Home / Archive / Mt. Gox Mark Karpeles May Avoid Jail Time but Class Action Lawsuits Remain

Mt. Gox Mark Karpeles May Avoid Jail Time but Class Action Lawsuits Remain

Last Updated March 4, 2021 3:19 PM
Mark Emem
Last Updated March 4, 2021 3:19 PM

Mark Karpeles, the former CEO of the defunct bitcoin exchange Mt. Gox, may eventually avoid jail time following the suspended sentence he received from a Tokyo court but his legal troubles are far from over.

A Suspended Sentence May Count as a Win for Mark Karpeles but the Lawsuits are Coming

Earlier this week, Karpeles failed to have a U.S. class-action lawsuit in which he is a defendant dismissed. This was after a court in Illinois, a state where around 1.5% of Mt. Gox victims hail from, ruled that there were legal grounds to go ahead with the case.

In the lawsuit, the plaintiffs acting on behalf of the class allege that the Mt. Gox ex-CEO misrepresented facts. Specifically, they argued that he did not give a true picture concerning the collapsed bitcoin exchange’s security and stability.

The plaintiffs also accused Karpeles of negligence which subsequently led them to lose their assets. This means that if found personally culpable, Karpeles could end up paying an undetermined amount in damages and compensation. There are also numerous lawsuits that have been filed against Mt. Gox.

He Got a Suspended Sentence Yes, but Mark Karpeles Could Still go to Jail

While the prosecutors had sought a 10-year sentence for Karpeles, the Tokyo court handed him 30 months. This was on charges of tampering with Mt. Gox records but not on embezzlement.

As the sentence is suspended for four years, it could mean Karpeles may not see the inside of a jail. Karpeles himself seemed pleased with the prospect as he retweeted a Bloomberg tech reporter’s call that he is ‘not actually going to prison’.

The big rider here is that Karpeles will have to be on his best behavior to avoid jail time. This could be a tall order though as Karpeles found out following his arrest. The ex-CEO of Mt. Gox took nearly a year before he could be granted bail as new charges kept being filed. Japan also boasts a conviction rate of 99%.

Will the Truth Finally Come Out?

In 2017 Karpeles argued that proving his innocence lay in finding the Mt. Gox heist masterminds per the Japan Times :

Most people will not believe what I say. The only solution I have is to actually find the real culprits.

Karpeles may have gotten his wish later that year as the U.S. Justice Department indicted Russian national Alexander Vinnik. This was for allegedly laundering funds obtained from the hacking of the Mt. Gox bitcoin exchange, per the indictment :

As to Vinnik, the indictment alleges that he received funds from the infamous computer intrusion or “hack” of Mt. Gox – an earlier digital currency exchange that eventually failed, in part due to losses attributable to hacking.  The indictment alleges that Vinnik obtained funds from the hack of Mt. Gox and laundered those funds through various online exchanges…

No Judgment has Been Delivered Yet, but Mark Karpeles has Already Drawn Conclusions

Karpeles has already signaled that he thinks Vinnik was behind the Mt. Gox theft. As Karpeles wrote on his blog two years ago, the money trail led to the Russian national:

Either way the Mt. Gox theft has been flowing to wallets controlled by Vinnik from the very beginning, without any wallet in between, and there is no evidence of any other party being involved. Evidence points without much doubt to Vinnik being not only behind the money launderer of those coins, but the actual theft.