Topic: [MTGox Sued 5/2/2013] Statement Regarding Formal Complaint (Read 6332 times)
We need Mt.Gox, if they really went through the venture with CoinLab, they will be in deep shit ... now that the Feds are after Dwolla and Frozen their funds... Exchanges in the US are Not Safe at all.. Big Brother wants to be everywhere.
Coinlab should just start their own NA exchange and move on,
They may actually be under some obligation to do so. If part of the damages they are claiming will end up involving the loss of opportunity to participate in the BTC market, and they have already put money toward getting "legal," they have an obligation to mitigate their damages by finding another partner. This might be tricky, as depending on how reasonable/unreasonable their claims in this case are, any potential partner may wonder if they're just going to get sued in a couple months after signing a contract.
However, they can't just let their investment go to waste and complain about what victims they are and expect to get that investment fully paid by Gox. That's not going to happen unless they do something to move into the market they claim they want to move into. It's sort of like a large scale version of a typical mitigation case, where someone reneges on a lease and moves out and stops paying rent. You don't just get to sit there and sue them and get the whole amount of the lost rent (unless the agreement provides for that). You have to try to fill that space. If you don't, you get either a reduced amount or perhaps even nothing.
When presented with a material breach of the contract one is allowed to "cover" ie seek an economically viable alternative in the market in order to mitigate the amount of loss. In fact it is required, and failure to do so can expose the non breaching party to non-compensable expense. If anything can be reasonably undertaken to diminish the effect of the breach, the non breaching party should undertake it. In the breach action the non breaching party can then recover the incidental costs incurred to peruse and put in place the covering actions or goods.
OK, this is going to be interesting...
Does anybody have background information on this:
Who was unwilling (not capable?) to fulfill their part of the agreement? Did MtGox i.e. intentionally take the risk of loosing 50+Mio%?
Does anybody have background information on this:
Who was unwilling (not capable?) to fulfill their part of the agreement? Did MtGox i.e. intentionally take the risk of loosing 50+Mio%?
The interesting thing about a liquidated damages clause is that its mere existence does not guarantee its execution upon a breach of contract.
Damages can be liquidated in a contract only if (1) the injury is either "uncertain" or "difficult to quantify"; (2) the amount is reasonable and considers the actual or anticipated harm caused by the contract breach, the difficulty of proving the loss, and the difficulty of finding another, adequate remedy; and (3) the damages are structured to function as damages, not as a penalty. If these criteria are not met, a liquidated damages clause will be void.
Liquidated damages are regularly "thrown out" by courts. The court feels that damage awards are their purview and are reluctant to uphold liquidated damages unless they comply very strictly with the above provisions
My understanding is that MTGOX did not follow through with their commitments as expected in the contract, but that is a matter of fact that will either need to be settled on or argued in court
So is this just gonna be radio silence until we find out we've all been Corzined and our account balances were seized to satisfy the judgment?
No, no court will seize other peoples money to pay MtGox' debt to the scammer Peter Vessenes and his gang.If it's been done right, the account holders have a secured interest that would take priority over a court judgment. The judgment creditor would have to stand in line behind them in a bankruptcy. Fat chance of them seeing anything in that event. It is not in the interest of CoinBase to bankrupt Gox at this point.
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Yes, we will. First the U.S. court must conclude the case with a sentence, and MtGox must accept it (i.e. not appeal the judgement). If MtGox don't pay in time, the scammers have to go to Japan and ask a japanese court to seize the money.
The last step will be a formality, if there is ever a judgment. And that won't be the first step. The first step will be just domesticating the judgment and seeing if it's paid voluntarily. And it can settle at any time the cost of continuing to litigate about it is higher than the reward remaining (i.e. if Gox ever is near insolvency).
And of course, Gox could win outright. In theory, Gox could win and Coinlab could lose and get slapped with that $20 million liquidated damages themselves.
I doubt you're going to hear anything very helpful about what's going on from either side. What they file in court will probably be a more accurate reflection of what's going on than anything they say in public. At least, unless they're fools, which has yet to be disproven.
So is this just gonna be radio silence until we find out we've all been Corzined and our account balances were seized to satisfy the judgment?
No, no court will seize other peoples money to pay MtGox' debt to the scammer Peter Vessenes and his gang.Quote
I guess if that did happen we certainly shouldn't expect to hear any forewarning.
Yes, we will. First the U.S. court must conclude the case with a sentence, and MtGox must accept it (i.e. not appeal the judgement). If MtGox don't pay in time, the scammers have to go to Japan and ask a japanese court to seize the money.
So is this just gonna be radio silence until we find out we've all been Corzined and our account balances were seized to satisfy the judgment?
I guess if that did happen we certainly shouldn't expect to hear any forewarning.
But it would be nice to hear from MtGox what in heaven's name Mark was thinking when he signed such an outrageously one-sided contact. Most important question: did he read it before signing? Not that this has any legal relevance, of course. Just curious. His signature certainly looks like something I could pull off blindfolded.
I guess if that did happen we certainly shouldn't expect to hear any forewarning.
But it would be nice to hear from MtGox what in heaven's name Mark was thinking when he signed such an outrageously one-sided contact. Most important question: did he read it before signing? Not that this has any legal relevance, of course. Just curious. His signature certainly looks like something I could pull off blindfolded.
It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.
If either of them wins the case, the contract basically no longer exists. What I think might be justice in this case is if they find that both sides breached the contract, then enforce the liquidated damages clause against both of these chumps, so that the awards cancel each other out, and say both sides get to pay their own costs and fees. That would serve them both right.
Until such time as the case is decided, or the parties reach some agreement to terminate the agreement, the contract is presumed to be valid. CoinLab's position is that they have an enforceable contract so it would be rather stupid of them to breach one of the conditions of that contract in the interim. Not that I expect this will ever go to court.
It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.
If either of them wins the case, the contract basically no longer exists. What I think might be justice in this case is if they find that both sides breached the contract, then enforce the liquidated damages clause against both of these chumps, so that the awards cancel each other out, and say both sides get to pay their own costs and fees. That would serve them both right.
It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.
Not just coinlab: "F.2. CoinLab shall not, directly or indirectly (including through legal entities ultimately owned by the same person or persons as CoinLab) provide services similar to the Services on any website". When I read the 'owned by the same persons' bit, my eyes kinda bugged out. Unless I'm confused about the involved parties, I believe that coinlab may be in default. God knows how this contract would be read though. I imagine that a lot more context will be needed to actually ascertain the minds of the involved parties here.I'm not even sure about which of the investors are "owners" of CoinLab. We're talking about seasoned VCs here, so I suspect the actual investment contracts could be complex.
It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.
Not just coinlab: "F.2. CoinLab shall not, directly or indirectly (including through legal entities ultimately owned by the same person or persons as CoinLab) provide services similar to the Services on any website". When I read the 'owned by the same persons' bit, my eyes kinda bugged out. Unless I'm confused about the involved parties, I believe that coinlab may be in default. God knows how this contract would be read though. I imagine that a lot more context will be needed to actually ascertain the minds of the involved parties here. Coinlab should just start their own NA exchange and move on,
They may actually be under some obligation to do so. If part of the damages they are claiming will end up involving the loss of opportunity to participate in the BTC market, and they have already put money toward getting "legal," they have an obligation to mitigate their damages by finding another partner. This might be tricky, as depending on how reasonable/unreasonable their claims in this case are, any potential partner may wonder if they're just going to get sued in a couple months after signing a contract.
It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.
Coinlab should just start their own NA exchange and move on,
They may actually be under some obligation to do so. If part of the damages they are claiming will end up involving the loss of opportunity to participate in the BTC market, and they have already put money toward getting "legal," they have an obligation to mitigate their damages by finding another partner. This might be tricky, as depending on how reasonable/unreasonable their claims in this case are, any potential partner may wonder if they're just going to get sued in a couple months after signing a contract.
However, they can't just let their investment go to waste and complain about what victims they are and expect to get that investment fully paid by Gox. That's not going to happen unless they do something to move into the market they claim they want to move into. It's sort of like a large scale version of a typical mitigation case, where someone reneges on a lease and moves out and stops paying rent. You don't just get to sit there and sue them and get the whole amount of the lost rent (unless the agreement provides for that). You have to try to fill that space. If you don't, you get either a reduced amount or perhaps even nothing.
Coinlab should just start their own NA exchange and move on,
the CCCB would be able to provide protection for Mtgox if required for Bitcoin stability, and will be watching the matter very closely
I'm sorry, the what? Is this some sort of supernode?
the CCCB would be able to provide protection for Mtgox if required for Bitcoin stability, and will be watching the matter very closely
Since yesterday is the first time I've actually had no bitcoins anywhere other than my own private offline wallets. I've typically kept at least a little bit in online wallets or an exchange or two, but I think I'm done with that until this infrastructure matures more and I have more trust in third parties.
Exactly my sentiments. The bitcoin infrastructure itself has proven to be pretty solid. Exchanges? Legal regulations, hacking, corruption...It's really great BTC is not built upon trust. I can simply lock my bitcoins away
Holy shit. Who in their right mind would sign that when the section above in J shows year 1 and 2 being under a half million? It applies to both parties and is the stupidest thing they both ever signed. If anything, coinlabs put that in their. Their F2 is a 2 year thing, F1 is MtGox responsibility for the entire term. So either they did something brilliant or both teams should fire their attorneys because they are idiots.
Liquidated damages clauses in large transactions are routine. Sun v. Microsoft, as one example, concerned in part a $35 million liquidated damages clause.
In this case, the clause might be unenforceable because the contract concerns a much smaller value than that between Sun and Microsoft, making the $50 million number more of a penalty than a way of simplifying the calculation of damages. The purpose of contract law is not to award jackpots to lucky winners, but to put the non-breaching party in the position he would have been in had the contract been followed.
The purpose for this kind of clause is often, you don't trust who you are contracting with actually to carry out the agreement. If Coinlab was acting in good faith (hard to know that yet), then the purpose of having such a big number is to have a big club to enforce compliance. Gox was obviously stupid to sign an agreement with a clause like this and then not carry it out. Coinlab might have been stupid, too, if they were the first to breach.
I doubt the $50 million number would be upheld. It might be a Sword of Damocles, but it's a toy plastic sword.
A rare (for this forum) legally accurate statement!
Holy shit. Who in their right mind would sign that when the section above in J shows year 1 and 2 being under a half million? It applies to both parties and is the stupidest thing they both ever signed. If anything, coinlabs put that in their. Their F2 is a 2 year thing, F1 is MtGox responsibility for the entire term. So either they did something brilliant or both teams should fire their attorneys because they are idiots.
Liquidated damages clauses in large transactions are routine. Sun v. Microsoft, as one example, concerned in part a $35 million liquidated damages clause.
In this case, the clause might be unenforceable because the contract concerns a much smaller value than that between Sun and Microsoft, making the $50 million number more of a penalty than a way of simplifying the calculation of damages. The purpose of contract law is not to award jackpots to lucky winners, but to put the non-breaching party in the position he would have been in had the contract been followed.
The purpose for this kind of clause is often, you don't trust who you are contracting with actually to carry out the agreement. If Coinlab was acting in good faith (hard to know that yet), then the purpose of having such a big number is to have a big club to enforce compliance. Gox was obviously stupid to sign an agreement with a clause like this and then not carry it out. Coinlab might have been stupid, too, if they were the first to breach.
I doubt the $50 million number would be upheld. It might be a Sword of Damocles, but it's a toy plastic sword.
I had a feeling this is the same old wallstreet tricks to shake the exchange price through a lawsuit so that some one can buy some cheap coins
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