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Mt. Gox Principal Ordered to Dallas to Meet Creditors

April 1 (Bloomberg) -- Mark Karpeles, principal of the bankrupt Mt. Gox bitcoin exchange, was ordered to travel to Dallas from Tokyo for limited questioning about the company’s assets and eligibility for U.S. court protection.

Bankruptcy Judge Stacey Jernigan said today it appeared Karpeles, while seeking protection from creditors in the U.S., was trying to avoid being served with additional legal papers upon his arrival. She rejected Mt. Gox lawyers’ offer to produce a representative to answer questions about the exchange without promising it would be Karpeles as well as a proposal he travel only as far as Taipei.

“I’m going to order him to appear,” Jernigan said. “He availed himself of this court.”

Mt. Gox filed for bankruptcy in Tokyo on Feb. 28, after revealing earlier that month that almost 750,000 customer bitcoins and about 100,000 of its own were unaccounted for and possibly stolen. It later said about 200,000 of them had been located. Each unit of the virtual currency is worth about $479.40 today, according to the website CoinDesk, which tracks its value.

At about the same time as the bankruptcy filing, the exchange, Karpeles and two related companies were sued for fraud in federal court in Chicago by U.S. depositor Gregory Greene.

On March 9, Mt. Gox filed in Dallas for U.S. recognition of the bankruptcy proceeding in Japan.

Bitcoin Lawsuit

Attorneys in the Chicago lawsuit and an earlier case in Seattle sought to question Karpeles. Today, Jernigan prohibited those lines of questioning, limiting the subject of a deposition of Karpeles to matters concerning the U.S. bankruptcy, assets and creditors.

Steven Woodrow, an attorney for Greene, called the offer to produce Karpeles in Taipei “unreasonable,” telling the judge it made no sense to send several sets of lawyers there in lieu of flying Karpeles to the U.S.

“We’ve offered to pay his travel expenses,” Woodrow said, adding the only person who could shed light on whether it was appropriate for Mt. Gox to be before a U.S. bankruptcy court is Karpeles.

Jernigan ordered that Karpeles appear April 17 at the Dallas offices of Mt. Gox’s bankruptcy attorneys.

She re-set a hearing to determine whether Mt. Gox is eligible for U.S. bankruptcy court protection, for May 20. It was originally set for today.

The U.S. bankruptcy is In re MtGox Co., 14-bk-31229, U.S. Bankruptcy Court, Northern District of Texas (Dallas). The Illinois lawsuit is Greene v. Mt. Gox Inc., 14-cv-01437, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser

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