Bankruptcy Judge: Bitcoin CEO Must Come to the United States to Be Deposed

 DALLAS — (Mealey’s) The federal bankruptcy judge presiding over the Chapter 11 case of bitcoin exchange operator MtGox Co. Ltd. today ordered the company’s CEO to fly to the United States from Japan to be deposed, a source told the LexisNexis Bankruptcy Report (In Re:  MtGox Co. Ltd., No. 14-31229, Chapter 15, N.D. Texas Bkcy.).

Bankruptcy

MtGox Co. Ltd. filed for Chapter 15 bankruptcy on March 9- Before its petition, Mark Karpeles, the CEO of MtGox Co. Ltd., filed an application to commence civil rehabilitation proceedings in the Tokyo District Court- Civil rehabilitation is the Japanese equivalent of filing for bankruptcy in the United States.

MtGox Co. Ltd. is the parent company for MtGox Inc., MtGox KK and Tibanne KK, all of which entered bankruptcy at the same time.

The same day MtGox Co. Ltd. filed for civil rehabilitation, a group of investors filed a putative class action against MtGox Inc. in the U.S. District Court for the Northern District of Illinois, alleging fraud, breach of contract and other causes of action related to the loss of 744,000 bitcoins, which the investors contended were valued at $409.2 million (Gregory Greene, et al. v. MtGox Inc., No. 14-01437, N.D. Ill.).

On March 25, the investors moved in the U.S. Bankruptcy Court for the Northern District of Texas to compel Karpeles to provide deposition testimony and offered to pay his travel expenses from Japan to the United States.

Travel

Despite the offer, the investors contend that Karpeles persisted in his refusal to travel to the United States “based solely on the inconvenience of the time it takes for a flight to the United States and an amorphous need to focus on the Japan proceeding.”

Bankruptcy Judge Stacey G. Jernigan issued a verbal order from the bench, a source said, which compels Karpeles to come to the United States and give deposition testimony.

The class is represented by Christopher L. Dore, Jay Edelson, David I. Mindell and Alicia Hwang of Edelson in Chicago and Segeven L. Woodrow and Megan Lindsey of Edelson in Denver- The MtGox entities are represented by Junko Suetomi and Yamamoto Hideyuki of Baker & McKenzie, Akio Shinomiya and Kazumasa Kawai of Yodoyabashi & Yamagami Legal Professional Corp. and Nobuaki Kobayashi of Nagashima Ohno & Tsunematsu, all in Tokyo- Karpeles is represented by David W. Parham and John Mitchell of Baker & McKenzie in Dallas.

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