A Chicago judge has reportedly frozen all US-based assets controlled by Mark Karpeles, the CEO of the now defunct bitcoin exchange Mt. Gox.
US District Judge Gary Feinerman made the decision to freeze Karpeles’ assets, along with assets belonging to companies tied to both Mt. Gox and Karpeles, according to the Wall Street Journal. The order is temporary, but the assets will remain frozen for at least two weeks.
This move doesn’t appear to be directly related to the exchange’s Chapter 15 bankruptcy proceedings. It is, in fact, the result of a prior lawsuit filed against Karpeles by Mt. Gox customers seeking compensation. It is not yet a class action, but it might soon become one.
As reported yesterday, Chapter 15 bankruptcy will not stop the case from moving forward and the asset freeze proves it is going ahead.
Will the asset freeze help customers?
Courts impose asset freezes in situations like this to secure plaintiffs and make sure the defendants don’t funnel money elsewhere. However, in this particular case it probably won’t go a long way toward reassuring customers, as Karpeles’ holdings in the US appear to be limited.
In court, lawyers for exchange customers alleged that Karpeles is moving funds which are claimed lost by Mt. Gox. One of the attorneys involved in the case, Jay Edelson, argued that every day the customers wait there will be “less and less money”. Christopher Dore, another Edelson attorney, said:
“The main thing we hope to achieve is to finally see what the web of things that Karpeles has put together over the last few years and to start unwinding it as to where things are and what happened.”
The asset freeze targets bank accounts used by Mt. Gox and Karpeles, as well as servers located in the US. However, even the judge admitted there might be no assets to freeze. “It may turn out there are no such assets,” Feinerman said.
More questions than answers
Judge Feinerman has scheduled a status conference for 20th March. Lead plantiff’s lawyer Jay Edelson said he is looking to question Karpeles under oath immediately, Bloomberg reports.
“We can finally get some real answers,” Edelson said.
Attorney Steven Woodrow believes the court order could freeze between $2.1m and $5m in assets controlled by Karpeles. In its Chapter 15 filing Mt. Gox claimed to have approximately $63.9m in liabilities and $37.7m in assets.