Roger Ver’s fight against Chinese bitcoin exchange OKCoin is intensifying as the noted bitcoin investor attempts to have the business liquidated in a Hong Kong court.
The move comes after months of legal wranglings that have already seen the exchange lose one court case. OKCoin's alleged lack of response to the judgement has now prompted Ver to take further action that could ultimately see the company closed.
That conflict deepened amid accusations of forgery, as well as impropriety on the part of OKCoin – allegations that exchange representatives swiftly denied.
In the end, Ver went to court, suing OKCoin's Hong Kong entity. At the same time, Ver and attorney Daniel Kelman prepared a suit against the exchange, as well as its chief executive, Star Xu, over the alleged forgery of Ver’s signature. That suit is pending trial.
According to court documents obtained by CoinDesk, OKCoin never responded in court to the breach-of-contract suit. On 17th November, the court handed down a final and interlocutory judgment awarding the $570,000 to Ver.
Yet, according to Ver and Kelman, OKCoin has yet to respond to both the court's decision, as well as further entreaties.
As such, the two say they intend to go ahead with a request for the Hong Kong court to liquidate OKCoin's local entity in a bid to obtain the funds. According to Kelman, a liquidation petition is currently being drawn up.
He went on to explain:
"OKCoin just stopped responding. It became a one-sided discussion, which basically means sue us. Sue us and stop talking, so they didn’t really give us much of a choice.”
Documents provided to CoinDesk indicate that, after the November judgment, OKCoin’s legal representation in Hong Kong responded by letter on 23rd December, asking that they set aside the original court decision. According to Kelman, they sent a response in turn, requesting an offer – which they never received.
A statutory demand letter was later served to OKCoin’s Hong Kong office on 24th January, reiterating the $570,000 judgment handed down by the court along with $13,867 in accrued interest.
According to Ver, the exchange never responded to that letter, which was also sent to its legal representatives in Hong Kong.
The delivery of that letter triggered a 21-day notice period, which ended this week on 13th February.
When reached for comment, OKCoin said in a statement:
"This case is still under legal proceedings. There is no result in the matter to discuss."
The development marks the latest chapter in a dispute that, after exploding across social media last year, has largely faded from public view.
Disclosed emails at the time portrayed an increasingly contentious back-and-forth between Ver and OKCoin representatives – a situation that worsened following the allegation of contract signature forgery, which Ver has since stressed is fact.
Former OKCoin exec Changpeng Zhao later backed up Ver, going on to allege that the exchange inflated its trade volumes with bots and had manipulated the outcome of an audit conducted in August 2014.
At the time, Xu provided several refutations of Zhao's claims.
Amidst that environment, Ver pledged that he would take his case to court, formally filing suit in September. Things went quiet, while Ver turned Bitcoin.com into a bitcoin-focused content platform and mining pool and OKCoin continued with its exchange business.
However, the latest developments could lever the situation into the public eye once again, depending on the court’s decision.
If the request is successful, the court in Hong Kong will push the exchange into liquidation – and from there, the situation could become potentially messy.
“[Then] their company in Hong Kong, that all their customers have an agreement [with], that all the customers trust with their money – regardless of who holds that money – the court is going to put them into liquidation and order all that money back and make everyone a creditor unless OKCoin actually shows up in court to settle this thing,” Kelman told CoinDesk.
As for what will happen after that, the path is less certain.
OKCoin owns business entities in China and Singapore, which could be impacted by the outcome in Hong Kong should the judge approve the liquidation. OKCoin may request that the suit be moved to China, where it keeps its headquarters.
The timing of these latest developments arguably couldn't be worse for the firm. OKCoin has recently come under pressure – along with the rest of China’s cryptocurrency exchange sector – from regulators in the country, including the People’s Bank of China.
Since then, OKCoin has ceased margin trading, added exchange fees and halted withdrawals pending upgrades to its internal systems.
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