OKPay 'Ordered' to Hand Over Customers' $6.1 Million to Mt Gox

NEWS
Jon Southurst
Sep 8, 2014 at 15:02 UTC  |  Updated  Sep 9, 2014 at 13:12 UTC

Payment processing firm OKPay has defended its recent transfer of withheld deposits totalling almost $6.1m to Mt Gox, saying a court order compelled it to make the payments.

The $6,014,910 amount consisted of deposits from individual OKPay customers around the world to Mt Gox in the period immediately preceding the exchange's collapse.

Until mid-August, the funds had existed in limbo in a Mt Gox-owned account and OKPay had intended to return everything to customers.

OKPay CEO Konstantin Romanovsky told CoinDesk that was no longer possible after a court decision in the British Virgin Islands (where OKPay is registered) ordered that the amount legally belonged to Mt Gox.

"Initially, we fought for the right to return the money directly to customers, but Mt Gox forbade us to do so. We reached the court, which eventually ordered us to pay the money [into the] Mt Gox Trustee Fund, and not to send money back to customers. As a result, we have fulfilled the court's decision in the BVI and recently sent money [...] We understand that for our business' overall image it would be better if we could send money back to them... But we had no other choice, and the decision of the court is already an undeniable factor."

Romanovsky also refuted a separate rumor that OKPay itself would be closing down, blaming poor translations of original articles. "This is complete nonsense," he said.

Record of OKPAY's payments to Mt Gox
Record of OKPAY's payments to Mt Gox

Earlier assurances

According to customers writing on the Bitcoin Talk forum, OKPay had originally said any funds left un-sent to Mt Gox would be returned to depositors.

They posted the following earlier message from OKPay Support:

"We want to assure you that your recent payments are on the internal MtGox account in the OKPay System, and, if the MtGox company cease to exist without fulfilling its obligations to customers, we will send your recent payments back to your OKPay account; so your funds will not be lost or stuck without any reason when we receive a confirmed report on the situation.

"We will appeal to MtGox to address this issue and keep you abreast of the situation. We will do everything possible to ensure that our clients either receive the service they paid for or get their money back to the OKPay account." [sic]

Although several customers expressed a willingness to take legal action against OKPay, others explained such an attempt would be pointless given the payment took place under a court order.

Creditors must wait

CoinDesk reached out to the Mt Gox bankruptcy trustee's office for comment, but had not received a reply at the time of publication.

While no official reason has been given for the BVI litigation, the trustee would likely consider the extra funds property of Mt Gox to be returned to creditors in some form at the case's conclusion.

Mt Gox creditors, however, have expressed displeasure at fees the bankrupt exchange has paid since its February 2014 demise, including $200,000 to parent company Tibanne, also owned by CEO Mark Karpeles.

OKPay's bitcoin headaches

OKPay had suspended transactions involving bitcoin exchanges including Mt Gox as early as May 2013. At the time, Mt Gox was still the world's most popular bitcoin trading platform with a 70% market share, but had suffered setbacks including cancelled transactions by payment processor Dwolla in May 2013 and a brief suspension of trading in April 2013 for a "market cooldown".

OKPay explained that its banking partners were "not comfortable with bitcoin and want payments to these firms restricted". It later reviewed that decision, and currently processes payments to and from a number of different bitcoin exchanges.

Image via OKPay

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