Failed bitcoin exchange prompts contract dispute

On Behalf of | Jun 27, 2018 | Business Torts |

Many California investors held Bitcoin at Mt. Gox, a prominent exchange for the cryptocurrency that collapsed after an attack on the service. Now, the consequences of the losses that accompanied the fall of Mt. Gox are playing out in litigation, including a complaint by several former Mt. Gox customers against Mizuho Bank. Several former Bitcoin holders who used the exchange allege that the bank tortiously interfered with their contract with the exchange.

The bank is seeking to dismiss the case filed by former customers of the Bitcoin exchange, who allege that the bank is responsible for breaching its contract. Mizuho was the only bank to provide services to Americans who used the Bitcoin exchange and, at some point, it made a decision to stop processing requests for international wire transfers. However, the transfer requests were submitted properly according to the contract the customers had with Mt. Gox. In addition, Mizuho failed to disclose why it was blocking transfers. This meant that customers did not have information they needed to determine whether they should purchase Bitcoin on the exchange.

Mizuho claims that it did not stop Mt. Gox customers from withdrawing cash from their accounts. It argues that when customers decided to deposit funds to buy Bitcoin at Mt. Gox as late as January 2014, they had the information they needed from the exchange and that the bank’s failure to disclose its restrictions on wire transfers was not material.

When a company fails to uphold an obligation to customers doing business with one another, it could be held responsible for interfering with the contract between them, especially when its behavior leads to financial losses. A business and commercial lawyer can help people dealing with complex issues of contract breach and business fraud to seek compensation for the damages they have suffered.

RSS Feed

FindLaw Network
Photo Of Henry B. LaTorraca

He is a highly-respected litigator who has been recognized by his peers with an AV Preeminent® rating*

AV | Distinguished | LexisNexis | Martindale-Hubbell | Peer Review Rated | For Ethical Standards And Legal Ability