MtGox v Coinlab Litigation

Coindesk gives an update on the litigation between Coinlab and MtGox, complete with copies of the claim and counterclaim.

The main controversy seems to be that Coinlab was supposed to have the necessary regulatory approval to legally run the MtGox business in the United States, and that representations from Coinlab that they already had that turned out to be false.

Both parties could not know at the time of the negotiations (last year) that American regulators would come up in 2013 with the absurd notion that running a Bitcoin exchange is somehow a money transmitting business, which doesn’t make any sense at all.

That means Coinlab had really no basis for their claim that they had regulatory approval at the time.

And MtGox was rather careless in accepting that baseless claim, especially the idea that Coinlab somehow was not obliged to explain why they had regulatory approval because that was a “trade secret”.

For the very least, this contract should have had a clause that states what exactly happens if later developments in the regulatory environment lead to a situation where Coinlab, in fact, has no regulatory approval.

One of the problems with the American idea of regulating the Bitcoin network is that anybody wishing to comply with regulatory requirements is expected to get licenses as a “Money Transmitting Business” in 48 States. Eventually some companies will finish this long and unnecessarily burdensome process and actually have the necessary licenses. Coinlab wants to be one of these companies.

But even if Coinlab gets such a license, probably MtGox will want to choose someone else for their representation to the American market.

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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