The former CEO of the now-defunct bitcoin exchange Mt Gox, Mark Karpeles, could face up to decade in prison if…
The former CEO of the now-defunct bitcoin exchange Mt Gox, Mark Karpeles, could face up to decade in prison if prosecutors have their way.
According to the Nikkei Asian Review, prosecutors are seeking a 10-year jail term for Mark Karpeles for embezzlement. Among the claims made by prosecutors at the Tokyo District Court include the fact that Karpeles diverted company funds to other ventures and is also responsible for ‘destroying the confidence of bitcoin users’.
Per the prosecutors, Karpeles embezzled 340 million yen (approximately US$3 million) of client funds which had been deposited in a bank count belonging to the fallen bitcoin exchange. Karpeles is alleged to have transferred the funds in 2013 between September and December. The prosecutors also accuse Karpeles of manipulating the trading system of Mt Gox with a view of padding the balance.
In the course of the trial, Karpelese has insisted that he did not embezzle funds but rather the money transferred was a temporary loan. But according to the prosecutors there was no paperwork to prove Karpeles’ claim:
"There was no documentation of loans and there was no intention of paying back"
At the start of the trial last year in July, Karpeles denied the charges of data manipulation and embezzlement proclaiming ‘I swear to God I am not guilty’ in a statement as CCN reported at the time.
Then Karpelese argued that the funds he had allegedly embezzled were not client funds but revenue generated by the defunct bitcoin exchange. Karpeles blamed the loss of the estimated 850,000 bitcoins to hacking. The loss of the bitcoins led to the collapse of the exchange in February 2014.
Some of the ventures the prosecutors alleged Karpeles had transferred the misappropriated funds to included a 3D printer business which the ex-CEO of Mt Gox purchased for an estimated 315 million yen. Karpeles is also alleged to have used 6 million yen to purchase a canopy bed. Additionally, karpeles was in 2015 accused of spending an unspecified amount on prostitutes.
Karpeles’ legal troubles are not limited to Japan though. In the United States, a lawsuit was filed against Karpeles several months ago by former clients of the defunct bitcoin exchange. However, through his lawyers Karpeles has argued that a U.S. court has no personal jurisdiction and therefore the lawsuit ought to be dismissed:
“Mr. Karpeles expressly asserts that this Court lacks personal jurisdiction over him and preserves this objection and argument for all purposes…Because this Court lacks personal jurisdiction over Mr. Karpeles, this proceeding against him must be dismissed with no further actions taken, including but not limited to the entry of any default,” a motion to dismiss the lawsuit read as CCN reported four months ago.
A determination is yet to be made by the U.S. court on the fate of the lawsuit.