US District Judge Allows Mt.Gox Class Action Lawsuit Against Mizuho Bank to Proceed in California

Northern District of Illinois Judge Gary Feinerman, has ruled that a class action suit filed in Illinois by victims of the the Mt.Gox fraud against Japanese bank Mizuho, will be moved to the Central District of California based on long-arm statute.

“California’s long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution.”

Mizuho attempted to have the suit relocated to Japan on jurisdictional grounds, but judge Feinerman stated that because Mizuho was accepting fiat currency wire transfers from US clients on behalf of Mt.Gox – which the bank earned a fee on – the suit should proceed in the United States.

According to the order, when Mizuho learned that Mt.Gox was under investigation by US authorities, the bank decided to make thing difficult for the embattled exchange:

“Those measures included limiting the number and amount of Mt. Gox customer withdrawals and refusing to  process some wire transfers.”

Judge Feinerman went on to accuse Mizuho of deliberately prohibiting Mt.Gox from releasing any public information regarding the difficulties the exchange was having with processing withdrawals, fearing that the users of the exchange would stop the flow of deposits.

“Mizuho knew that if Mt. Gox’s members learned of its prohibition on withdrawals of fiat currency from Mt. Gox’s Mizuho account, members would stop making deposits and Mizuho would stop collecting the associated fees.”

Furthermore, Feinerman stated that Mizuho took special measure to ensure that clients of Mt.Gox were kept in the dark about why their withdrawals were being delayed.

“Mizuho prohibited Mt. Gox from disclosing that the withdrawal difficulties were attributable to Mizuho or that Mizuho wanted to terminate its relationship with Mt. Gox.”

 

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