtGox Co., Ltd., applied on February 28, 2014 for commencement of a civil rehabilitation procedure at the Tokyo District Court (Tokyo District Court 2014 (rehabilitation) no. 12, the “Civil Rehabilitation Procedure”).
During the following 1 month and a half, an investigation has proceeded with regard to the past factual elements related to the disappearance of bitcoins and missing funds which were the cause of said application, but it is expected that said investigation will still require some time and at this time, there are no prospects for the restart of the business.
Further, MtGox Co., Ltd. is continuing the negotiations with sponsor candidates but the concrete selection process has not yet started.
Taking into account this situation and the fact that the drafting of a rehabilitation plan and its adoption or approval appear difficult, after consultation with the Court and the Supervisor on the continuation of the procedure, the Tokyo District Court decided today to dismiss the application for commencement of a civil rehabilitation and at the same time, an order for Provisional Administration was issued and Attorney-at-law Nobuaki Kobayashi (Supervisor and Examiner under the Civil Rehabilitation Procedure) was appointed Provisional Administrator.
It is expected that, if the bankruptcy proceedings commence, an investigation regarding the liability of the representative director of the company will be conducted as part of the bankruptcy proceedings.
Mt. Gox KK's assets -- and Tibanne KK and Mr. Karpelès assets, it appears -- are under the control of Nobuaki Kobayashi, the court-appointed administrator, at least for now.
III. Mt. Gox for $1?
It's possible under the court order that Mt. Gox could still be sold as part of the liquidation process. Brock Pierce -- a child actor from films such as
The Might Ducks
series who today works as an investor -- offered a token bid of $1 USD last week, along with a coalition of other investors, according to the news agencies. Hopes of a large bid, though, have faded fast.
actor Brock Pierce led a group of investors who submitted a bid of $1 USD for Mt. Gox this week. [Image Source: Disney]
If Mr. Karpelès proves unwilling or unable to "find" more of his "missing" bitcoins, then it seems likely that creditors to Mt. Gox -- including its users -- will lose a large portion of their holdings.
In his lawyers court filings, Mt. Gox KK and Mr. Karpelès have been careful to use ambiguous language, so that if indeed he has absconded with his customers coins, at least he hasn't lied in court -- not in a technical sense, at least.
Mark Karpelès will also face a fraud investigation in Japan, according to the Tokyo Court.
[Image Source: Mark Karpelès on Flickr; Fair Use clause
TITLE 17 > CHAPTER 1 > § 107
Mt. Gox KK's U.S. subisidiaries -- which are also under fire from breach of contract lawsuits -- are scheduled to appear in court this month, but its lawayers are requesting that
Judge Harlin Hale
U.S. District Court for the Northern District of Texas
push the hearing to May 5. However, they can't promise will be there, even if the court orders the delay.
Mr. Karpelès, who currently resides in a luxury Tokyo high rise, is fighting to shield Mt. Gox's parent company Tibanne KK from the bankruptcy. That way he can keep much of his assets and potentially keep Mt. Gox KK's headquarters building as well -- which is technically owned by Tibanne KK. It appears likely, however, that he will lose the French coffee shop/wine bar/bistro "The Bitcoin Cafe" that he had poured millions into building.
Mt. Gox [1, PDF]
This article is over a month old, voting and posting comments is disabled
RE: Why should he?
4/17/2014 6:13:45 AM
I'm not blaming the victim. I'm saying in this type of international relationship, responsibility lies entirely with the person choosing to interact with an overseas business entity. You're conducting business in a foreign country. It is your responsibility to learn and abide by the laws of that country; it is not the responsibility of the foreign business to comply with your country's laws. Unless there is some sort of bilateral agreement between the two countries standardizing business and criminal conduct, it cannot be any other way.
Are you arguing that he falls under U.S. jurisdiction simply because some of the people using his business were U.S. citizens? If you are, then you're saying you could be hauled off to China for violating their censorship laws just because some Chinese citizen happened to post on your blog. If someone sends their money, property, writing, whatever to
country to conduct business with your company operating under
country's laws, in no way should that constitute your consent to fall under the jurisdiction of the laws of that person's country. If you go to their country to conduct business, then yeah, sure, of course you should fall under their laws. But if they come to you, then they fall under your laws, not vice versa.
Japan and France are close allies to the U.S., so there may in fact be some grounds for extradition to the U.S. based on criminal conduct. But until that determination is made, he's a French citizen residing in Japan, and beyond the reach of U.S. law. Did he defraud U.S. citizens? Probably. But by our own laws he's innocent until proven guilty. If they want to question him, all they can do is ask, and he has every right to refuse. If they want to force him to come here, they're going to have to build a case, have a grand jury indict him, file an extradition petition with Japan, and hope the Japanese courts agree with the indictment and extradition.
"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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