November 25, 2020

Mississippi doctors sue over $3,000 bitcoin loss now worth $135 million

Two Mississippi doctors are continuing to pursue a lawsuit against a bankrupt bitcoin exchange for a loss in 2011 that is now worth approximately $135 million, according to CoinDesk.

Dr. Donald Raggio, who works in pediatrics at the University of Mississippi Medical Center, and his son, Chris, filed suit in 2014 against the former owners of Mt. Gox—a now-defunct bitcoin exchange—for a loss of about 9,400 bitcoins (valued around $3,100 at the time of the theft, court filings note) allegedly stolen from their account seven years ago when the cryptocurrency was in its infancy.

The Raggios opened the account in late 2010, according to court documents, depositing $5,000 and doing some initial trading on the site. About $3,100 worth of stolen bitcoins were allegedly removed from the account in January 2011 using the Raggios’ login information.

The Raggios spent the following weeks corresponding via email with Mt. Gox’s then owner, Jed McCaleb, who willingly helped the two try to track down the hacker and recover the loss, even after he sold Mt. Gox to a different owner in February 2011 named Mark Karpeles.

The Raggios continued to communicate with McCaleb, who seemed confident they’d recover the stolen bitcoins, according to email correspondence, but the pursuit appeared to halt in March 2012 when Karpeles allegedly told them he had only purchased Mt. Gox’s assets and not its liabilities.

Bitcoin’s popularity as the world’s first decentralized form of digital currency has steadily risen since its first breaths in 2009, generating unprecedented attention in 2017 when its value skyrocketed. The defendants claim there was no further attempt on the Raggios’ part to recover the lost bitcoins until 2014 when Mt. Gox filed for bankruptcy and the value of their loss had reached approximately $2 million.

More than three years had passed between the alleged theft and the Raggios’ lawsuit—54 days beyond Mississippi’s statute of limitations for many of their claims, the defendants argue, including breach of contract, conversion, negligence and conspiracy. The looming legal question revolves around whether the Raggios’ claim is “time-barred,” as the two claim the statute of limitations “did not begin to run at the time of the theft,” but at a later date when it was officially determined the bitcoins were never recovered.

Any potential damages recovered would be based on the value of the stolen bitcoins at the time of the theft, approximately $0.33 each—not the current value, which as of today is approximately $14,000 per coin.

The defendants are appealing a Hinds County Circuit Court ruling after their motion for summary judgment was denied in November 2017.