The former CEO of collapsed bitcoin exchange Mt. Gox is to head to trial in Tokyo next week on charges stemming from the disappearance of hundreds of millions of US dollars worth of the virtual currency from its digital vaults.
Frenchman Mark Karpeles — once the high-flying head of the world’s busiest bitcoin trading platform, who reportedly lived in an US$11,000-a-month penthouse and spent money lavishly, including on prostitutes — is facing embezzlement and data manipulation charges.
“He is keeping calm as the trial gets underway,” his lawyer Kiichi Iino told reporters, adding that Karpeles plans to plead his innocence.
Photo: AFP
The 32-year-old was first arrested in August 2015 and released on bail nearly a year later over allegations he fraudulently manipulated data and pocketed millions worth of bitcoins.
Mt. Gox, which claimed it once hosted around 80 percent of global bitcoin trading, shuttered in 2014 after admitting that 850,000 coins — worth around US$480 million at the time — had disappeared from its vaults.
The Tokyo-based exchange filed for bankruptcy protection soon after the cyber-money went missing, leaving a trail of angry investors calling for answers and denting the virtual currency’s reputation.
Karpeles, who said he is working as an IT consultant, is active on social media and has commented on issues concerning bitcoin, but not on details of his criminal case.
“The charges [against Karpeles] only cover a subset of the issues which were happening at Mt. Gox, so I don’t expect that we will find out most of the information we want to know,” said Kolin Burges, a British investor who said he lost several hundred bitcoins in the Mt. Gox collapse.
“I’ve not had any back yet, but hopefully, eventually all the creditors will get a small percentage of their money back from the bankruptcy distribution,” he said.
Around the time of his 2015 arrest, Karpeles’ mother told the Yomiuri Shimbun that her son was a “genius” who learned computer languages at age three and started making simple programs by the time he was five.
In 2006, Karpeles wrote on his blog that computer crime was “totally contrary to my ethical principles.”
However, four years later, a Paris court sentenced him in absentia to a year in prison for hacking. He had come to Japan to work for a Web development company around 2009 and later got involved with the bitcoin exchange.
In the wake of the Mt. Gox scandal, Japan passed a bill stipulating that all virtual currency exchanges must be regulated by its Financial Services Agency.
Despite the demise of Mt. Gox and concerns about security, bitcoin and hundreds of rival digital currencies are becoming increasingly popular and accepted by merchants worldwide.
Bitcoin remains the most popular. Its market value has ballooned to more than US$42.9 billion, according to the coinmarketcap.com.
The unit has seen wild volatility during its short life, soaring from just a few US cents to around US$2,500 now, more than double its value just a few months ago.
Backers say virtual currencies offer an efficient and anonymous way to store and transfer funds online, but critics argue the lack of legal framework governing the currency, the opaque way it is traded and its volatility make it dangerous.
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