Mizuho Bank Slapped with Civil Action Lawsuit in US

Gautham | March 15, 2016 | 10:00 pm
mizuho, blockchain, bitcoin

Mizuho Bank Slapped with Civil Action Lawsuit in US

Gautham | March 15, 2016 | 10:00 pm

In 2014, Bitcoin faced one of the worst disasters that turned the clock back on the whole ecosystem. That disaster was none other than the collapse of Mt Gox, a major bitcoin exchange at that time. The Japanese bitcoin exchange collapsed following a series of alleged hacking incidents resulting in over half a billion worth of bitcoins going missing.

The troubles started in mid-2013 when discrepancies started cropping up. Mt Gox announced that it was hacked and also the customers started facing difficulty operating their accounts on the platform. The whole issue took a serious turn after Mt Gox filed for bankruptcy in 2014.

Three years since the incident, the stakeholders and entities associated with the exchange still suffer from the aftermath of Mt Gox incident. In the latest development, Mizuho Bank, the banking partner for Mt Gox is now facing a lawsuit in Chicago, United States. The class action lawsuit was filed by the United States customers of Mt Gox exchange who have accused Mizuho Bank of concealing the issues with Mt Gox exchange at that time so that the exchange can continue to operate.

Mizuho is one of the largest banking institutions in Japan. The bank was responsible for handling all transaction made by US customers of Mt Gox exchange. The lawsuit, filed in 2014 was contested by the lawyers representing Mizuho bank who argued that the US Court in Chicago does not have jurisdiction as the case belongs in Japan, where Mt Gox operated.

Reuters has reported that the defendant’s (Mizuho Bank) arguments were shot down by the presiding US District Judge Gary Feinerman. As the judge permitted the lawsuit to proceed further, the Tokyo-based bank will now have to contest the lawsuit on US soil.

The lawsuit filed by Mt Gox customers in the United States claim that Mizuho Bank knowingly withheld information about Mt Gox’s actual situation, which led the customers to suffer more losses. Customers trying to withdraw their funds from Mt Gox following reports of an investigation into the bitcoin exchange was declined by the bank. At the same time, the bank continued to accept payments from Mt Gox users instead of reducing the inflow of funds. This decision compounded the problem by increasing the losses among Mt Gox users.

Meanwhile, the law enforcement authorities in Japan are pursuing the investigation into Mt Gox and its ex-CEO Mark Karpeles. During the course of the investigation, Mark Karpeles has been arrested twice for his role in the embezzlement of user funds and fabricating exchange data were uncovered. It is believed that he has embezzled about $2.6 million from Mt Gox to his other businesses. He is also accused of altering the exchange data to change its outstanding balance information.

In other news, Mizuho Bank is actively involved in the blockchain technology space. the banking giant is working in collaboration with Fujitsu to optimize the cross-border movement of financial assets using blockchain technology.

The final outcome of the lawsuit and Mizuho’s blockchain research still remains to be seen.

Ref: Channel NewsAsia
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