Karpeles faces immediate arrest in United States

Christoph Marckx @cryptomaniacs
April 9, 2014
If he would set foot on American soil, Mt. Gox CEO Mark Karpeles would likely face an immediate arrest.

In an article last week, CCN reported on a US judge ordering Mark Karpeles to travel to the United States for hearing if he wanted bankruptcy protection there. This seems unlikely to happen now.

Arresting Karpeles

A federal judge ordered Mark Karpeles to appear in Dallas on April 17 to explain how his company was able to lose at least $400 million worth of customer deposits. This seems highly unlikely after having heard some lawyers who are involved in the process. They claim that Karpeles would probably be arrested by law enforcement as soon as he sets foot on American soil.

“I assume he would be arrested as a person of interest,” said Roger Townsend of Breskin Johnson & Townsend. “The FBI would likely want to question Karpeles about alleged fraud at MtGox, which collapsed in February, or about connections he may have to that other notorious online marketplace, Silk Road.”

To further clarify this, Townsend said he believed the FBI “could already be sitting on a grand jury indictment for Karpeles and that they have also arrested Karpeles’ friend Charlie Shrem.”

These remarks were made on Tuesday, following a presentation at Inside Bitcoin. Townsend had been explaining the ongoing legal fallout related to Mt. Gox together with Edgar Sargent, another lawyer involved in the whole Gox process. The lawyers represent a Seattle company Coinlab, which sued MtGox for $75 million last year over a soured deal to offer bitcoins to the North American market.

The whole Gox process brings forth new items almost daily. Meanwhile, Karpeles remains silent in the media, only to be found on IRC under the pseudonym MagicalTux. Nobody knows how many coins are found, and even the total amount of ‘stolen’ coins is up for debate. CCN published a story about this just a few hours ago. Two members of the Swiss Federal Institute of Technology in Zürich have been examining the events in the blockchain and are now disputing this version of events.

No matter the outcome of all this, the legal process is complicated because of Bitcoin’s borderless nature and the case’s multiple jurisdictions. The bankruptcy proceedings are underway in Japan and the United States, and the related CoinLab proceeding has so far involved deposing the assistant of Karpeles in Taiwan.


Meanwhile, in Texas, U.S. Bankruptcy judge Stacey Jernigan ordered Karpeles over to the United States for hearings. She was reported to having said: “If he avails himself of this court, my God, he is going to get himself over here.”

Even though a federal judge has some weight in this case, the lawyers do not expect Karpeles to board a plane heading to the States anytime soon. Obviously, Karpeles has already thought about his options, and he probably feels it is best not to go to a place where there is jail-time waiting for him. Townsens expects Mt. Gox will name someone else as head of the failed company. That way, the new CEO, will appear at the Texas bankruptcy process instead.

All this news about Karpeles still fails to answer one simple question. Where did the money go? Many people claim the money is not lost, some sources say it is all gone. Unfortunately, we still have to find one single source that is 100% trustworthy. Hopefully, the Japan report, which is to be expected early May, will shed more light on this shady case.

Do you think Karpeles is a thief or just an incompetent CEO? Write down your thoughts and join the discussion here.

Mark Karpeles photo by Engineering and Technology Magazine

Christoph Marckx @cryptomaniacs

Internet addict and virtual currency aficionado living in Belgium. I work in a school, where I am responsible for every computer and the entire network that keeps our students connected to the world. I love cryptocurrencies, mostly because it gives us a chance to take back our freedom. If we do this right, there are exciting times ahead!