Business 28 December 2018

Ed Drake

Disgraced Mt. Gox CEO affirms ‘not guilty’ plea in closing arguments

The former CEO of failed cryptocurrency exchange Mt. Gox has reiterated that he is entirely innocent in the events leading up to its demise, in closing arguments at his trial in Japan.

Mark Karpeles was in court on Thursday, stressing that while he regrets the spectacular hack that led the exchange to collapse, he could not personally be held responsible for the attack, NHK reported. Regarding funds withdrawn by Karpeles from the firm, the former CEO maintains this was “a loan from the company” which he had intended to settle at a later date.

Karpeles is on trial on charges of embezzlement to the tune of approximately $3 million, as well as allegations he manipulated financial data to artificially inflate the firm’s declared cash position.

The transfer of funds, which Karpeles claimed was on loan terms, was conducted between September and December 2013, just a matter of months before the exchange filed for bankruptcy.

At the time of its collapse, Mt. Gox was one of the world’s most significant cryptocurrency exchanges, handling as much as 70% of global Bitcoin trading in early 2014.

In February 2014, Mt. Gox announced that as many as 850,000 Bitcoins had gone missing, presumed stolen. Although 200,000 were later found, the news was devastating for the exchange, and for the wider cryptocurrency markets at the time.

Several commentators have suggested that the loss was the result of mismanagement, fraud or an external hack, or perhaps even several of these factors, with the finger of blame pointed in the direction of the firm’s founder and former CEO.

Despite his protestations of innocent, Japanese prosecutors are pursuing a 10-year jail term, particularly significant in light of the investors who lost money in the collapse—the majority of whom remain substantially out of pocket to this day.

The firm is currently being administered by trustee Nobuaki Kobayashi on behalf of creditors, with around $230 million of Bitcoin holdings liquidated since September, with some 24,658 BTC and 25,331 BCH sold since Q3 2017.

The final ruling is expected on March 15.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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