Last updated on April 15th, 2015 at 10:49 am
It was November, the land of Bitcoin lived in peace and quiet and two major cryptocurrency-related companies, the Japan-based exchange Mt. Gox and the Bitcoin business incubator CoinLab, decided to team up. Well, the good times lasted until May.
The business partnership had some goals, but the main core of the deal was to use Coinlab’s compliance with the North-American law to market Mt. Gox’s services in the United States. This way, the incubator got the exclusive license of the exchange in the country and everything was good, until it wasn’t anymore.
On May 2, CoinLab filed a complaint against Mt. Gox, alleging that the exchange had withheld information the incubator needed to market to customers. The company claims that, instead, the exchange continued to sell into North America itself and CoinLab claimed $75 millions in damages.
You can read an excerpt below:
Mt.Gox has continued to market to customers in North America and has accepted business from customers there. Mt. Gox has also failed to provide CoinLab with account reconciliation data, server access, and other information promised in the agreement that is essential for CoinLab to market exchange services and service its customers as contemplated in the agreement.
And what was Mt. Gox’s answer? Well, they responded with a lawsuit, filed last Friday (13). The action demands CoinLab to pay the exchange $5.5 millions in damages, alleging that the incubator wasn’t able to operate lawfully as its partner in the United States.
According to the Japan-based company, it was impossible to let CoinLab market in the US because the company violated the contract, so Mt. Gox filed a counterclaim that you can check here.
To perform the Bitcoin exchange services in the United States called for under the Agreement, CoinLab was required to be registered and licensed with the federal government and most of the states as a money transmitter. The Agreement is void and unenforceable, and is subject to rescission, because CoinLab failed and refused to become so registered and licensed, and, the Agreement, if performed by CoinLab, would have been unlawful — if MtGox had continued to perform under the Agreement and transferred customer accounts to CoinLab, such that CoinLab was engaging in Bitcoin exchange services in the US, CoinLab would have been acting in violation of federal and state law, to the prejudice of the MtGox customers. MtGox has rescinded the Agreement.
Todd Gamlen, from the litigation services group at Baker & McKenzie LLP, working for Mt. Gox, talked with Coindesk and said that “one of the most important issues to Mt. Gox was that CoinLab be compliant with all applicable laws”.
“CoinLab promised Mt. Gox that CoinLab was, and would be, compliant. As it turns out, CoinLab was not properly registered with the federal government or in the necessary states. CoinLab did not have the legal ability to conduct the services, plain and simple – if CoinLab had operated the Bitcoin exchange services in the US called for under the Agreement it would have violated the law”, he adds.
Now, besides wanting the dismissal of the $75 millions damage claim, Mt. Gox also wants money that it’s rightfully theirs, the exchange assures. According to the counterclaim, CoinLab took $12,788,701 in payments from Mt. Gox’s North-American clients during two months, but only gave Mt. Gox almost $7.5 millions. Now, Mt. Gox wants the rest of the money – $5,315,210 – plus interest.