With MtGox disappearing, questions about legal alternatives for customers to retrieve their funds has heated up. Unfortunately, the current case appears to be one large enigma due to the lack of regulations governing the legalities of bitcoins and limited legal precedence to lean on.
In terms of local financial regulator enforcement, a spokesperson for the Japanese Financial Services Agency (JFSA) told the Wall Street Journal, that MtGox customers wouldn’t fall under their jurisdiction as they stated “Bitcoin isn’t a currency; it works as an alternative to currencies, like gold. The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight.”
Among legal alternatives, DC Magnates reported last week of customers beginning to band together on forums to formally file a case against MtGox, and Tibanne Co, the holding company that operates the bitcoin exchange as is incorporated in Japan. However, any legal actions would require cross border cooperation due to the existence of MtGox’s global customer base.
Searching for possible solutions, DC Magnates reached out to Richard Howlett, a UK based Solicitor, whose firm Selachii LLP is currently in the process of organizing a class action lawsuit of MtGox customers against the exchange, and who according to Howlett have an existing list of about 180 people that have shown interest in joining the case.
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Explaining the situation, Howlett stated that the “Quite simply, the best legal solution in situations like this is a class action. This is where a group of people, all suffering from the same breach of contract collectively issue legal proceedings.”
Answering how a class action would be handled with customers located around the world, Howlett explained that for individuals, a cross border claim is often expensive to undertake. However, via a collective lawsuit like a class action filing, per person expenses are manageable.
In terms of how a case would be filed, Howlett stated that “The way in which a class action would proceed would be to initially obtain instructions from as many affected individuals as possible, details would be taken from each individual such as their holding with Mt Gox, their name, address, country of origin etc.” He added that this process would be followed by the class action being “instigated in Japan against Mt Gox, the sooner the better in an attempt to preserve evidence and also to obtain a freezing injunction/order against Mt Gox, their subsidiaries, shareholders and Directors.”
Commenting on potential criminal behavior, Howlett said that “At this stage, it is unknown whether Mt Gox have acted criminally or if they are indeed the victim of hacking. The fact they have shut down their website, offices and Twitter feed rings very loud alarm bells.”
Overall, Howlett concluded that “If Mt Gox are not challenged legally, due to the current lack of regulation around the world and in Japan, it is likely they could walk away from this without giving an official explanation and without paying back any bitcoins.”