Mt. Gox Former CEO Mark Karpeles
Mt Gox former CEO Mark Karpeles embezzlement trial is to begin today in Tokyo, Japan. He is facing embezzlement charges in regards to 750,000 missing Bitcoins which are now worth over $1.75 billion USD. He was arrested for the first time in August 2015 in regards to allegations that he had manipulated Bitcoin volumes at Mt. Gox, however 3 weeks later he was released with no formal charges. Karpele was rearrested and charged with embezzlement in that same month. Furthermore Karpeles has been accused of using customers Bitcoins in order to fund an elaborate lifestyle. Allegedly using the stolen funds to purchase prostitutes and a penthouse. Meanwhile he has filed the plea of not guilty in regards to all charges.
Mt. Gox Collapse
Mt. Gox, a Tokyo based bitcoin exchange that once handled 80 percent of the world’s bitcoin trades but filed for bankruptcy in 2014 after losing some 850,000 bitcoins (then worth around half a billion USD) and $28 million in cash from its Japanese bank accounts. During the bankruptcy filing, Mt. Gox blamed hackers for the lost bitcoins, pointing to a software security flaw. Mt. Gox stated afterwards that it had found 200,000 of the missing bitcoins.
Consequently, the company is continuing to process claims from the collapse. So far 24,750 individual claims have been reviewed.
Prosecutors have said that Karpeles transferred around 340 million yen ($3 million) from an account holding customer funds to an outside account between September to December 2013. The Nikkei reported that Karpeles’ defense told a pre-trial consultation that the remittance was within the scope of the firm’s revenue and not the embezzlement of customer funds. They added “the increased balance was part of the administrative process of exchanging cash and bitcoins and therefore not illegal.”
“I swear to God that I am innocent,” he said in Japanese to the three-judge panel hearing his case, according to the pool report.
As a result If Karpele is found guilty (Japan has one of the highest conviction rates in the world) he could spend up to 5 years in jail or face a fine of up to 500,000 yen. (4000 USD)