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Mt Gox CEO Mark Karpeles Heads to Trial for Bitcoin Embezzlement

Last Updated March 4, 2021 4:58 PM
Samburaj Das
Last Updated March 4, 2021 4:58 PM

Bitcoin exchange Mt Gox’s former CEO Mark Karpeles will go on trial next week in Tokyo, Japan to face embezzlement charges in the case of some 750,000 missing bitcoins, now worth over $1.85 billion.

Frenchman Mark Karpeles, who was released on bail a year ago from a Tokyo detention house will be expected to plead innocent, according to his laywer.

Speaking to AFP , Kiichi Iino, Karpeles’ lawyer, revealed that the former disgraced chief executive of what was once the world’s busiest bitcoin trading platform is keeping calm ahead of the trial.

Karpeles was first arrested in Tokyo in early August 2015 with allegations that he had manipulated bitcoin volumes at Mt Gox. After being in custody for a period of three weeks – the maximum time frame for suspects to be detained without formal charges in Japan – Karpeles was soon re-arrested the same month on charges of embezzlement. At the time, Karpeles was alleged to have stolen 321 million yen in bitcoin.

Mt Gox was notorious for its security snafus, suffering a hack as early as summer 2011. Those troubles continued through the years and when bitcoin reached a then-all-time-high near $1,300 in November 2013, Mt Gox stopped bitcoin withdrawals and claimed its vault of 850,000 bitcoins, about $500 million at the time, was plundered by a hack.

Blaming the incident due to “weakness in the system” in early 2014, Karpeles publicly appeared on television to apologize and state “the 750,000 bitcoins we kept for users, are almost all gone.”  His claim of the hack being the result of structural weakness of bitcoin was soon debunked.

Karpeles has also been accused of using customers’ bitcoins to fund a lavish lifestyle complete with a penthouse and prostitutes.

As things stand, a Tokyo court-appointed Trustee has completed a review of a total of 24,750 individual claims by creditors as the effort to reimburse Mt Gox creditors for their lost funds takes shape.

“I’ve not had any back yet but hopefully, eventually all the creditors will get a small percentage of their money back from the bankruptcy distribution,” British bitcoiner Kolin Burges told AFP.

Burges, who claims he lose several hundred bitcoins as a result of the collapse, added:

The charges [against Karpeles] only cover a subset of the issues which were happening at Mt Gox, so I don’t expect that we will find out most of the information we wanted to know.

If Karpeles is found guilty by a Japanese court – in a country has one of the highest conviction rates  in the world – he could face up to five years in prison or a fine of up to 500,000 yen ($4,000).

Featured image from news24.