According to a Reuters report on Monday, District Judge Robert Kelly has refused Karpeles’ request to dismiss the suit, which alleges that the former CEO had concealed issues at the exchange from its users.
Mark Karpeles, former CEO of the early bitcoin exchange Mt. Gox, must face a class action lawsuit brought in Philadelphia over the firm’s collapse in 2014.
A court document on the ruling indicates that the case has been brought by a former customer of Mt. Gox, Gregory Pearce on his own behalf and others affected by the failure of the exchange. He alleges that Karpeles, who was the “sole controlling force” of the Tokyo-based exchange, knew there were “security bugs in the system but did not make these defects known to the public.”
Karpeles had argued that the Philadelphia court did not have jurisdiction in the case and sought a dismissal, however Judge Kelly rejected his argument on Friday, according to the report.
The court document cites Pearce’s claim that he had ordered a physical security key from Mt. Gox and that he had requested that it be sent to his Philadelphia address.
The suit was originally brought in 2018 against Karpeles and Mihuzo Bank, but the court found it did not have jurisdiction over the bank. Pearce is claiming one count of negligence and one count of fraud against Karpeles.
Karpeles has been the subject of numerous lawsuits over his role in Mt. Gox’s failure. In 2016, a similar class action in Canada was dismissed.
He’s also been found innocent of most charges in a more recent Tokyo criminal trial in which he was charged with embezzlement, breach of trust and manipulating data on the exchange. Karpeles was found guilty only on the data charge, one he said he’d appeal in March.