Former Mt. Gox CEO May Get 10 Years for Embezzlement

Exchange Hack Mt Gox

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Sead Fadilpašić

Journalist

Sead Fadilpašić

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Sead specializes in writing factual and informative articles to help the public navigate the ever-changing world of crypto. He has extensive experience in the blockchain industry, where he has served...

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June 26, 2023

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Former CEO of now defunct Bitcoin exchange Mt. Gox, Mark Karpeles, may be looking at a 10-year prison term on charges of embezzlement, Japanese officials announced Wednesday.

The prosecutors, who sought this prison term, told the Tokyo District Court that Karpeles “diverted company funds for such uses as investing in a software development business for personal interest” and “played a great role in totally destroying the confidence of bitcoin users,” the Japan Times reported.

According to the indictment, Karpeles embezzled a total of USD 3 million of customers’ money that was kept in a Mt. Gox bank account by transferring it to his own account between September and December 2013. Karpeles also allegedly manipulated data on his company’s trading system to pad the balance.

Karpeles, who pleaded innocent in the first hearing of his trial in July 2017, now swears to God he’s not guilty, according to the report.

Launched in July 2010, by 2013 and into 2014 Mt. Gox was handling over 70% of all bitcoin transactions worldwide, as the largest bitcoin intermediary and the world’s leading bitcoin exchange. Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than USD 450 million at the time. A few weeks later, around 200,000 were somehow found, and the exchange proceeded to sell huge amounts of cryptocurrency when markets were at their peak – many attributing the series of sell-offs to massive price drops.

Victims of the hack had until October 22nd this year to file rehabilitation claims, either online or offline, and the process for this had been started in June. A Q&A document, published in August, says that, “The planned deadline for the Rehabilitation Trustee to submit a statement of approval or rejection to the court is January 24, 2019, but, at the current point in time, a definite date has not been determined.” There has been no update on this situation as of right now.

The next Mt. Gox creditors’ meeting is set for March 20th, 2019. Before that, the period to examine Proofs of rehabilitation claims is set from January 31st to February 7th, 2019. The community speculates that the payout could happen in the summer of 2019.

However, in April this year, Karpeles’s LinkedIn profile showed the position of new chief technology officer of London Trust Media, a Denver-based company that boasts the world’s largest paid virtual private network (VPN) service and is investing in cryptocurrency projects.