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Lawsuit filed against Mt. Gox founder for allegedly misleading clients

Bitcoin.Antana/Flickr

Thu, 27 Jun 2019, 00:26 am UTC

Crypto enthusiasts might remember the scandal that was the Mt. Gox incident in 2014, where over $400 million worth of bitcoins were stolen. Since then, the founder of the crypto exchange, Jed McCaleb has had to contend with numerous lawsuits accusing him of some serious crimes. The most recent one involves the controversial figure supposedly knowing about the security risks and keeping them hidden.

In the court filings detailing the accusations being leveled at McCaleb by traders, Joseph Jones and Peter Steinmetz, the Mt. Gox founder allegedly hid serious security issues discovered around late 2010. This was several years before the large theft of bitcoins, Cointelegraph reports and some of the digital currency have supposedly already been stolen at this point.

“Rather than secure the exchange, McCaleb sold a large portion of his interest in the then sole proprietorship, and provided avenues to the purchases to cover-up security concerns at the time without ever informing or disclosing these issues to the public,” the court filings read.

The main issue that the plaintiffs have with regards to this particular matter was the transparency of the exchange’s vulnerability. Had they known about its issues, the two noted that they would not have used its services at all.

“In deciding to use Mt. Gox as offered by Defendants, Plaintiff accepted as true the totality of representations and omissions made by representatives from Defendants that Defendants were uniquely qualified to properly provide the services needed to operate a successful and secure exchange per the needs of Plaintiffs and that Mt. Gox was properly funded,” the documents read.

For his part, McCaleb has yet to provide a statement regarding this new round of lawsuits against him, Coindesk reports. His exchange has already been closed for a long time but he is still being hounded by traders who lost a lot of money during the incident.

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