Business

Erik Gibbs

Mt. Gox former CEO says he didn’t do it

The Mt. Gox cryptocurrency exchange scandal will probably never die. Even if investors and creditors find resolution and receive restitution, the exchange, as well as its CEO, will live forever in infamy. That CEO, Mark Karpeles, is now in a court in Tokyo, responding to accusations that he embezzled millions from the exchange during his tenure. As everyone expected, he loudly proclaims that he is innocent.

In 2014, Mt. Gox suddenly shut off the lights and boarded up its windows, claiming that it had been the target of a massive hack that saw the theft of 850,000 Bitcoin Core (BTC), worth around $450 million at the time. That hack was never resolved, although 200,000 BTC were miraculously “found” shortly after.

The following year, Karpeles was arrested in Japan in conjunction with additional missing funds, which he was accused of embezzling from the company. He was charged with embezzlement and fraud for allegedly making off with $3 million in company money, which he used to make real estate and business deals, as well as for the purchase of furniture. Prosecutors argue that he took off with the money and then cooked the books in an effort to hide his tracks. He has been confined to Japan since and has only now been sent before a judge.

If he is found guilty, Karpeles faces up to ten years in prison – a sentence that some say is relatively light given the scope of the damage that was done either by him or under his auspices. At the time of the hack, Mt. Gox was responsible for more than 70% of all BTC trades worldwide.

After Mt. Gox filed for bankruptcy, it was determined that the company held enough assets – when combined with the 200,000 recovered BTC – to be able to pay off investors and creditors. An intermediary was assigned to oversee the process, which is still ongoing today. While most have received some type of compensation, there are still more than a few that have not been paid. Given the recent slide in the crypto markets, some are beginning to question if there is enough left in the coffers to finish making restitution. 

The company is still facing a lawsuit over the ordeal. That lawsuit was put on hold while the plaintiffs determined if all payouts would be made – given the current crypto environment, chances are good that the suit will continue as planned next February.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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