Bitcoin exchange Mt. Gox sues for return of $5M from CoinLab
Tokyo-based exchange's countersuit claims its one-time partner still holds more than $5 million in exchange customer funds.
Mt. Gox, the world's largest Bitcoin exchange, has filed a countersuit against CoinLab that demands the return of more than $5 million in customer funds it claims its one-time partner still holds.
The lawsuit, filed last week in US District Court for the Western District of Washington, came in response to athat CoinLab filed against Mt. Gox in May. The two companies reached an agreement last year under which CoinLab would in the US and Canada.
The partnership was designed to smooth the Bitcoin trading process and show the security of the virtual currency, but the transfer of operations never occurred because Mt. Gox withheld account information, according to the Seattle-based startup's lawsuit against Mt. Gox.
In its counterclaim, the Tokyo-based exchange charged that its agreement with CoinLab was void because the Seattle-based startup violated the agreement by not registering as a money-transmitting business or money services business. As a result of this failure, Mt. Gox said it rescinded the agreement in March and seeks dismissal of CoinLab's lawsuit.
In addition, Mt. Gox claims that at the beginning of the partnership, nearly $12.8 million of customer accounts were transferred to CoinLab accounts. About $7.5 million was transferred back to Mt. Gox, leaving about $5.3 million of Mt. Gox funds "being wrongfully held by CoinLab," the exchange said in its complaint.
A CoinLab representative declined to comment, saying the company was still reviewing the lawsuit.
Along with the US government's seizure of $2.9 million in Mt. Gox funds earlier this year, the alleged withholding of funds may be contributing to cash flow problems the exchange has allegedly been experiencing in recent months. Bitcoin discussion forums have been ripe for months with complaints from some users unable to withdraw their funds from the exchange.