Mt. Gox CEO to Appear in Tokyo Court to Face Bitcoin Exchange Embezzlement Charges This Week
Nearly everyone in cryptocurrency knows the tale of Mt. Gox, one of the greatest thefts to be seen in the crypto world. Originally launched as an exchange forum for Magic: The Gathering, the platform became a Bitcoin exchange soon before the sale to Karpelès in 2011.
The exchange grew to become the biggest in the world, and even was the host of about 80% of the Bitcoin in circulation. However, an alleged hack stole 850,000 BTC from the exchange. Soon after, the platform filed for bankruptcy, causing a crash in Bitcoin that took two years to reconcile, while Karpelès is now on the line for embezzlement charges.
Prosecutors believe that Karpelès embezzled 340 million yen (about $3 million) by diverting the finds from Mt Gox clients to other companies that he was also responsible for. The accusations also include spending those same funds from clients on prostitutes, bills, a bed, and overseas jaunts. Interestingly, not long after the “theft,” Karpelès managed to discover 200,000 BTC in an “old format” cold wallet.
Further investigation through 2015 by WizSec showed that the majority of the missing Bitcoins came from a hot wallet of Mt. Gox over an extended period of time.
With this information made available to the authorities, they deduced that Karpelès had direct involvement with the Bitcoin loss, which is almost impossible for him to disprove. In the case, if Karpelès is proven guilty, the prosecutors are hoping to secure a 10-year prison sentence, following about half a year in a Japanese prison.
Karpelès was ultimately released on bail prior to this trial, and his comments on a Reddit post suggest that the time was not taken seriously, as he criticized the jail for their “poor service” and “bad food.”
— The Economist (@TheEconomist) December 14, 2015
Considering that over 99% of Japan-based trials ultimately end in conviction, Mark Karpelès is likely to face it as well, considering that his verdict is due in Tokyo on Friday.
However, throughout the case, he has constantly claimed to be innocent, even apologizing to the clients that became the victims of the “hack.” Now, he says his only option is to be “humble” about the way that he handled the last days of Mt. Gox, which he said he tried to get “out of its trouble.”