Mark Karpeles, the CEO of failed Bitcoin exchange Mt. Gox, has delivered his final comments at his trial for embezzlement and fraud. The trial, which has been taking place in Tokyo, has been running for over 6 months.
Karpeles, who denies the charges, has been on bail since 2017 and unable to leave Japan pending the result of this trial; he denies embezzlement. However, prosecutors are demanding a 10-year jail sentence for his oversight of the collapse of Mt. Gox. According to Japan Times earlier this month, Prosecutors told the Tokyo District Court that Mark Karpeles, 33, “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.”
So, What Happened?
Mt. Gox was founded in 2010 in Tokyo, but by 2013 it had become the largest exchange in the world. At its peak, estimates are that it was handling around 70-75% of the world’s Bitcoin transactions every day. Then, in 2014, the exchange filed for bankruptcy in the blink of an eye. Worse still, the exchange claimed that 900,000 Bitcoins had disappeared and that customers could not request them back. However, WizSec’s investigation concluded that the majority of the missing coins had been stolen as far back as 2011.
The investigations rolled on and in 2015, Mt. Gox CEO Mark Karpeles was arrested on charges of embezzlement, related to using the Mt. Gox computer system to artificially increase a specific account balance. While the charge at the time was not related to the collapse of the exchange, or the missing BTC, Karpeles’ name has since become synonymous with the ongoing investigations into exactly what happened to Mt. Gox.
On the specifics of the charges, Coindesk report that “While Karpeles isn’t accused over the hacking losses, prosecutors claim he transferred 340 million yen belonging to customers from an Mt. Gox account to his personal account between September and December 2013, according to a court indictment. Karpeles, they allege, took the cash for uses such as investing in a software development business.”
If found guilty, many believe that Karpeles will face the maximum possible sentence, despite already having spent nearly a year in prison. In a time when Bitcoin is facing an uncertain future, and the trust that was starting to build between crypto and the mainstream markets is starting to fray, the crypto world may seek a statement to underline their intentions towards legitimising moving into 2019 and beyond. This is not to say that Karpeles would be a scapegoat – only his guilt will result in a conviction, and the missing BTC amounted to a valuation so high that many thousands of investors ended up out of pocket. But any chance for leniency that he might have had, may well not be on the table in the current climate. The trial continues.