Assets of Mark Karpeles Frozen Amid Allegations of Fraud

The personal assets of Mark Karpeles, CEO of now defunct MtGox, were temporarily frozen on Tuesday by Judge Gary Feinerman of

The personal assets of Mark Karpeles, CEO of now defunct MtGox, were temporarily frozen on Tuesday by Judge Gary Feinerman of the U.S. District Court for Northern Illinois.

The freeze comes amid a class action lawsuit spearheaded by Illinois resident Gregory Greene for users of the exchange, represented by Christopher Dore of Edelson PC. The freeze remains in effect for 14 days, after which the relevant parties will return to court to decide if it will be extended.

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The assets were frozen to allow victims of the exchange to demand evidence of alleged fraud. There have been allegations that more than an external hacking has taken place; some Bitcoiners allege that Karpeles stole bitcoins based on their analysis of movements within the blockchain. Indeed, the language of one the original updates on the MtGox website insinuated such. It stated that bitcoins have gone missing and separately that they had been hacked but stopped shy of completely linking the two: “The increase of current liabilities may be linked to a loss of bitcoins and customer funds. These are now investigated by an expert and all efforts are made to discover the truth.”

The asset freeze extends to MtGox’s U.S. affiliate as well as its Japanese parent company, Tibanne. It did not apply to the Tokyo-based Mt. Gox KK, which is immune by having filed for bankruptcy protection in Japan and the U.S.

Whatever the outcome, any future enforcements or seizures related to Bitcoin would have to set a massive precedent, as cryptocurrency’s decentralized nature places it outside control by authorities. Dore explained that “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.” While this may uncover their true location, it may do nothing to rectify the issue.

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