Entries with tag pending court cases.

Court Orders Microsoft to Return Data Stored Overseas to US

A US judge has ordered Microsoft return all the data it stores outside the US to servers in the country. This could be a blow for privacy protection in the US as well as for those businesses with data storage operations. The decision, based on a case in which a search warrant for email related to a narcotics case that is stored in Ireland, was rendered based on the court’s finding that because the US-based Microsoft controls the data it stores overseas, its foreign subsidiaries are equally subject to US law. US District Judge Loretta Preska in New York said the ruling will be stayed to let Microsoft appeal the decision. She said the issue “is a question of control, not a question of the location of the information.” Microsoft challenged the ruling, saying local laws must apply in each jurisdiction. Stated Microsoft general counsel Brad Smith, “We will appeal promptly and continue to advocate that people’s email deserves strong privacy protection in the US and around the world.” Apple, AT&T, Cisco Systems, and Verizon Communications and AT&T have supported Microsoft’s position via amicus briefs. In the European Union, authorities contend that regardless of where an EU-based company's parent firm is based, that subsidiary must abide by European law. (ZDNet)(Associated Press @ San Jose Mercury News)(Reuters)

US Court Approves Bitcoin Exchange’s Bankruptcy Proceedings

A US bankruptcy court has allowed Mt. Gox—which was once the world’s largest bitcoin exchange but which closed earlier this year amid confusion about missing money—to begin Chapter 15 bankruptcy proceedings in the United States. The company filed 9 March for Chapter 15 protection, which, for example, prevents US customers involved in a class action suit from seizing its assets. Mt. Gox shut down after it lost 850,000 bitcoins—750,000 belonging to customers—and subsequently found only 200,000 a digital wallet. The company is finalizing both a settlement with its US customers and the sale of its business. A federal court must approve the settlement, which would let US and Canadian customers divide the 200,000 bitcoins Mt. Gox found and share in a 16.5 percent stake in the company when and if it sells. In Japan, a court liquidated the company and appointed a trustee to investigate the missing bitcoin. The trustee says it is too early in the court proceedings to consider any offers. The US decision allows the Japanese trustee to examine witnesses, gather and review evidence, and oversee any US assets involved, such as computer servers. (Reuters)(Engadget)(CoinDesk)(Bloomberg)

Apple Reaches Out-of-Court Settlement on eBook Price Fixing

Apple has reached an out-of-court settlement with 33 attorneys general from US states and other jurisdictions who filed a class action lawsuit seeking $840 million in damages for the company’s fixing of eBook prices. A trial on the case, scheduled to start 14 July 2014, was to determine whether Apple led a conspiracy to increase eBook prices designed to force Amazon.com to change its low pricing. The settlement allows Apple to avoid a jury trial. Details regarding the settlement agreement, which is still subject to court approval, were not released. Apple has declined to comment and says it intends to appeal. It has repeatedly denied breaking any antitrust laws. The settlement hinges on the outcome of the appeal of a separate, but related ruling. In July 2013, a US federal court found Apple guilty of colluding with five major publishers to increase eBook prices ahead of the iPad launch. (Bloomberg)(Reuters)(The Washington Post)

Japanese Court Orders Liquidation of Mt. Gox Bitcoin Exchange

A Tokyo District Court has ordered the complete liquidation of the Mt. Gox bitcoin exchange. Once the world’s largest bitcoin exchange, Mt. Gox initially filed for bankruptcy protection on 28 February, after reporting that a large number of bitcoins had been stolen and that money was missing from its accounts. Mt. Gox had asked for bankruptcy protection in Japan so that it could continue operating, but the court ordered the liquidation based on its finding that the company could not be rehabilitated. Under terms of the liquidation, the company’s remaining assets will be converted to cash for distribution to creditors. Mt. Gox also filed for bankruptcy protection in the US. The judge in the case ordered Mark Karpeles, the company’s chief executive, to appear in court April 17 to answer questions, but he did not travel to the US to do so. (Reuters)(CNET)

Japanese Court Rejects Bankruptcy Protection Petition of Troubled Bitcoin Exchange

Tokyo-based Mt. Gox, once the largest bitcoin exchange in the world, had its bankruptcy protection application rejected by a Japanese court. The company will likely be liquidated as a result. The Tokyo District Court found the company could not be rehabilitated. The remaining assets may be sold by an administrator, but it is unlikely that creditors will be paid. An administrator has yet to be named. Mark Karpeles, the failed company’s chief executive officer, will likely be investigated for liability in the business’s failure, according to a statement by Nobuaki Kobayashi, an attorney and the provisional administrator of the company, appearing 16 April on the Mt. Gox website. The exchange filed for bankruptcy protection 28 February after “losing” roughly 850,000 bitcoins worth about $425 million; 200,000 of them were later found. The company has also filed for protection in the US courts. Karpeles, who remains in Japan, says he will not comply with an order from the US Treasury’s Financial Crimes Enforcement Network to attend an 18 April hearing in the US. Karpeles claims he is seeking legal representation before appearing in court in the US. (The Associated Press)(Reuters)(USA Today)(Forbes)(Mt. Gox)

Judge Orders Bitcoin Exchange CEO to Appear at Bankruptcy Hearing

A United States federal judge has ordered Mark Karpeles, CEO of failed bitcoin exchange Mt. Gox, to answer questions related to the company’s US bankruptcy case. The exchange closed and filed for bankruptcy protection in Japan and the US after the company lost $400 million in customers’ bitcoins. Mt. Gox claims hackers stole the digital currency. This week, US Bankruptcy Judge Stacey Jernigan ordered Karpeles—who is currently in Japan—to appear 17 April at his Dallas attorney’s offices. Karpeles has asked a Dallas court to grant Mt. Gox Chapter 15 bankruptcy protection, which would temporarily stop US creditors. Jernigan said Karpeles must agree to appear in her court because his testimony is critical to his request for Chapter 15 protection. Should Karpeles fail to appear, he faces several potential consequences, including the court’s dismissal of his case. His attorneys say he should not have to be questioned in the US; they did not respond to requests for comment on this point. Concurrently with this legal proceeding, the Tokyo District Court continues its investigation. (Reuters)(PC World)

Microsoft Shareholder Sues Company for Mismanagement

A lawsuit filed against the Microsoft board of directors contends the company was mismanaged. The legal action is tied to how the company dealt with its Internet Explorer browser deployment in the European Union, which ultimately led to a record-breaking $731 million anti-trust fine against the company. Kim Barovic, a shareholder of the Seattle-based company, filed charges 11 April 2014 alleging directors and executives -- including founder Bill Gates and Microsoft’s former chief executive officer Steve Ballmer -- did not properly manage the company. She also alleges a subsequent investigation by the board of directors was insufficient and did not determine how the mistakes leading to the fine occurred. Under the terms of a 2009 agreement, the company was to have provided European Windows users with a choice for Internet access instead of providing the Microsoft Internet Explorer browser by default; however, updated Windows 7 software, issued between May 2011 and July 2012, did not give an estimated 15 million users such an option. Barovic, according to Reuters, claims “she asked Microsoft's board to fully investigate how that mistake occurred and to take action against any directors or executives that had not performed their duties.” Microsoft replied that its investigation found no such evidence. Both Ballmer and Steven Sinofsky, head of the Windows unit at that time, had their bonuses cut in 2012 following the incident. Microsoft issued a statement standing behind its decisions, adding that there is “no basis for such a suit." (Reuters)

US Prosecutors Indict UK Man for Hacking Government Networks

US prosecutors have charged a British man, arrested on charges of hacking into US government computer systems, with breaking into the US Federal Reserve system, and stealing and disclosing various personal information. The charges include one count of computer hacking and one of aggravated identity theft, which carry maximum prison sentences of 10 and two years, respectively. (Reuters)(The Guardian)
 

US Authorities Charge Hackers in Huge, High Profile Attacks

US authorities have charged four Russians and a Ukrainian in connection with an extensive, eight-year hacking operation in which they allegedly stole 160 million credit-card numbers and sold them on the black market. The network’s targets included numerous high-profile payment processors, retailers, and financial institutions including the 7-Eleven convenience-store company, Dow Jones, the Hannaford Bros. supermarket chain, the J.C. Penney department stores, and Visa Jordan Card Services, a licensee of the Visa credit-card company in the country of Jordan. Hackers initially penetrated the networks via SQL injection attacks and then added a backdoor to enable easy ongoing access. They stole usernames, passwords, other types of personal identification used for verification, credit-card numbers, and debit-card information. The hackers sold the data to identity-theft wholesalers for $10 per US credit card and associated data; $15 per Canadian credit card and associated data; and $50 per European credit card and associated data. The wholesalers put the information onto blank credit or debit cards that could be used to withdraw money or make purchases. Authorities indicted the suspects on charges including conspiracy to gain unauthorized access to computers, conspiracy to commit wire fraud, and wire fraud. Two were arrested in the Netherlands and have been extradited to the US, but the other three are at large. (SlashDot)(SecurityWeek)(The New York Times)
 

Researchers Blocked from Presenting Car-Hack Findings

Volkswagen AG obtained a restraining order from a British high court that prohibits dissemination of research by three European computer scientists who uncovered a hack for locks on various luxury automobiles. University of Birmingham lecturer Flavio Garcia, along with Radboud University Nijmegen researchers Baris Ege and Roel Verdult were to have presented their work at the upcoming Usenix Security Symposium. They had shown vulnerabilities in antitheft systems in Audi, Bentley, Lamborghini, and Porsche vehicles by defeating the RFID transponder built into the car key based on a unique algorithm, which the researchers claim had been published on the Internet in 2009, that allows the car to verify the identity of the ignition key. Volkswagen and French electronics firm the Thales Group filed a suit to stop the researchers from presenting their work, contending that would make the affected cars vulnerable to theft. A Radboud University Nijmegen spokesperson told the BBC that the researchers would not have released information describing how to actually steal a car and that they informed Thales, which created the algorithm,  in November 2012 so that it could eliminate the antitheft-system vulnerability. (Ars Technica)(The Associated Press @ Businessweek)(BBC) 

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