Japan: Court Rules Against Bitcoin Compensation

The plaintiff, a man from Kyoto, was seeking repayment of 458 bitcoins

A Japanese court has ruled against a man hoping to claim compensation over lost bitcoins, saying the virtual currency cannot be owned. The Kyoto man lost 458 bitcoins worth around 31 million yen (£160,000) following the collapse of the MtGox exchange last year.

But the Tokyo District Court said the currency was "not subject to ownership". As a result, the lawsuit seeking repayment was dismissed.

The judge in the case, Masumi Kurachi, ruled that the Japanese law only allowed for proprietorship of tangible entities that occupy space and which allow for exclusive control over them. As a result, virtual currency could not be owned. An example given by the judge was that transactions between users must involve a third party and therefore exclusive control over bitcoins was not possible.

The MtGox exchange filed for bankruptcy protection in Japan in February last year and reported that it had lost 850,000 bitcoins worth about £240m at the time. Ever since, users whose bitcoins disappeared have been attempting to stand up legal cases in order to gain some form of compensation.

A class-action lawsuit in North America over the MtGox catastrophe was settled out of court last year, for example. Recently, the former CEO of MtGox, Mark Karpeles was arrested in connection with the lost bitcoins (See last news story above).

Bitcoin developer Mike Hearn told the BBC he was a little surprised by the Tokyo court's ruling but added that there was still a great deal of confusion over the legal status of Bitcoin in many nations.

"What's we've seen a bunch of times is different governments in different parts of the world coming to different conclusions about Bitcoin," he said.
He commented that compensation claims over MtGox were unlikely to get anywhere, even with judicial endorsement. "It's quite obvious that MtGox doesn't have the money so where these compensation claims would be paid from is not clear," he explained.

Mr Hearn also said that the looming question mark over bitcoins was beginning to harm the growth of the virtual currency. "One of the biggest and most common reasons especially for more established companies to say, 'we're not getting into Bitcoin', is regulatory uncertainty," he said.
BBC: http://bbc.in/1gVptYr