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The well-known former head of collapsed crypto exchange Mt. Gox, will learn his fate soon as the Tokyo court- in charge of the trial is expected to issue a verdict on Mark Karpeles’ innocence or guilt this Friday.
The Prosecutors have called a 10-year jail sentence for French-born Karpeles, 33, who maintains his innocence on all counts and states that the client money used was meant to be loans that he planned to pay back. The half-a-year already served by him in a Japanese prison before being released on bail pending the court proceedings might be taken off the sentence by the court.
According to the charge sheet, Mark Karpeles is put on trial for embezzling millions of dollars during his tenure as the exchange’s CEO. Apparently, the former CEO would transfer funds from client accounts for personal use of going on trips and shopping sprees and faking data to make the exchange look more successful. The total amount of misused fund comes to a whopping 341 million yen- $3 million in USD. The embezzlement probably has happened sometime between September and December of 2013.
Mt.Gox’s Collapse
Karpeles is suspected of having repeatedly manipulated computer data over several years while embezzling clients’ money deposited at the company.
It has been claimed that he splurged the embezzled money on a 3D-printing software business unnecessary for Mt. Gox, and personal expenses like some six million yen ($54,000) for a canopy bed.
Prosecutors allege that millions of yen were spent by Karpeles on organizing overseas trips for his estranged wife, as well as utility bills and cleaning services at his luxury apartment that he reportedly rented for $11,000 per month.
If convicted, it might be a fiery end to the Mt. Gox history.
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This infamous Bitcoin exchange lost 850,000 bitcoins worth a whole $500 million to hackers when it disappeared from its virtual vaults, a mystery that remains unsolved. MtGox was shut down after it filed for bankruptcy in 2014.
Before the beginning of its troubles, Mt. Gox was the world’s most popular crypto exchange. The anger among the investors after the disappearance dented confidence in the security of bitcoin. At one point, MtGox claimed to be handling around 80 percent of all global bitcoin transactions, and its collapse threw the crypto market into disarray, causing the price of bitcoin to nose-dive into a long crypto winter that lasted two years. It is trading at around $3,900 as of now.
Japan has issued new regulations after the Mt. Gox case. The exchange Coincheck was obligated to refund customers more than $440 million in virtual currency that disappeared from its holdings last year.
“I swear to God that I am innocent,” Karpeles, appealed in Japanese, to the three-judge panel hearing when his trial opened.
Claiming that the bitcoins were mislaid due to an external “hacking attack,” Karpeles later said that he had found some 200,000 coins in a “cold wallet” — a storage device not connected to other computers. He made a statement to the reporters saying that due to his misrepresentation in public, his only solution is to find the real culprits.
The Chief attorney at Mizuho Chuo law firm, Satoshi Mihira said that
“If it was an outside hacker who stole the currency, it’s a problem. But if he stole even part of the money, it would be embezzlement.”
Karpeles’ Defense counsel will need a high level of evidence to prove his innocence. Due to the monetary losses suffered by the customers, it is highly possible that he will have to serve significant jail time. The odds are not in his favor as the vast majority of cases that come to trial in Japan end in a conviction.
The Frenchman’s first arrest was in August 2015, for another high-profile case against former Nissan chief Carlos Ghosn and was re-arrested several times on different charges. Karpeles won bail in July 2016- allegedly paying 10 million yen for his freedom pending a trial, which began in July 2017.
Karpeles has been active on social media in the duration of his bail time- voicing his thoughts on the bitcoin status and answering media questions about conditions in Japanese detention centers.
However, he has essentially refrained from commenting on his case in detail.
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The court will issue a verdict on Friday and, if it finds Karpeles guilty, he will be handed down a statement at the same time.
Possessing the right to appeal, Karpeles would be able to keep himself on bail, even if he loses the case.
