Mt Gox CEO Mark Karpeles Found Not Guilty of Embezzlement, Guilty Of Record Tampering
Mark Karpeles, CEO of the now-defunct Bitcoin exchange Mt. Gox, has actually been sentenced by the Tokyo District Court. The court convicted him of record tampering but discovered him innocent of embezzlement. He received a suspended jail sentence of 2 and a half years.
The CEO of the now-defunct Mt. Gox exchange, Mark Karpeles, received a suspended prison sentence of 2 and a half years Friday after the Tokyo District Court found him guilty on charges of data manipulation, according to local media. Noting that the court suspended the sentence for four years, AFP-Jiji Press wrote:
The court convicted Mark Karpeles, a 33-year-old Frenchman, for falsifying computer data but acquitted him over charges of embezzling millions from client accounts.
Tokyo-based tech press reporter for Bloomberg, Yuji Nakamura, translated the verdict in a series of tweets. “We’re calling it that he’s not actually going to prison,” he wrote. “In plain English: he’s guilty of record tampering, but not guilty of embezzlement. He is ‘suspended’ for 4 years, during which time if he does anything bad he’ll be jailed for 2.5 years.”
The 2014 collapse of Karpeles' Mt. Gox exchange involved the loss of around 850,000 bitcoins, 200,000 of which were later found, although victims have yet to see any restitution. In spite of the court-appointed personal bankruptcy trustee offering the recuperated coins in preparation for disbursement, the recovery process has actually been put on hold due to a pending $16 billion claim by a previous business partner.
Total Mess Found By The Court
According to the verdict which Nakamura translated, the Tokyo District Court found that the way Karpeles “ran Mt. Gox was a total mess and that he tampered w/ records to hide the fact it was missing a lot of bitcoin, but he did not do it for personal gain or have ill intent.” The court document also details:
We find the charge of electronic record tampering to be true and that it deserves punishment, but there’s no criminal evidence re embezzlement (dominant or reserve type) or violations of company laws, resulting in a not guilty ruling.
The court acknowledged that “the creation and use of tampered records involved a monetary amount that was extremely large, resulting in severe damage to the trust of the users,” Nakamura described. “There is no excuse for the defendant, who is an engineer with expert knowledge, to abuse his status and authority to perform clever criminal acts. We cannot look lightly upon the criminal responsibility of the defendant,” his translation reads.
After the news of the verdict broke, Karpeles has made only one tweet at the time of this writing. It was in response to Twitter user Emilien Dutang, founder of blockchainpartner.fr, reminding him of his earlier promise. On Feb. 11, Karpeles wrote:
I hereby pledge any net proceeds I receive from Mtgox back to Mtgox creditors. Not that I will [be] receiving anything anyway.
Dutang reminded him Friday, “I hope you’ll keep your words,” to which the former Mt. Gox CEO replied, “Will do.”
Mt. Gox: The Backstory
Mt. Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan. Launched in July 2010, by 2013 and into 2014 it was dealing with over 70% of all bitcoin (BTC) transactions worldwide, as the biggest bitcoin intermediary and the world's leading bitcoin exchange.
In February 2014, Mt. Gox suspended trading, closed its site and exchange service, and filed for bankruptcy protection from lenders. In April 2014, the business started liquidation procedures.
Mt. Gox revealed that approximately 850,000 bitcoins belonging to clients and the company were missing and most likely stolen, a quantity valued at more than $450 million at the time. Even though 200,000 bitcoins have since been “found”, the factor( s) for the disappearance– theft, fraud, mismanagement, or a mix of these– were at first uncertain. New proof provided in April 2015 by Tokyo security business WizSec led them to conclude that “most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late 2011.”
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