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Top Bitcoin exchange faces $75 million lawsuit as international partnership reportedly breaks down

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bitcoin 1020 (casascius)
bitcoin 1020 (casascius)

This past February, the largest Bitcoin exchange, Mt. Gox, announced a partnership with an American company called CoinLab. The goal of the partnership was to give Mt. Gox access to US customers through CoinLab, as the company is strongest in Japan. It also served to help Mt. Gox navigate new regulation guidelines the US government has proposed for Bitcoin transactions. In all, it looked like it could have been a win-win — but as Gawker reports, that doesn't appear to be the case.

CoinLab has filed a lawsuit against Mt. Gox to the tune of $75 million. CoinLab alleges that Mt. Gox has "willfully failed to perform its obligations" under the original contract, because it "failed to provide CoinLab with account reconciliation data, server access, and other information." CoinLab also alleges that Mt. Gox has been serving customers in the US and Canada contrary to their contractual agreement — in total CoinLab says that there were at least eight different breaches of their contract.

In a statement on CoinLab's site, CEO Peter Vessenes expressed hope that the two companies would be able to settle the dispute, but didn't leaven his company's harsh words, saying "we were often left just apologizing to our alpha customers while their own businesses suffered." Vessenes did offer some faint praise for Mt. Gox, however, saying that his "biggest hope is that Mt. Gox does an excellent job keeping Bitcoiners safe and liquid and trading on the exchange." Mt. Gox's founder, at the time of this publication, had told Gawker that "we have not been served nor notified" and would "review this within the next few hours." We've reached out for further comment.

In the meantime, the suit is just the latest in a string of bad news for Bitcoin, which has included DDoS attacks, the shutdown of another exchange, and exploitative botnets. The value of a Bitcoin has been relatively volatile — at least compared to other currencies — and a lawsuit against the world's biggest exchange isn't likely to help stabilize prices.