Mark Karpeles of Mt Gox Faces Ten Year Sentence for Embezzlement

"I swear to God I am not guilty," said Karpeles in court.

Mark Karpeles, once-CEO of collapsed Bitcoin exchange Mt Gox, is facing ten years in a Japanese prison on charges of embezzlement, according to the Japan Times.

“I swear to God I am not guilty.”

Speaking at the Tokyo District Court, prosecutors alleged that Karpeles “diverted company funds for such uses as investing in a software development business for personal interest” and “played a great role in totally destroying the confidence of bitcoin users.”

Discover iFX EXPO, Your Gateway to Asian Markets!

According to the indictment, Karpeles, who is originally from France, transferred $3 million worth of customer money from a Mt Gox account to his own in the period between September and December 2013, manipulating company data to hide his behaviour.

Karpeles pleaded his innocence. “I swear to God I am not guilty,” he told the court in Japanese.

Valentine’s Day Gift

Mt Gox, created in 2010, once handled as much as 70 percent of all Bitcoin transactions. It filed for bankruptcy in February 2014 after hackers stole 850,000 bitcoins. The Japanese authorities arrested Karpeles in August 2015 and formally charged him shortly afterwards. They claimed that he transferred money to his own account, and spent some of it on prostitutes. In his defence, investigations later discovered that money was being siphoned off even before he took over.

Suggested articles

Trading Places: Finding The Best Jurisdiction for Your BrokerageGo to article >>

Karpeles did not set up Mt Gox, but took over early on; the original creator was overwhelmed by the sums of money that were pouring in. At the time of the hack, Karpeles owned 88 percent of the company and personally held around $50 million in BTC.

The exchange was formally declared bankrupt in June 2018. In September, ex-customers were invited to file a claim for the remaining money, which had been placed in a trust. It is set to be distributed to claimants on Valentine’s Day 2019.

The prosecutors referred to market confidence because there are enormous amounts of ex-Mt Gox BTC sitting in wallets online, and when some is sold to someone else, people go crazy. 

A man suspected of being involved in the hack, a Russian national named Alexander Vinnik, is sitting in a Greek prison while the US and Russia fight over who gets to extradite him.

 

Got a news tip? Let Us Know