A man walks past a signboard of Mizuho Bank ATM outside its headquarters in Tokyo Thomson Reuters By Dena Aubin

NEW YORK (Reuters) - A U.S. lawsuit accusing Japan's Mizuho Bank of concealing problems at the now-bankrupt Tokyo-based Mt Gox bitcoin exchange can move forward, a federal judge in Chicago has ruled.

U.S. District Judge Gary Feinerman rejected on Monday the bank's argument that the case belongs in Japan, finding that the hardship to the bank from trying the case in the United States would be no more than that "routinely tolerated by courts."

Mizuho provided banking services for the exchange and handled all deposits for U.S. customers. It is part of Mizuho Financial Group Inc <8411.T>, one of Japan's largest banks by assets.

The proposed class action on behalf of the exchange's U.S. customers was filed in February 2014, the same month Mt Gox filed for bankruptcy after losing an estimated half a billion dollars worth of customers' bitcoin digital currency. Once the world's largest exchange for bitcoins, Mt Gox blamed hackers for stealing the vanished currency.

Customers agreed to settle their claims against Mt Gox in April 2014, reaching a deal with outside investors and creditors to receive a share of recovered assets.

The lawsuit claims Mizuho inflated customers' losses by limiting withdrawals from their Mt Gox accounts in mid-2013, following reports of a U.S. government investigation into the exchange. At the same time, Mizuho continued to accept deposits from Mt Gox users, the lawsuit said.

Customers who complained about withdrawal delays were told by the exchange that they were due to technical problems, the lawsuit said. Although Mizuho knew these statements were false, it "stood silent while allowing the public to continue being duped," the lawsuit said.

Jay Edelson, a lawyer for the Mt Gox customers, said he was pleased with Monday's decision. "The court rightfully held that these victims are entitled to have their day in a U.S. court," he said in an emailed message on Tuesday.

Lawyers and a U.S. spokesman for Mizuho Bank did not immediately respond to requests for comment.

In court filings, lawyers for the bank said it had nothing to do with Mt Gox's collapse or its customers' losses. They also said the Chicago court did not have jurisdiction over the case because the disputed activities took place in Japan.

But Feinerman rejected that argument, noting that the bank knowingly accepted deposits from U.S. residents.

The case is Greene v Mt Gox, U.S. District Court, Northern District of Illinois, No 14-cv-1437

(Reporting By Dena Aubin; Editing by Anthony Lin and Alan Crosby)