MtGox CEO heads to trial over miss­ing Bit­coins

Kuwait Times - - BUSINESS -

The for­mer CEO of col­lapsed Bit­coin ex­change MtGox heads to trial in Tokyo next week on charges stem­ming from the dis­ap­pear­ance of hun­dreds of mil­lions of 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 $11,000-amonth 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 AFP, adding that Karpe­les plans to plead his in­no­cence. 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.

MtGox, which claimed it once hosted around 80 per­cent of global Bit­coin trad­ing, shut­tered in 2014 after ad­mit­ting that 850,000 coins-worth around $480 million at the time-had dis­ap­peared from its vaults. The com­pany ini­tially said there was a bug in the soft­ware un­der­pin­ning Bit­coins that al­lowed hack­ers to pil­fer them.

Karpe­les later claimed he had found some 200,000 of the lost coins in a “cold wal­let”-a stor­age de­vice, such as a memory stick, that is not con­nected to other com­put­ers. Tokyo-based MtGox 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.

Still miss­ing

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 MtGox, 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 MtGox 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 told AFP. Around the time of his 2015 ar­rest, Karpe­les’ mother told Ja­pan’s top-sell­ing Yomi­uri news­pa­per that her son was a “ge­nius” who learned com­puter lan­guages at age three and started mak­ing sim­ple pro­grammes by the time he was five. In 2006, Karpe­les wrote on his blog that com­puter crime was “to­tally con­trary to my eth­i­cal prin­ci­ples”. But 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 MtGox scan­dal, Ja­pan passed a bill stip­u­lat­ing that all vir­tual cur­rency ex­changes must be reg­u­lated by its Fi­nan­cial Ser­vices Agency. Vir­tual cur­ren­cies are gen­er­ated by com­plex chains of in­ter­ac­tions among a huge net­work of com­put­ers around the world, and are not backed by any gov­ern­ment or cen­tral bank, un­like tra­di­tional cur­ren­cies. Bit­coin has suf­fered hack­ing in­ci­dents in­clud­ing one last year in which a ma­jor Hong Kong-based ex­change Bitfinex suspended trad­ing after $65 million in the vir­tual unit was stolen.

Soar­ing pop­u­lar­ity

De­spite the demise of MtGox 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 $42.9 bil­lion, ac­cord­ing to the web­site coin­mar­ket­cap.com.

The unit has seen wild volatil­ity dur­ing its short life, soar­ing from just a few US cents to around $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. Crit­ics ar­gue the lack of le­gal frame­work gov­ern­ing the cur­rency, the opaque way it is traded and its volatil­ity make it dangerous. Bit­coin’s rep­u­ta­tion was dam­aged when US author­i­ties seized funds as part of an in­ves­ti­ga­tion into the on­line black mar­ket Silk Road.

— AFP

SIN­GA­PORE: An im­age of Bit­coin and US cur­ren­cies is dis­played on a screen as del­e­gates lis­ten to a panel of speak­ers dur­ing the In­ter­pol World Congress.

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.